<PAGE>



                                   Exhibit 4.1

                         Pooling and Servicing Agreement

                                (attached hereto)




<PAGE>

                                                                  EXECUTION COPY



================================================================================






                       MORGAN STANLEY ABS CAPITAL I INC.,

                                   Depositor,

                              THE PROVIDENT BANK,

                                   Servicer,

                            NC CAPITAL CORPORATION,

                               Responsible Party,

                                      and

                     DEUTSCHE BANK NATIONAL TRUST COMPANY,

                                    Trustee

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

                        POOLING AND SERVICING AGREEMENT

                         Dated as of September 1, 2003

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

                MORGAN STANLEY ABS CAPITAL I INC. TRUST 2003-NC8

                      MORTGAGE PASS-THROUGH CERTIFICATES,
                                SERIES 2003-NC8







================================================================================



<PAGE>


                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

                                    ARTICLE I
                                   DEFINITIONS

                                   ARTICLE II
          CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES

Section 2.01    Conveyance of Mortgage Loans.................................35

Section 2.02    Acceptance by the Trustee of the Mortgage Loans..............38

Section 2.03    Representations and Warranties; Remedies for
                Breaches of Representations and
                Warranties with Respect to the Mortgage Loans................39

Section 2.04    The Depositor and the Mortgage Loans.........................42

Section 2.05    Delivery of Opinion of Counsel in
                  Connection with Substitutions..............................42

Section 2.06    Execution and Delivery of Certificates.......................42

Section 2.07    REMIC Matters................................................42

Section 2.08    Representations and Warranties of the Depositor..............42

                                   ARTICLE III
                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 3.01    Servicer to Service Mortgage Loans...........................44

Section 3.02    Subservicing Agreements between the
                  Servicer and Subservicers..................................46

Section 3.03    Successor Subservicers.......................................47

Section 3.04    Liability of the Servicer....................................47

Section 3.05    No Contractual Relationship between
                  Subservicers and the Trustee...............................47

Section 3.06    Assumption or Termination of Subservicing
                  Agreements by Trustee......................................47

Section 3.07    Collection of Certain Mortgage Loan Payments.................48

Section 3.08    Subservicing Accounts........................................50

Section 3.09    Collection of Taxes, Assessments and
                  Similar Items; Escrow Accounts.............................50

Section 3.10    Collection Account...........................................51

Section 3.11    Withdrawals from the Collection Account......................52

Section 3.12    Investment of Funds in the Collection
                  Account and the Distribution Account.......................54

Section 3.13    Maintenance of Hazard Insurance and
                  Errors and Omissions and Fidelity Coverage.................55

Section 3.14    Enforcement of Due-on-Sale Clauses;
                  Assumption Agreements......................................57

Section 3.15    Realization upon Defaulted Mortgage Loans....................58


                                       -i-
<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page
                                                                            ----
Section 3.16    Release of Mortgage Files....................................59

Section 3.17    Title, Conservation and Disposition of
                REO Property.................................................60

Section 3.18    Notification of Adjustments..................................62

Section 3.19    Access to Certain Documentation and Information
                Regarding the Mortgage Loans.................................62

Section 3.20    Documents, Records and Funds in Possession
                of the Servicer to Be Held for the Trustee...................62

Section 3.21    Servicing Compensation.......................................63

Section 3.22    Annual Statement as to Compliance............................63

Section 3.23    Annual Independent Public Accountants'
                Servicing Statement; Financial Statements....................63

Section 3.24    Trustee to Act as Servicer...................................64

Section 3.25    Compensating Interest........................................65

Section 3.26    Credit Reporting; Gramm-Leach-Bliley Act.....................65

                                   ARTICLE IV
                   DISTRIBUTIONS AND ADVANCES BY THE SERVICER

Section 4.01    Advances.....................................................65

Section 4.02    Priorities of Distribution...................................66

Section 4.03    Monthly Statements to Certificateholders.....................71

Section 4.04    Certain Matters Relating to the
                Determination of LIBOR.......................................74

Section 4.05    Allocation of Applied Realized Loss Amounts..................74

                                    ARTICLE V
                                THE CERTIFICATES

Section 5.01    The Certificates.............................................74

Section 5.02    Certificate Register; Registration of
                  Transfer and Exchange of Certificates......................75

Section 5.03    Mutilated, Destroyed, Lost or Stolen Certificates............80

Section 5.04    Persons Deemed Owners........................................80

Section 5.05    Access to List of Certificateholders'
                  Names and Addresses........................................80

Section 5.06    Maintenance of Office or Agency..............................81


                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page
                                                                            ----
                                   ARTICLE VI
                         THE DEPOSITOR AND THE SERVICER

Section 6.01    Respective Liabilities of the
                Depositor and the Servicer...................................81

Section 6.02    Merger or Consolidation of the
                Depositor or the Servicer....................................81

Section 6.03    Limitation on Liability of the
                Depositor, the Servicer and Others...........................81

Section 6.04    Limitation on Resignation of the Servicer....................82

Section 6.05    Additional Indemnification by
                the Servicer; Third Party Claims.............................82

                                   ARTICLE VII
                                     DEFAULT

Section 7.01    Events of Default............................................83

Section 7.02    Trustee to Act; Appointment of Successor.....................85

Section 7.03    Notification to Certificateholders...........................86

                                  ARTICLE VIII
                             CONCERNING THE TRUSTEE

Section 8.01    Duties of the Trustee........................................86

Section 8.02    Certain Matters Affecting the Trustee........................87

Section 8.03    Trustee Not Liable for Certificates
                or Mortgage Loans............................................88

Section 8.04    Trustee May Own Certificates.................................89

Section 8.05    Trustee's Fees and Expenses..................................89

Section 8.06    Eligibility Requirements for the Trustee.....................90

Section 8.07    Resignation and Removal of the Trustee.......................90

Section 8.08    Successor Trustee............................................91

Section 8.09    Merger or Consolidation of the Trustee.......................91

Section 8.10    Appointment of Co-Trustee or Separate Trustee................91

Section 8.11    Tax Matters..................................................93

Section 8.12    Periodic Filings.............................................95

Section 8.13    Tax Classification of the Excess Reserve
                Fund Account and the Cap Agreement..........................97

                                   ARTICLE IX
                                   TERMINATION

Section 9.01    Termination upon Liquidation or
                Purchase of the Mortgage Loans...............................97

Section 9.02    Final Distribution on the Certificates.......................98


                                     -iii-
<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page
                                                                            ----
Section 9.03    Additional Termination Requirements..........................99

                                    ARTICLE X
                            MISCELLANEOUS PROVISIONS

Section 10.01   Amendment...................................................100

Section 10.02   Recordation of Agreement; Counterparts......................101

Section 10.03   Governing Law...............................................102

Section 10.04   Intention of Parties........................................102

Section 10.05   Notices.....................................................102

Section 10.06   Severability of Provisions..................................103

Section 10.07   Assignment; Sales; Advance Facilities.......................103

Section 10.08   Limitation on Rights of Certificateholders..................105

Section 10.09   Inspection and Audit Rights.................................105

Section 10.10   Certificates Nonassessable and Fully Paid...................106

Section 10.11   Rule of Construction........................................106

Section 10.12   Waiver of Jury Trial........................................106


                                      -iv-
<PAGE>

SCHEDULES

Schedule I        Mortgage Loan Schedule

Schedule II       Representations and Warranties of the Servicer

Schedule III      Representations and Warranties of the
                  Responsible Party as to the Mortgage Loans

Schedule IV       Representations and Warranties as to the Responsible Party

EXHIBITS

Exhibit A         Form of Class A, Class M and Class B Certificate

Exhibit B         Form of Class P Certificate

Exhibit C         Form of Class R Certificate

Exhibit D         Form of Class X Certificate

Exhibit E         Form of Initial Certification of Trustee

Exhibit F         Form of Document Certification and Exception Report of Trustee

Exhibit G         Form of Residual Transfer Affidavit

Exhibit H         Form of Transferor Certificate

Exhibit I         Form of Rule 144A Letter

Exhibit J         Form of Request for Release

Exhibit K         Form of Contents for Each Mortgage File

Exhibit L         Form of Certification to be provided with Form 10-K

Exhibit M         Form of Trustee's Certification to be provided to Depositor

Exhibit N         Form of Servicer's Certification to be provided to Depositor


                                      -v-
<PAGE>

         THIS POOLING AND SERVICING AGREEMENT, dated as of September 1, 2003,
among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, as depositor
(the "Depositor"), THE PROVIDENT BANK, an Ohio banking corporation, as servicer
(the "Servicer"), NC CAPITAL CORPORATION, a California corporation, as
responsible party (the "Responsible Party"), and DEUTSCHE BANK NATIONAL TRUST
COMPANY, a national banking association, as trustee (the "Trustee"),

                              W I T N E S S E T H:

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

                              PRELIMINARY STATEMENT

         The Trustee shall elect that two segregated asset pools within the
Trust Fund be treated for federal income tax purposes as comprising two REMICs
(each, a "REMIC" or, in the alternative, the Lower Tier REMIC and the Upper Tier
REMIC, respectively). Each Class of Certificates (other than the Class P and
Class R Certificates), other than the right of each Class of LIBOR Certificates
to receive Basis Risk CarryForward Amounts and the right of the Class X
Certificates to receive payments from the Cap Agreement, represents ownership of
a regular interest in the Upper Tier REMIC for purposes of the REMIC Provisions.
The Class R Certificate represents ownership of the sole class of residual
interest in each of the Lower Tier REMIC and the Upper Tier REMIC for purposes
of the REMIC Provisions. The Startup Day for each REMIC described herein is the
Closing Date. The latest possible maturity date for each Certificate is the
latest date referenced in Section 2.07. The Upper Tier REMIC shall hold as
assets the several classes of uncertificated Lower Tier Regular Interests, set
out below. Each such Lower Tier Regular Interest is hereby designated as a
regular interest in the Lower Tier REMIC. The Class LT-A-1, Class LT-A-2, Class
LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-B-1, Class LT-B-2 and Class LT-B-3
Interests are hereby designated the LT Accretion Directed Classes (the "LT
Accretion Directed Classes"). The Class P Certificates represent beneficial
ownership of the Prepayment Charges, each Class of LIBOR Certificates represents
beneficial ownership of a regular interest in the Upper Tier REMIC and the right
to receive Basis Risk CarryForward Amounts and the Class X Certificates
represent beneficial ownership of a regular interest in the Upper Tier REMIC,
the Excess Reserve Fund Account and the Cap Agreement, which portions of the
Trust Fund shall be treated as a grantor trust.

<TABLE>
<CAPTION>

 Lower Tier
  Class               Lower Tier          Initial Lower Tier               Corresponding Upper
Designation          Interest Rate          Principal Amount                  Tier REMIC Class
------------------  --------------         -----------------                --------------------
<S>                  <C>           <C>                                      <C>

Class LT-A-1             (1)       1/2 initial Corresponding Upper Tier             A-1
                                      REMIC initial principal balance
Class LT-A-2             (1)       1/2 initial Corresponding Upper Tier             A-2
                                      REMIC initial principal balance
Class LT-M-1             (1)       1/2 initial Corresponding Upper Tier             M-1
                                      REMICinitial principal balance
Class LT-M-2             (1)       1/2 initial Corresponding Upper Tier             M-2
                                      REMIC initial principal balance
</TABLE>


                                      -1-
<PAGE>

<TABLE>
<CAPTION>

 Lower Tier
  Class               Lower Tier           Initial Lower Tier               Corresponding Upper
Designation          Interest Rate          Principal Amount                  Tier REMIC Class
------------------  --------------         -----------------                --------------------
<S>                 <C>            <C>                                      <C>
Class LT-M-3             (1)       1/2 initial Corresponding Upper Tier             M-3
                                      REMIC initial principal balance
Class LT-B-1             (1)       1/2 initial Corresponding Upper Tier             B-1
                                      REMIC initial principal balance
Class LT-B-2             (1)       1/2 initial Corresponding Upper Tier             B-2
                                      REMIC initial principal balance
Class LT-B-3             (1)       1/2 initial Corresponding Upper Tier             B-3
                                      REMIC initial principal balance
Class LT-Accrual         (1)       1/2 Pool Stated Principal Balance
                                      plus 1/2 Subordinated Amount,
                                      less $2,000
Class LT-Group I         (2)          1,293.84 (4)
Class LT-Group II        (3)          706.16 (4)
Class LT-R               (5)          (5)
</TABLE>

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

(1)      The interest rate with respect to any  Distribution  Date for these
         interests is a per annum variable rate equal to the WAC Cap.

(2)      The interest rate with respect to any Distribution Date for the Class
         LT-Group I Interest is a per annum variable rate (expressed as a
         percentage rounded to eight decimal places) equal to the Loan Group I
         Cap.

(3)      The interest rate with respect to any Distribution Date for the Class
         LT-Group II Interest is a per annum variable rate (expressed as a
         percentage rounded to eight decimal places) equal to the Loan Group II
         Cap.

(4)      On the Closing Date, the Initial Lower Tier Principal Amount of Class
         LT-Group I Interest shall be $1,293.83568081, and the Initial Lower
         Tier Principal Amount of the Class LT-Group II Interest shall be
         $706.16431918. For all future Distribution Dates, the principal
         balances of these Lower Tier Regular Interests shall be rounded to
         eight decimal places.

(5)      The Class LT-R Interest is the sole class of residual interest in the
         Lower Tier REMIC and it does not have a principal amount or an interest
         rate.

         The Lower Tier REMIC shall hold as assets all of the assets included in
the Trust Fund other than Prepayment Charges, the Cap Agreement, the Excess
Reserve Fund Account, and the Lower Tier Regular Interests.

         On each Distribution Date, 50% of the increase in the Subordinated
Amount will be payable as a reduction of the principal balances of the LT
Accretion Directed Classes (each such Class will be reduced by an amount equal
to 50% of any increase in the Subordinated Amount that is attributable to a
reduction in the principal balance of its Corresponding Class) and will be
accrued and added to the principal balance of the Class LT-Accrual Interest. On
each Distribution Date, the increase in the principal balance of the Class
LT-Accrual Interest may not exceed interest accruals for such Distribution Date
for the Class LT-Accrual Interest. In the event that: (i) 50% of the increase in
the Subordinated Amount exceeds (ii) interest accruals on the Class LT-Accrual
Interest for such Distribution Date, the excess for such Distribution Date
(accumulated with all such excesses for all prior Distribution Dates) will be
added to any increase in the Subordinated Amount for purposes of determining the
amount of interest accrual on the Class LT-Accrual Interest payable as principal
on the LT Accretion Directed Classes on the next Distribution Date pursuant to
the first sentence of this paragraph. All payments of scheduled principal and
prepayments of principal generated by the Mortgage Loans shall be allocated (i)
50% to the Class LT-Accrual Interest, the Class LT-Group I Interest and the
Class LT-Group II Interest (and further allocated among these Lower Tier Regular
Interests in the manner described below) and (ii) 50% to the LT Accretion
Directed Classes (principal payments shall be allocated among such LT Accretion
Directed Classes in an amount equal to 50% of the principal amounts allocated to
their respective Corresponding Classes), until paid in full. Notwithstanding the
above, principal payments allocated to the Class X Certificates that result in
the reduction in the Subordinated Amount shall be allocated to the Class
LT-Accrual Interest (until paid in full). Realized Losses shall be applied so
that after all distributions have been made on each Distribution Date (i) the
principal balance of each LT Accretion Directed Class is equal to 50% of the
principal balance of its Corresponding Class, and (ii) the Class LT-Accrual
Interest, the Class LT-Group I Interest and the Class LT-Group II Interest (and
further allocated between these Lower Tier Regular Interests in the manner
described below) is equal to 50% of the aggregate Stated Principal Balance of
the Mortgage Loans plus 50% of the Subordinated Amount. As among the Class
LT-Accrual Interest, the Class LT-Group I Interest and the Class LT-Group II
Interest, all payments of scheduled principal and prepayments of principal
generated by the Mortgage Loans, and all Realized Losses, allocable to such
Lower Tier Regular Interests shall be allocated (i) to the Class LT-Accrual
Interest in the same proportion that the then outstanding principal balance of
such Lower Tier Regular Interest bears to the then outstanding aggregate
principal balance of the Class LT-Accrual Interest, the Class LT-Group I
Interest and the Class LT-Group II Interest and (ii) the remainder to each of
the Class LT-Group I Interest and the Class LT-Group II Interest in the same
proportion that the then outstanding aggregate Stated Principal Balance of the
Mortgage Loans in the related Loan Group bears to the then outstanding aggregate
Stated Principal Balance of the Mortgage Loans.


                                      -2-
<PAGE>

         The Upper Tier REMIC shall issue the following classes of Upper Tier
Regular Interests and each such interest, other than the Class UT-R Interest, is
hereby designated as a regular interest in the Upper Tier REMIC.

<TABLE>
<CAPTION>
                                                      Initial Upper Tier
                      Upper Tier Interest Rate          Principal Amount      Corresponding Class
   Upper Tier            and Corresponding         and Corresponding Class             of
Class Designation     Class Pass-Through Rate        Certificate Balance          Certificates
-----------------    ------------------------      -----------------------    -------------------
<S>                  <C>                           <C>                        <C>
Class A-1                      (1)                     $708,882,000              Class A-1(6)
Class A-2                      (2)                     $386,901,000              Class A-2(6)
Class M-1                      (3)                     $ 87,118,000              Class M-1(6)
Class M-2                      (3)                     $ 71,464,000              Class M-2(6)
Class M-3                      (3)                     $ 23,822,000              Class M-3(6)
Class B-1                      (3)                     $ 20,418,000              Class B-1(6)
Class B-2                      (3)                     $ 14,293,000              Class B-2(6)
Class B-3                      (3)                     $ 17,696,000              Class B-3(6)
Class X                        (4)                     $          0(5)           Class X(4)
Class UT-R                     (5)                     $          0              Class R
</TABLE>


                                      -3-
<PAGE>

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

(1)      The Class A-1 Interest will bear interest during each Interest Accrual
         Period at a per annum rate equal to (a) on or prior to the Optional
         Termination Date, the least of (i) LIBOR plus 0.43%, (ii) the Loan
         Group I Cap and (iii) the WAC Cap or (b) after the Optional Termination
         Date, the least of (i) LIBOR plus 0.860%, (ii) the Loan Group I Cap and
         (iii) the WAC Cap.

(2)      The Class A-2 Interest will bear interest during each Interest Accrual
         Period at a per annum rate equal to (a) on or prior to the Optional
         Termination Date, the least of (i) LIBOR plus 0.36%, (ii) the Loan
         Group II Cap and (iii) the WAC Cap or (b) after the Optional
         Termination Date, the least of (i) LIBOR plus 0.720%, (ii) the Loan
         Group II Cap and (iii) the WAC Cap.

(3)      The Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
         Interests will bear interest during each Interest Accrual Period at a
         per annum rate equal to (a) on or prior to the Optional Termination
         Date, the lesser of (i) LIBOR plus 0.70%, 1.75%, 2.10%, 3.60%, 3.750%
         and 3.750%, respectively, and (ii) the WAC Cap or (b) after the
         Optional Termination Date, the lesser of (i) LIBOR plus 1.050%, 2.625%,
         3.150%, 5.400%, 5.625% and 5.625%, respectively, and (ii) the WAC Cap.

(4)      The Class X Interest has an initial principal balance of $30,627,758,
         but it will not accrue interest on such balance but will accrue
         interest on a notional principal balance. As of any Distribution Date,
         the Class X Interest shall have a notional principal balance equal to
         the aggregate of the principal balances of the Lower Tier Regular
         Interests as of the first day of the related Interest Accrual Period.
         With respect to any Interest Accrual Period, the Class X Interest shall
         bear interest at a rate equal to the excess, if any, of the WAC Cap
         over the product of (i) 2 and (ii) the weighted average Pass-Through
         Rate of the Lower Tier REMIC Interests, where the interest rate on each
         of the Class LT-Accrual Interest, Class LT-Group I Interest and Class
         LT-Group II Interest is subject to a cap equal to zero and each LT
         Accretion Directed Class is subject to a cap equal to the Pass-Through
         Rate on its Corresponding Class. With respect to any Distribution Date,
         interest that so accrues on the notional principal balance of the Class
         X Interest shall be deferred in an amount equal to any increase in the
         Subordinated Amount on such Distribution Date. Such deferred interest
         shall not itself bear interest. The Class X Certificates will represent
         beneficial ownership of the Class X Interest, the Cap Agreement, and
         amounts in the Excess Reserve Fund Account, subject to the obligation
         to make payments from the Excess Reserve Fund Account in respect of
         Basis Risk Carry Forward Amounts. For federal income tax purposes, the
         Trustee will treat a Class X Certificateholder's obligation to make
         payments from the Excess Reserve Fund Account as payments made pursuant
         to an interest rate cap contract written by the Class X
         Certificateholders in favor of each Class of LIBOR Certificates. Such
         rights of the Class X Certificateholders and LIBOR Certificateholders
         shall be treated as held in a portion of the Trust Fund that is treated
         as a grantor trust under subpart E, Part I of subchapter J of the Code.

(5)      The Class UT-R Interest is the sole class of residual interest in the
         Upper Tier REMIC. The Class UT-R Interest does not have an interest
         rate.

(6)      Each of these Certificates will represent not only the ownership of the
         Corresponding Class of Upper Tier Regular Interest but also the right
         to receive payments from the Excess Reserve Fund Account in respect of
         any Basis Risk CarryForward Amounts. For federal income tax purposes,
         the Trustee will treat a Certificateholder's right to receive payments
         from the Excess Reserve Fund Account as payments made pursuant to an
         interest rate cap contract written by the Class X Certificateholders.

         The minimum denomination for each Class of Certificates, other than the
Class P, Class R and the Class X Certificates, will be $25,000 with integral
multiples of $1 in excess thereof. The Class P, Class R and the Class X
Certificates will each represent a 100% Percentage Interest in such class.


                                      -4-
<PAGE>

         Set forth below are designations of Classes of Certificates to the
categories used herein:

Book-Entry Certificates..............All Classes of Certificates other than the
                                     Physical Certificates.

Class A Certificates.................Class A-1 and Class A-2 Certificates.

Delay Certificates...................None.

ERISA-Restricted
  Certificates.......................Class R Certificates, Class P Certificates
                                     and Class X Certificates; any certificate
                                     with a rating below the lowest applicable
                                     permitted rating under the Underwriters'
                                     Exemption.

LIBOR Certificates...................Class A and Subordinated Certificates.

Non-Delay Certificates...............Class A, Class X and Subordinated
                                     Certificates.

Offered Certificates.................All Classes of Certificates other than the
                                     Private Certificates.

Physical Certificates................Class P, Class X and Class R Certificates.

Private Certificates.................Class A-1, Class P, Class X and
                                     Class R Certificates.

Rating Agencies......................Moody's, Fitch and Standard & Poor's.

Regular Certificates.................All Classes of Certificates other than
                                     the Class P and Class R Certificates.

Residual Certificates................Class R Certificates.

Subordinated.........................Certificates Class M-1, Class M-2,
                                     Class M-3, Class B-1, Class B-2 and
                                     Class B-3 Certificates.

ARTICLE I

                                   DEFINITIONS

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

         Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices set forth in Section 3.01 of this Agreement.

         Account: Any of the Collection Account, the Distribution Account, any
Escrow Account or the Excess Reserve Fund Account. Each Account shall be an
Eligible Account.


                                      -5-
<PAGE>

         Accrued Certificate Interest Distribution Amount: With respect to any
Distribution Date for each Class of LIBOR Certificates, the amount of interest
accrued during the related Interest Accrual Period at the applicable
Pass-Through Rate on the related Class Certificate Balance immediately prior to
such Distribution Date, as reduced by such Class's share of Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for the related Due
Period allocated to such Class pursuant to Section 4.02.

         Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan.

         Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any time,
the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.

         Adjustment Date: As to any Mortgage Loan, the first Due Date on which
the related Mortgage Rate adjusts as set forth in the related Mortgage Note and
each Due Date thereafter on which the Mortgage Rate adjusts as set forth in the
related Mortgage Note.

         Advance: Any P&I Advance or Servicing Advance.

         Advance Facility: A financing or other facility as described in Section
10.07.

         Advancing Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any P&I Advances or Servicing Advances have been
assigned pursuant to Section 10.07.

         Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

         Agreement: This Pooling and Servicing Agreement and all amendments or
supplements hereto.

         Amount Held for Future Distribution: As to the Certificates on any
Distribution Date, the aggregate amount held in the Collection Account at the
close of business on the related Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds
on the Mortgage Loans received after the end of the related Prepayment Period
and (ii) all Scheduled Payments on the Mortgage Loans due after the end of the
related Due Period.

         Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which the aggregate Class Certificate Balance of the
LIBOR Certificates after distributions of principal on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.

         Appraised Value: The value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.


                                      -6-
<PAGE>

         Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form (other than the assignee's
name and recording information not yet returned from the recording office),
reflecting the sale of the Mortgage to the Trustee.

         Available Funds: With respect to any Distribution Date and the Mortgage
Loans to the extent received by the Trustee (x) the sum of (i) all scheduled
installments of interest (net of the related Expense Fees) and principal due on
the Due Date on such Mortgage Loans in the related Due Period and received by
the Servicer on or prior to the related Determination Date, together with any
P&I Advances in respect thereof; (ii) all Condemnation Proceeds, Insurance
Proceeds and Liquidation Proceeds received by the Servicer during the related
Prepayment Period (in each case, net of unreimbursed expenses incurred in
connection with a liquidation or foreclosure and unreimbursed Advances, if any);
(iii) all partial or full prepayments on the Mortgage Loans received by the
Servicer during the related Prepayment Period together with all Compensating
Interest thereon (excluding any Prepayment Charges); (iv) all Substitution
Adjustment Amounts with respect to the substitutions of Mortgage Loans that
occur during the month in which such Distribution Date occurs; (v) amounts
received with respect to such Distribution Date as the Repurchase Price in
respect of a Mortgage Loan repurchased by the Responsible Party as of such
Distribution Date; and (vi) the Closing Date Deposit Amount; reduced by (y)
amounts in reimbursement for Advances previously made with respect to the
Mortgage Loans and other amounts as to which the Servicer, the Depositor or the
Trustee are entitled to be paid or reimbursed pursuant to this Agreement.

         Balloon Loan: Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.

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

         Basis Risk CarryForward Amount: With respect to each Class of LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of LIBOR Certificates is
based upon a Loan Group Cap or the WAC Cap, the excess of (i) the amount of
interest such Class of Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of LIBOR and the
applicable Pass-Through Margin on such Class of Certificates for such
Distribution Date, over (ii) the amount of interest payable on such Class of
Certificates at, with respect to the Class A-1 Certificates, the lesser of the
Loan Group I Cap or the WAC Cap, with respect to the Class A-2 Certificates, the
lesser of the Loan Group II Cap or the WAC Cap, and with respect to each other
Class of Regular Certificates, the WAC Cap, as applicable, for such Distribution
Date and (B) the Basis Risk CarryForward Amount for such Class of Certificates
for all previous Distribution Dates not previously paid, together with interest
thereon at a rate equal to the sum of LIBOR and the applicable Pass-Through
Margin for such Class of Certificates for such Distribution Date.


                                      -7-
<PAGE>

         Basis Risk Payment: For any Distribution Date, an amount equal to the
lesser of (i) the aggregate of the Basis Risk CarryForward Amounts for such
Distribution Date and (ii) the Class X Distributable Amount (prior to any
reduction for Basis Risk Payments).

         Best's: Best's Key Rating Guide, as the same shall be amended from time
to time.

         Book-Entry Certificates: As specified in the Preliminary Statement.

         Business Day: Any day other than (i) Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions, in (a) the State of New
York, California, Florida or Delaware, (b) the State in which the Servicer's
servicing operations are located, or (c) the State in which the Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.

         Cap Agreement: The interest rate cap agreement, dated September 25,
2003, between the Cap Provider and the Trustee on behalf of the Trust, or any
replacement thereof.

         Cap Provider: Morgan Stanley Capital Services, Inc., a Delaware
corporation, and its successors in interest.

         Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.

         Certificate Balance: With respect to any Class of Certificates, other
than the Class P or Class R Certificates, at any date, the maximum dollar amount
of principal to which the Holder thereof is then entitled hereunder, such amount
being equal to the Denomination thereof minus all distributions of principal
previously made with respect thereto and in the case of any Subordinated
Certificates, reduced by any Applied Realized Loss Amounts applicable to such
Class of Subordinated Certificates. The Class P and Class R Certificates have no
Certificate Balance.

         Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.

         Certificate Register: The register maintained pursuant to Section 5.02.

         Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.


                                      -8-
<PAGE>

         Certification: As specified in Section 8.12.

         Class: All Certificates bearing the same class designation as set forth
in the Preliminary Statement.

         Class A Certificates: The Class A-1 Certificates and Class A-2
Certificates.

         Class A Principal Allocation Percentage: With respect to any
Distribution Date, the percentage equivalent of a fraction, determined as
follows: (A) with respect to the Class A-1 Certificates, a fraction, the
numerator of which is (x) the portion of the Principal Remittance Amount for
such Distribution Date that is attributable to the principal received or
advanced on the Group I Mortgage Loans and the denominator of which is (y) the
Principal Remittance Amount for such Distribution Date; and (B) with respect to
the Class A-2 Certificates, a fraction, the numerator of which is (x) the
portion of the Principal Remittance Amount for such Distribution Date that is
attributable to the principal received or advanced on the Group II Mortgage
Loans and the denominator of which is (y) the Principal Remittance Amount for
such Distribution Date.

         Class A Principal Distribution Amount: With respect to any Distribution
Date, the excess of (i) the aggregate Class Certificate Balances of the Class A
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 61.00% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$6,806,109.

         Class A-1 Certificates: All Certificates bearing the class designation
of "Class A-1 Certificates".

         Class A-2 Certificates: All Certificates bearing the class designation
of "Class A-2 Certificates".

         Class B Certificates: The Class B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates.

         Class B-1 Certificates: All Certificates bearing the class designation
of "Class B-1 Certificates".

         Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), and (E) the Class Certificate Balance of the Class B-1
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 90.80% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$6,806,109.


                                      -9-
<PAGE>

         Class B-2 Certificates: All Certificates bearing the class designation
of "Class B-2 Certificates".

         Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount on such Distribution Date) and (F) the Class
Certificate Balance of the Class B-2 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) approximately 92.90% of the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date and (B) the excess, if any, of the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date over $6,806,109.

         Class B-3 Certificates: All Certificates bearing the class designation
of "Class B-3 Certificates".

         Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount on such Distribution Date), (F) the Class
Certificate Balance of the Class B-2 Certificates (after taking into account the
distribution of the Class B-2 Principal Distribution Amount on such Distribution
Date) and (G) the Class Certificate Balance of the Class B-3 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A)
approximately 95.50% of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B) the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date over
$6,806,109.


                                      -10-
<PAGE>

         Class Certificate Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date.

         Class M-1 Certificates: All Certificates bearing the class designation
of "Class M-1 Certificates".

         Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), and (B) the Class Certificate Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 73.80%
of the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date and (B) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date over $6,806,109.

         Class M-2 Certificates: All Certificates bearing the class designation
of "Class M-2 Certificates".

         Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date) and (C) the Class Certificate Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 84.30% of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B) the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date over
$6,806,109.

         Class M-3 Certificates: All Certificates bearing the class designation
of "Class M-3 Certificates".

         Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date) and (D) the Class
Certificate Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 87.80% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $6,806,109.


                                      -11-
<PAGE>

         Class P Certificates: All Certificates bearing the designation of
"Class P Certificates".

         Class R Certificates: All Certificates bearing the designation of
"Class R Certificates".

         Class X Certificates: All Certificates bearing the designation of
"Class X Certificates".

         Class X Distributable Amount: On any Distribution Date, the sum of (i)
as a distribution in respect of interest, the amount of interest that has
accrued on the Class X Interest and not applied as an Extra Principal
Distribution Amount on such Distribution Date, plus any such accrued interest
remaining undistributed from prior Distribution Dates, plus (ii) as a
distribution in respect of principal, any portion of the principal balance of
the Class X Interest which is distributable as a Subordination Reduction Amount,
minus (iii) any amounts paid as a Basis Risk Payment.

         Class X Interest: The Upper Tier Regular Interest represented by the
Class X Certificates as specified and described in the Preliminary Statement and
the related footnote thereto.

         Closing Date: September 25, 2003.

         Closing Date Deposit Amount: $202,623.05 deposited by the Depositor
into the Distribution Account on the Closing Date. $120,870.36 of the Closing
Date Deposit Amount shall be attributable to the Group I Mortgage Loans, and
$81,752.69 of the Closing Date Deposit Amount shall be attributable to the Group
II Mortgage Loans .

         Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

         Collection Account: As defined in Section 3.10(a).

         Combined Loan-to-Value Ratio or CLTV: As of any date and as to any
Second Lien Mortgage Loan, the ratio, expressed as a percentage, of the (a) sum
of (i) the outstanding principal balance of the Second Lien Mortgage Loan and
(ii) the outstanding principal balance as of such date of any mortgage loan or
mortgage loans that are senior or equal in priority to the Second Lien Mortgage
Loan and which are secured by the same Mortgaged Property to (b) the Appraised
Value as determined pursuant to the Underwriting Guidelines of the related
Mortgaged Property as of the origination of the Second Lien Mortgage Loan.

         Compensating Interest: For any Distribution Date, the lesser of (a) the
Prepayment Interest Shortfall, if any, for such Distribution Date, with respect
to voluntary Principal Prepayments in full by the Mortgagor (excluding any
payments made upon liquidation of the Mortgage Loan) and (b) the amount of the
Servicing Fee payable to the Servicer for such Distribution Date.


                                      -12-
<PAGE>

         Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.

         Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage Loan
purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Adjustable Rate Mortgage Loan to a Fixed
Rate Mortgage Loan in accordance with the terms of the related Mortgage Note.

         Corporate Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
with respect to this Agreement is administered, which office at the date of the
execution of this Agreement is located at 1761 East St. Andrew Place, Santa Ana,
California 92705, Attn: Trust Administration-MS03C8, facsimile no. (714)
247-6478, and which is the address to which notices to and correspondence with
the Trustee should be directed.

         Corresponding Class: The class of interests in any REMIC created under
this Agreement that corresponds to the Class of interests in another such REMIC
or to a Class of Certificates in the manner set out below:

          Lower Tier             Upper Tier          Corresponding Class of
       Class Designation      Regular Interest           Certificates
       -----------------      ----------------       ----------------------
         Class LT-A-1            Class A-1                Class A-1
         Class LT-A-2            Class A-2                Class A-2
         Class LT-M-1            Class M-1                Class M-1
         Class LT-M-2            Class M-2                Class M-2
         Class LT-M-3            Class M-3                Class M-3
         Class LT-B-1            Class B-1                Class B-1
         Class LT-B-2            Class B-2                Class B-2
         Class LT-B-3            Class B-3                Class B-3
              N/A                Class X                  Class X

         Cumulative Loss Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
calendar month preceding the month in which such Distribution Date occurs and
the denominator of which is the Cut-off Date Pool Principal Balance of the
Mortgage Loans.

         Cumulative Loss Trigger Event: If, with respect to any Distribution
Date, the quotient (expressed as a percentage) of (x) the aggregate amount of
Realized Losses incurred since the Cut-off Date through the last day of the
related Prepayment Period, divided by (y) the Cut-off Date Pool Principal
Balance, exceeds the applicable percentages set forth below with respect to such
Distribution Date:


                                      -13-
<PAGE>

Distribution Date Occurring In           Loss Percentage
------------------------------           ---------------

October 2005 through September 2006      3.100% for the first month, plus an
                                         additional 1/12th of 1.000% for each
                                         month thereafter (e.g., 3.600% in
                                         April 2006)

October 2006 through September 2007      4.100% for the first month, plus
                                         an additional 1/12th of 0.900% for
                                         each month thereafter (e.g., 4.550% in
                                         April 2007)

October 2007 through September 2008      5.000% for the first month, plus
                                         an additional 1/12th of 1.000% for
                                         each month thereafter (e.g., 5.500% in
                                         April 2008)

October 2008 and thereafter              6.000%

         Custodial File: With respect to each Mortgage Loan, the file retained
by the Trustee consisting of items (a) - (h) as listed on Exhibit K hereto.

         Cut-off Date: September 1, 2003.

         Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date plus the portion of the
Closing Date Deposit Amount allocable to principal.

         Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.

         Data Tape Information: The information provided by the Responsible
Party as of September 1, 2003 to the Depositor or the Purchaser setting forth
the following information with respect to each Mortgage Loan: (1) the
Mortgagor's name; (2) as to each Mortgage Loan, the Scheduled Principal Balance
as of the Cut-Off Date; (3) the Mortgage Rate Cap; (4) the Index; (5) a code
indicating whether the Mortgaged Property is owner-occupied; (6) the type of
Mortgaged Property; (7) the first date on which the Scheduled Payment was due on
the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date; (8) the "paid through date" based on
payments received from the related Mortgagor; (9) the original principal amount
of the Mortgage Loan; (10) with respect to Adjustable Rate Mortgage Loans, the
Maximum Mortgage Rate; (11) the type of Mortgage Loan (i.e., Fixed Rate or
Adjustable Rate Mortgage Loan, First Lien or Second Lien Mortgage Loan); (12) a
code indicating the purpose of the loan (i.e., purchase, rate and term
refinance, equity take-out refinance); (13) a code indicating the documentation
style (i.e., full, asset verification, income verification and no
documentation); (14) the credit risk score (FICO score); (15) the loan credit
grade classification (as described in the underwriting guidelines); (16) with
respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate; (17)
the Mortgage Rate at origination; (18) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the Cut-off Date;
(19) the value of the Mortgaged Property; (20) a code indicating the type, term
and amount of Prepayment Charges applicable to such Mortgage Loan, if any; (21)
with respect to each Adjustable Rate Mortgage Loan, the Periodic Mortgage Rate
Cap; (22) with respect to each First Lien Mortgage Loan, the Loan-to-Value Ratio
at origination, and with respect to each Second Lien Mortgage Loan, the Combined
Loan-to-Value Ratio at origination; and (23) if such Mortgage Loan is covered by
a primary mortgage insurance policy, the primary mortgage insurance rate. With
respect to the Mortgage Loans in the aggregate, the Data Tape Information shall
set forth the following information, as of the Cut-off Date: (1) the number of
Mortgage Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans.


                                      -14-
<PAGE>

         Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the United States
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.

         Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United States Bankruptcy
Code.

         Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).

         Delay Certificates: As specified in the Preliminary Statement.

         Deleted Mortgage Loan: As defined in Section 2.03.

         Delinquency Trigger Event: If, with respect to an Distribution Date,
the quotient (expressed as a percentage) of (x) the rolling three month average
of the Stated Principal Balances of 60+ Day Delinquent Mortgage Loans, divided
by (y) the aggregate Stated Principal Balance of the Mortgage Loans, equals or
exceeds 40% of the prior period's Senior Enhancement Percentage.

         Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face thereof.

         Depositor: Morgan Stanley ABS Capital I Inc., a Delaware corporation,
and its successors in interest.

         Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.

         Depository Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated P-1 by Moody's, F1+ by Fitch and A-1 by Standard & Poor's.


                                      -15-
<PAGE>

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

         Determination Date: With respect to each Remittance Date, the 18th day
(or if such day is not a Business Day, the immediately preceding Business Day)
in the calendar month in which such Remittance Date occurs.

         Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders and designated "Deutsche Bank National
Trust Company in trust for registered holders of Morgan Stanley ABS Capital I
Inc. Trust 2003-NC8 Mortgage Pass-Through Certificates, Series 2003-NC8". Funds
in the Distribution Account shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.

         Distribution Account Deposit Date: As to any Distribution Date, 12:30
p.m. Central time on the third Business Day immediately preceding such
Distribution Date.

         Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such day is not a Business Day, the
next succeeding Business Day, commencing in October 2003.

         Document Certification and Exception Report: The report attached to
Exhibit F hereto.

         Due Date: The day of the month on which the Scheduled Payment is due on
a Mortgage Loan, exclusive of any days of grace.

         Due Period: With respect to any Distribution Date, the period
commencing on the second day of the calendar month preceding the month in which
that Distribution Date occurs and ending on the first day of the calendar month
in which that Distribution Date occurs.

         Eligible Account: Either (i) an account maintained with a federal or
state chartered depository institution or trust company the short-term unsecured
debt obligations of which (or, in the case of a depository institution or trust
company that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated "A-1" by Standard & Poor's, "P-1"
by Moody's and if rated by Fitch, "F1" by Fitch (or a comparable rating if
another Rating Agency is specified by the Depositor by written notice to the
Servicer) at the time any amounts are held on deposit therein, (ii) an account
or accounts the deposits in which are fully insured by the FDIC, (iii) a trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, accounts
maintained with the Trustee.

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

         ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of Prohibited
Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor.


                                      -16-
<PAGE>

         ERISA-Restricted Certificate: As specified in the Preliminary
Statement.

         Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).

         Escrow Payments: As defined in Section 3.09(b).

         Event of Default: As defined in Section 7.01.

         Excess Reserve Fund Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the name
of the Trustee for the benefit of the Regular Certificateholders and designated
"Deutsche Bank National Trust Company in trust for registered holders of Morgan
Stanley ABS Capital I Inc. Trust 2003-NC8, Mortgage Pass-Through Certificates,
Series 2003-NC8". Funds in the Excess Reserve Fund Account shall be held in
trust for the Regular Certificateholders for the uses and purposes set forth in
this Agreement. Amounts on deposit in the Excess Reserve Fund Account shall not
be invested.

         Excess Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the Subordinated Amount on such Distribution Date over
(b) the Specified Subordinated Amount for such Distribution Date.

         Expense Fee Rate: As to each Mortgage Loan, a per annum rate equal to
the sum of the Servicing Fee Rate and the Trustee Fee Rate.

         Expense Fees: As to each Mortgage Loan, the sum of the Servicing Fee
and the Trustee Fee.

         Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the related Total Monthly Excess Spread for such Distribution Date
and (y) the related Subordination Deficiency for such Distribution Date.

         Fannie Mae: The Federal National Mortgage Association, or any successor
thereto.

         Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie Mae
Servicers' Guide and all amendments or additions thereto.

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

         Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Responsible Party as contemplated by this Agreement), a determination
made by the Servicer that all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.


                                      -17-
<PAGE>

         Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each Class of Certificates is the Distribution Date in each of the
following months:

                                                       Month of Final
                                                         Scheduled
                                                     Distribution Date
                                                     -----------------
Class A-1 Certificates.........................        September 2033
Class A-2 Certificates.........................        September 2033
Class M-1 Certificates.........................        September 2033
Class M-2 Certificates.........................        September 2033
Class M-3 Certificates.........................        September 2033
Class B-1 Certificates.........................        September 2033
Class B-2 Certificates.........................        September 2033
Class B-3 Certificates.........................        September 2033
Class X Certificates...........................        September 2033
Class P Certificates...........................        September 2033
Class R Certificates...........................        September 2033

         First Lien Mortgage Loan: A Mortgage Loan secured by a first lien
Mortgage on the related Mortgaged Property.

         Fitch: Fitch, Inc., or any successor thereto. If Fitch is designated as
a Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b)
the address for notices to Fitch shall be Fitch, Inc., One State Street Plaza,
New York, New York 10004, Attention: MBS Monitoring - Morgan Stanley ABS Capital
I Inc. Trust 2003-NC8, or such other address as Fitch may hereafter furnish to
the Depositor and the Servicer.

         Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.

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

         Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note to be added to
the applicable Index to determine the Mortgage Rate.

         Group I Mortgage Loans: The Mortgage Loans identified on the Mortgage
Loan Schedule as Group I Mortgage Loans.

         Group II Mortgage Loans: The Mortgage Loans identified on the Mortgage
Loan Schedule as Group II Mortgage Loans.

         Indenture: The indenture, dated as of September 25, 2003, by and
between the NIM Trust, as issuer, and Deutsche Bank National Trust Company, as
indenture trustee.


                                      -18-
<PAGE>

         Indenture Trustee: As defined in the Indenture.

         Index: As to each Adjustable Rate Mortgage Loan, the index from time to
time in effect for the adjustment of the Mortgage Rate set forth as such on the
related Mortgage Note.

         Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect, including any replacement policy or policies for any Insurance
Policies.

         Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

         Interest Accrual Period: With respect to each Class of Non-Delay
Certificates and the Corresponding Class of Lower Tier Regular Interests and any
Distribution Date, the period commencing on the Distribution Date occurring in
the month preceding the month in which the current Distribution Date occurs and
ending on the day immediately preceding the current Distribution Date (or, in
the case of the first Distribution Date, the period from and including the
Closing Date to but excluding such first Distribution Date). For purposes of
computing interest accruals on each Class of Non-Delay Certificates, each
Interest Accrual Period has the actual number of days in such month and each
year is assumed to have 360 days.

         Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate is adjusted.

         Interest Rate Cap Payment: Beginning on the first Distribution Date and
continuing through the immediately succeeding 35 Distribution Dates thereafter,
an amount, if any, equal to the product of (a) the lesser of (i) (A) prior to
the reset date under the Cap Agreement occurring in July 2005, the percentage by
which one-month LIBOR as of the related reset date under the Cap Agreement
exceeds 5.850%, (B) on and after the reset date under the Cap Agreement
occurring in July 2005 until the reset date under the Cap Agreement occurring in
January 2005, the percentage by which one-month LIBOR as of the related reset
date under the Cap Agreement exceeds 6.850% or (C) on and after the reset date
under the Cap Agreement occurring in January 2005 until the termination of the
Cap Agreement, the percentage by which one-month LIBOR as of the related reset
date under the Cap Agreement exceeds 7.750% and (ii) (A) prior to the reset date
under the Cap Agreement occurring in July 2005, 2.40%, (B) on and after the
reset date under the Cap Agreement occurring in July 2005 until the reset date
under the Cap Agreement occurring in January 2005, 1.40% or (C) on and after the
reset date under the Cap Agreement occurring in January 2005 until the
termination of the Cap Agreement, 0.50%, as applicable, and (b) the product of
the notional balance and multiplier for such reset date as set forth on the
schedule attached to the Cap Agreement, calculated on an "actual/360" basis.

         Investment Account: As defined in Section 3.12(a).

         Late Collections: With respect to any Mortgage Loan and any Due Period,
all amounts received after the Determination Date immediately following such Due
Period, whether as late payments of Scheduled Payments or as Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.


                                      -19-
<PAGE>

         LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided, that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee (after
consultation with the Depositor), at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loan to leading European banks.

         LIBOR Certificates: As specified in the Preliminary Statement.

         LIBOR Determination Date: With respect to any Interest Accrual Period
for the LIBOR Certificates, the second London Business Day preceding the
commencement of such Interest Accrual Period.

         Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with this Agreement) that it has received
all amounts it expects to receive in connection with the liquidation of such
Mortgage Loan including the final disposition of an REO Property.

         Liquidation Proceeds: Cash received in connection with the liquidation
of a Liquidated Mortgage Loan, whether through a trustee's sale, foreclosure
sale or otherwise.

         Loan Group: The Group I Mortgage Loans or the Group II Mortgage Loans,
as applicable.

         Loan Group Cap: The Loan Group I Cap or the Loan Group II Cap, as
applicable.

         Loan Group I Cap: With respect to the Group I Mortgage Loans as of any
Distribution Date, the product of (i) the weighted average of the Adjusted Net
Mortgage Rates then in effect on the beginning of the related Due Period on the
Group I Mortgage Loans and (ii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the Interest Accrual Period
related to such Distribution Date.

         Loan Group II Cap: With respect to the Group II Mortgage Loans as of
any Distribution Date, the product of (i) the weighted average of the Adjusted
Net Mortgage Rates then in effect on the beginning of the related Due Period on
the Group II Mortgage Loans and (ii) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days in the Interest
Accrual Period related to such Distribution Date.


                                      -20-
<PAGE>

         Loan-to-Value Ratio or LTV: With respect to any First Lien Mortgage
Loan, the ratio (expressed as a percentage) of the original outstanding
principal amount of the First Lien Mortgage Loan as of the Cut-off Date (unless
otherwise indicated), to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination, and (b) if the First Lien Mortgage Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price of
the Mortgaged Property.

         London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.

         Lower Tier Regular Interest: Each of the Class LT-A-1, Class LT-A-2,
Class LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-B-1, Class LT-B-2, Class
LT-B-3, Class LT-Group I, Class LT-Group II and Class LT-Accrual Interests as
described in the Preliminary Statement.

         Lower Tier REMIC: As described in the Preliminary Statement.

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage Loan.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage Loan.

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.

         Moody's: Moody's Investors Service, Inc. If Moody's is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Moody's shall be Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Pass-Through Group, or such other address as Moody's may hereafter furnish to
the Depositor and the Servicer.

         Mortgage: The mortgage, deed of trust or other instrument identified on
the Mortgage Loan Schedule as securing a Mortgage Note.

         Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.

         Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, Prepayment Charges, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage Loans.


                                      -21-
<PAGE>

         Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Schedule I, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Mortgage Loan number; (2) the city, state and zip
code of the Mortgaged Property; (3) the number and type of residential units
constituting the Mortgaged Property; (4) the current Mortgage Rate; (5) the
current net Mortgage Rate; (6) the current Scheduled Payment; (7) with respect
to each Adjustable Rate Mortgage Loan, the Gross Margin; (8) the original term
to maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) with respect to
each First Lien Mortgage Loan, the Loan-to-Value Ratio at origination and with
respect to each Second Lien Mortgage Loan, the Combined Loan-to-Value Ratio at
origination; (12) with respect to each Adjustable Rate Mortgage Loan, the next
Interest Rate Adjustment Date; (13) with respect to each Adjustable Rate
Mortgage Loan, the lifetime Mortgage Rate Cap; (14) whether the Mortgage Loan is
convertible or not; (15) the Servicing Fee; (16) whether such Mortgage Loan is a
Group I Mortgage Loan or a Group II Mortgage Loan; (17) the date such Mortgage
Loan was sold by the Originator to the Purchaser; and (18) whether such Mortgage
Loan provides for a Prepayment Charge as well as the term and amount of such
Prepayment Charge, if any.

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

         Mortgage Rate: The annual rate of interest borne on a Mortgage Note,
which shall be adjusted from time to time in the case of an Adjustable Rate
Mortgage Loan.

         Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage Loan,
the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.

         Mortgaged Property: With respect to each Mortgage Loan, the real
property (or leasehold estate, if applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt evidenced by the related Mortgage
Note.

         Mortgagor: The obligor(s) on a Mortgage Note.

         Net Monthly Excess Cash Flow: For any Distribution Date the amount
remaining for distribution pursuant to subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such subsection).

         Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls exceeds the sum of
the Compensating Interest payments made on such Distribution Date.


                                      -22-
<PAGE>

         NIM Securities: Any debt securities issued by the NIM Trust that are
rated by Standard & Poor's.

         NIM Trust: Morgan Stanley ABS Capital I Inc. NIM Trust 2003-NC8N, a
Delaware statutory trust.

         Non-Delay Certificates: As specified in the Preliminary Statement.

         Non-Permitted Transferee: A Person other than a Permitted Transferee.

         Nonrecoverable P&I Advance: Any P&I Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related late payments,
Insurance Proceeds, Condemnation Proceeds, or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.

         Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or proposed to be made in respect of a Mortgage Loan or REO Property,
which, in the good faith business judgment of the Servicer, will not or, in the
case of a proposed Servicing Advance, would not be ultimately recoverable from
related Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds or
otherwise. The determination by the Servicer that it has made a Nonrecoverable
Servicing Advance or that any proposed Servicing Advances, if made, would
constitute a Nonrecoverable Servicing Advance, shall be evidenced by an
Officer's Certificate delivered to the Trustee.

         Note Account: As defined in the Indenture.

         Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.

         Offered Certificates: As specified in the Preliminary Statement.

         Officer's Certificate: A certificate signed by an officer of the
Servicer with responsibility for the servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant to this Agreement.

         Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer or the Subservicer, reasonably acceptable to the
Trustee; provided, that any Opinion of Counsel relating to (a) qualification of
either the Lower Tier REMIC or Upper Tier REMIC or (b) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Servicer of the
Mortgage Loans, (ii) does not have any material direct or indirect financial
interest in the Servicer of the Mortgage Loans or in an affiliate of either and
(iii) is not connected with the Servicer of the Mortgage Loans as an officer,
employee, director or person performing similar functions.


                                      -23-
<PAGE>

         Optional Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans, as of the last day of the
related Due Period, is equal to 10% or less of the Cut-off Date Pool Principal
Balance.

         Originator: New Century Mortgage Corporation, a California corporation,
and its successors in interest.

         OTS: Office of Thrift Supervision, and any successor thereto.

         Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:

         (i)      Certificates theretofore canceled by the Trustee or delivered
                  to the Trustee for cancellation; and

         (ii)     Certificates in exchange for which or in lieu of which other
                  Certificates have been executed and delivered by the Trustee
                  pursuant to this Agreement.

         Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.

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

         P&I Advance: As to any Mortgage Loan or REO Property, any advance made
by the Servicer in respect of any Remittance Date representing the aggregate of
all payments of principal and interest, net of the Servicing Fee, that were due
during the related Due Period on the Mortgage Loans and that were delinquent on
the related Determination Date, plus certain amounts representing assumed
payments not covered by any current net income on the Mortgaged Properties
acquired by foreclosure or deed in lieu of foreclosure as determined pursuant to
Section 4.01.

         Pass-Through Margin: With respect to each Class of Regular
Certificates, the following percentages: Class A-1 Certificates, 0.43%; Class
A-2 Certificates, 0.36%; Class M-1 Certificates, 0.70%; Class M-2 Certificates,
1.75%; Class M-3 Certificates, 2.10%; Class B-1 Certificates, 3.60%; Class B-2
Certificates, 3.75%; and Class B-3 Certificates, 3.75%. On the first
Distribution Date after the Optional Termination Date, the Pass-Through Margins
shall increase to: Class A-1 Certificates, 0.860%; Class A-2 Certificates,
0.720%; Class M-1 Certificates, 1.050%; Class M-2 Certificates, 2.625%; Class
M-3 Certificates, 3.150%; Class B-1 Certificates, 5.400%; Class B-2
Certificates, 5.625%; and Class B-3 Certificates, 5.625%.

         Pass-Through Rate: For each Class of Certificates and each Lower Tier
Regular Interest, the per annum rate set forth or calculated in the manner
described in the Preliminary Statement.


                                      -24-
<PAGE>

         Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.

         Periodic Mortgage Rate Cap: With respect to an Adjustable Rate Mortgage
Loan, the periodic limit on each Mortgage Rate adjustment as set forth in the
related Mortgage Note.

         Permitted Investments: Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued by the Servicer, the Trustee or any of their respective
Affiliates:

         (i) direct obligations of, or obligations fully guaranteed as to timely
     payment of principal and interest by, the United States or any agency or
     instrumentality thereof, provided such obligations are backed by the full
     faith and credit of the United States;

         (ii) demand and time deposits in, certificates of deposit of, or
     bankers' acceptances (which shall each have an original maturity of not
     more than 90 days and, in the case of bankers' acceptances, shall in no
     event have an original maturity of more than 365 days or a remaining
     maturity of more than 30 days) denominated in United States dollars and
     issued by, any Depository Institution and rated F1+ by Fitch;

         (iii) repurchase obligations with respect to any security described in
     clause (i) above entered into with a Depository Institution (acting as
     principal);

         (iv) securities bearing interest or sold at a discount that are issued
     by any corporation incorporated under the laws of the United States of
     America or any state thereof and that are rated by each Rating Agency that
     rates such securities in its highest long-term unsecured rating categories
     at the time of such investment or contractual commitment providing for such
     investment;

         (v) commercial paper (including both non-interest-bearing discount
     obligations and interest-bearing obligations payable on demand or on a
     specified date not more than 30 days after the date of acquisition thereof)
     that is rated by each Rating Agency that rates such securities in its
     highest short-term unsecured debt rating available at the time of such
     investment;

         (vi) units of money market funds, including money market funds advised
     by the Depositor or an Affiliate thereof, that have been rated "Aaa" by
     Moody's, "AAA" by Standard & Poor's and at least "AAA" by Fitch; and

         (vii) if previously confirmed in writing to the Trustee, any other
     demand, money market or time deposit, or any other obligation, security or
     investment, as may be acceptable to the Rating Agencies as a permitted
     investment of funds backing "Aaa" or "AAA" rated securities;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.


                                      -25-
<PAGE>

         Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, international organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code, (v) a Person that is not a U.S.
Person or a U.S. Person with respect to whom income from a Residual Certificate
is attributable to a foreign permanent establishment or fixed base within the
meaning of an applicable income tax treaty, of such Person or any other U.S.
Person, (vi) an "electing large partnership" within the meaning of Section 775
of the Code and (vii) any other Person so designated by the Depositor based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause either the Lower Tier REMIC or the Upper
Tier REMIC to fail to qualify as a REMIC at any time that the Certificates are
outstanding. The terms "United States", "State" and "international organization"
shall have the meanings set forth in Section 7701 of the Code or successor
provisions. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception of
Freddie Mac, a majority of its board of directors is not selected by such
government unit.

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

         Physical Certificates: As specified in the Preliminary Statement.

         Plan: (a) an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, (b) a "plan" as described in
Section 4975 of the Code, (c) any entity deemed to hold the plan assets of any
of the foregoing by reason of investment by an employee benefit plan or plan in
such entity, or (d) a government plan subject to Similar Law.

         Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans for such
Distribution Date that were Outstanding Mortgage Loans on the Due Date in the
related Due Period.

         Prepayment Charge: Any prepayment premium, penalty or charge collected
by the Servicer with respect to a Mortgage Loan from a Mortgagor in connection
with any voluntary Principal Prepayment in Full pursuant to the terms of the
related Mortgage Note.

         Prepayment Interest Shortfall: With respect to any Remittance Date, the
sum of, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment which is not accompanied by an amount equal to
one month of interest that would have been due on such Mortgage Loan on the next
succeeding Due Date and which was applied by the Servicer to reduce the
outstanding principal balance of such Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period, an amount equal to the product of (a)
the Mortgage Rate net of the Servicing Fee Rate for such Mortgage Loan, (b) the
amount of the Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the
number of days commencing on the date on which such Principal Prepayment was
applied and ending on the last day of the related Prepayment Period.


                                      -26-
<PAGE>

         Prepayment Period: With respect to any Remittance Date, the calendar
month preceding the calendar month in which such Remittance Date occurs.

         Principal Distribution Amount: For any Distribution Date, the sum of
(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)
the Extra Principal Distribution Amount for such Distribution Date.

         Principal Prepayment: Any full or partial payment or other recovery of
principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
which is received in advance of its scheduled Due Date, excluding any Prepayment
Charge thereon.

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

         Principal Remittance Amount: With respect to any Distribution Date, the
amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each scheduled payment of principal on a
Mortgage Loan due during such Due Period and received by the Servicer on or
prior to the related Determination Date or advanced by the Servicer for the
related Remittance Date (including the portion of Insurance Proceeds or
Condemnation Proceeds allocable to principal), and all Principal Prepayments
received during the related Prepayment Period; (ii) the Liquidation Proceeds on
the Mortgage Loans allocable to principal actually collected by the Servicer
during the related Prepayment Period; (iii) the portion of the purchase price
allocable to principal with respect to each Mortgage Loan, the repurchase
obligation for which arose during the related Prepayment Period, that was
repurchased during the period from the prior Distribution Date through
Distribution Account Deposit Date; (iv) all Substitution Adjustment Amounts with
respect to the substitutions of Mortgage Loans that occur during the calendar
month in which such Distribution Date occurs; (v) with respect to the
Distribution Date in October 2003 only, the portion of the Closing Date Deposit
Amount allocable to principal; and (vi) the allocable portion of the proceeds
received with respect to the termination of the Trust Fund (to the extent such
proceeds relate to principal).

         Private Certificates: As specified in the Preliminary Statement.

         Prospectus Supplement: The Prospectus Supplement, dated September 22,
2003, relating to the Offered Certificates.

         PTCE: Department of Labor Prohibited Transaction Class Exemption.

         PUD: A planned unit development.


                                      -27-
<PAGE>

         Purchase Agreement: The Second Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of July 1, 2003, by and between the
Purchaser, as purchaser, and the Responsible Party, as seller.

         Purchaser: Morgan Stanley Mortgage Capital Inc., a New York
corporation, and its successors in interest, as purchaser of the Mortgage Loans
under the Purchase Agreement.

         Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
a given rating or rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers. For purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor and the Servicer.

         Realized Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in connection with the liquidation of
such Liquidated Mortgage Loan and net of the amount of unreimbursed Servicing
Advances with respect to such Liquidated Mortgage Loan.

         Record Date: With respect to any Distribution Date, the close of
business on the Business Day immediately preceding such Distribution Date;
provided, however, that for any Certificate issued in definitive form, the
Record Date shall be the close of business on the last Business Day of the month
preceding the month in which such applicable Distribution Date occurs.

         Reference Bank: As defined in Section 4.04.

         Regular Certificates: As specified in the Preliminary Statement.

         Relief Act Interest Shortfall: With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended,
or any similar state statutes.

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

         REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time as well as provisions of applicable state laws.


                                      -28-
<PAGE>

         Remittance Date: With respect to any Distribution Date, the third
Business Day immediately preceding such Distribution Date.

         REO Disposition: The final sale by the Servicer of any REO Property.

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

         REO Mortgage Loan: A Mortgage Loan where title to the related Mortgaged
Property has been obtained by the Servicer in the name of the Trustee on behalf
of the Certificateholders.

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

         Repurchase Price: With respect to any Mortgage Loan, an amount equal to
the sum of (i) the unpaid principal balance of such Mortgage Loan as of the date
of repurchase, (ii) interest on such unpaid principal balance of such Mortgage
Loan at the Mortgage Rate from the last date through which interest has been
paid and distributed to the Trustee to the date of repurchase, (iii) all
unreimbursed Servicing Advances and (iv) all expenses incurred by the Trustee
arising out of the Trustee's enforcement of the Responsible Party's repurchase
obligation hereunder.

         Request for Release: The Request for Release submitted by the Servicer
to the Trustee, substantially in the form of Exhibit J.

         Residual Certificates: As specified in the Preliminary Statement.

         Responsible Officer: When used with respect to the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any associate, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers who at such time shall be officers to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Agreement.

         Responsible Party: NC Capital Corporation, a California corporation,
and its successors in interest.

         Rule 144A Letter: As defined in Section 5.02(b).

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.


                                      -29-
<PAGE>

         Second Lien Mortgage Loan: A Mortgage Loan secured by a second lien
Mortgage on the related Mortgaged Property.

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

         Senior Enhancement Percentage: With respect to any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated Certificates and (ii) the Subordinated
Amount (in each case after taking into account the distributions of the
Principal Distribution Amount for such Distribution Date) by (y) the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date.

         Senior Specified Enhancement Percentage: As of any date of
determination, 39.00%.

         Servicer: The Provident Bank, an Ohio banking corporation, and its
successors in interest, and if a successor servicer is appointed hereunder, such
successor.

         Servicer Remittance Report: As defined in Section 4.03(d).

         Servicing Advances: The reasonable "out-of-pocket" costs and expenses
(including legal fees) incurred by the Servicer in the performance of its
servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures and
litigation, in respect of a particular Mortgage Loan, (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property and (iv) the performance of its obligations under Sections 3.01, 3.09,
3.13 and 3.15. The Servicer shall not be required to make any Nonrecoverable
Servicing Advances.

         Servicing Fee: With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest at the Servicing Fee Rate on the
applicable Stated Principal Balance of such Mortgage Loan as of the first day of
such calendar month. Such fee shall be payable monthly, for any month or portion
during which the Mortgage Loan is serviced by the Servicer under this Agreement.
The Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, Insurance
Proceeds, Condemnation Proceeds and proceeds received with respect to REO
Properties, to the extent permitted by Section 3.11) of such Scheduled Payment
collected by the Servicer, or as otherwise provided under Section 3.11.

         Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
annum.

         Servicing File: With respect to each Mortgage Loan, the file retained
by the Servicer consisting of originals or copies of all documents in the
Mortgage File which are not delivered to the Trustee in the Custodial File and
copies of the Mortgage Loan Documents set forth in Exhibit K hereto.

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


                                      -30-
<PAGE>

         Similar Law: Applicable law that is substantially similar to the
fiduciary responsibility provisions of ERISA or Section 4975 of the Code.

         60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect to
which any portion of a Scheduled Payment is, as of the last day of the prior Due
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in foreclosure and all REO Property.

         Specified Subordinated Amount: Prior to the Stepdown Date, an amount
equal to 2.25% of the Cut-off Date Pool Principal Balance. On and after the
Stepdown Date, an amount equal to 4.50% of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date, subject, until the
Class Certificate Balance of each Class of LIBOR Certificates has been reduced
to zero, to a minimum amount equal to 0.50% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date; provided, however, that
if, on any Distribution Date, a Delinquency Trigger Event exists, the Specified
Subordinated Amount shall not be reduced to the applicable percentage of the
then current aggregate Stated Principal Balance of the Mortgage Loans until the
Distribution Date on which a Delinquency Trigger Event no longer exists;
provided, further, that, if, on any Distribution Date, a Cumulative Loss Trigger
Event exists, the Specified Subordinated Amount will be an amount equal to 2.75%
of the Cut-off Date Pool Principal Balance until the Distribution Date on which
the Cumulative Loss Trigger Event no longer exists. When the Class Certificate
Balance of each Class of LIBOR Certificates has been reduced to zero, the
Specified Subordinated Amount will thereafter equal zero.

         Standard & Poor's: Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. If Standard & Poor's is designated as a Rating
Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Standard & Poor's shall be Standard & Poor's, 55 Water
Street, New York, New York 10041, Attention: Residential Mortgage Surveillance
Group - Morgan Stanley ABS Capital I Inc. Trust 2003-NC8, or such other address
as Standard & Poor's may hereafter furnish to the Depositor and the Servicer.

         Startup Day: The Closing Date.

         Stated Principal Balance: As to each Mortgage Loan and as of any date
of determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
minus (ii) all amounts previously remitted to the Trustee with respect to the
related Mortgage Loan representing payments or recoveries of principal including
advances in respect of scheduled payments of principal. For purposes of any
Distribution Date, the Stated Principal Balance of any Mortgage Loan will give
effect to any scheduled payments of principal received by the Servicer on or
prior to the related Determination Date or advanced by the Servicer for the
related Remittance Date and any unscheduled principal payments and other
unscheduled principal collections received during the related Prepayment Period.


                                      -31-
<PAGE>

         Stepdown Date: The later to occur of (i) the earlier to occur of (a)
the Distribution Date in October 2006 and (b) the Distribution Date following
the Distribution Date on which the aggregate Class Certificate Balances of the
Class A Certificates have been reduced to zero and (ii) the first Distribution
Date on which the Senior Enhancement Percentage (calculated for this purpose
only after taking into account payments of principal on the Mortgage Loans
applied to reduce the Stated Principal Balance of the Mortgage Loans for the
applicable Distribution Date but prior to any applications of Principal
Distribution Amount to the Certificates) is greater than or equal to the Senior
Specified Enhancement Percentage.

         Subordinated Amount: As of any Distribution Date, the excess, if any,
of (a) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date over (b) the aggregate of the Class Certificate Balances of
the LIBOR Certificates as of such Distribution Date (after giving effect to the
payment of the Principal Remittance Amount on such Certificates on such
Distribution Date).

         Subordinated Certificates: As specified in the Preliminary Statement.

         Subordination Deficiency: With respect to any Distribution Date, the
excess, if any, of (a) the Specified Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.

         Subordination Reduction Amount: With respect to any Distribution Date
on or after the Stepdown Date on which no Trigger Event exists, an amount equal
to the lesser of (a) the Excess Subordinated Amount and (b) the Total Monthly
Excess Spread.

         Subservicer: As defined in Section 3.02(a).

         Subservicing Account: As defined in Section 3.08.

         Subservicing Agreements: As defined in Section 3.02(a).

         Substitute Mortgage Loan: A Mortgage Loan substituted by the
Responsible Party for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the form
of Exhibit J, (i) have a Stated Principal Balance, after deduction of the
principal portion of the Scheduled Payment due in the month of substitution, not
in excess of, and not more than 10% less than, the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) be accruing interest at a rate no lower than and
not more than 1% per annum higher than, that of the Deleted Mortgage Loan; (iii)
have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;
(iv) have a remaining term to maturity no greater than (and not more than one
year less than that of) the Deleted Mortgage Loan; and (v) comply with each
representation and warranty set forth in Section 2.03.

         Substitution Adjustment Amount: As defined in Section 2.03.

         Tax Service Contract: As defined in Section 3.09(a).


                                      -32-
<PAGE>

         Telerate Page 3750: The display page currently so designated on the
Bridge Telerate Service (or such other page as may replace that page on that
service for displaying comparable rates or prices).

         Total Monthly Excess Spread: As to any Distribution Date, an amount
equal to the excess if any, of (i) the interest on the Mortgage Loans received
by the Servicer on or prior to the related Determination Date or advanced by the
Servicer for the related Remittance Date (net of Expense Fees) over (ii) the sum
of the amounts payable to the Certificates pursuant to Section 4.02(a)(i) on
such Distribution Date.

         Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.

         Transfer Affidavit: As defined in Section 5.02(c).

         Transferor Certificate: As defined in Section 5.02(b).

         Trigger Event: Either a Cumulative Loss Trigger Event or a Delinquency
Trigger Event.

         Trust: The express trust created hereunder in Section 2.01(c).

         Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest and principal with respect thereto received
on or after the related Cut-off Date, other than such amounts which were due on
the Mortgage Loans on or prior to the related Cut-off Date; (ii) the Collection
Account, Excess Reserve Fund Account, the Distribution Account, and all amounts
deposited therein pursuant to the applicable provisions of this Agreement; (iii)
property that secured a Mortgage Loan and has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise; (iv) the Closing Date Deposit Amount;
and (v) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.

         Trustee: Deutsche Bank National Trust Company, and its successors in
interest and, if a successor trustee is appointed hereunder, such successor.

         Trustee Fee: As to any Distribution Date, an amount equal to the
product of (a) one-twelfth of the Trustee Fee Rate and (b) (i) the aggregate
Stated Principal Balance of the Mortgage Loans as of the first day of the
related Interest Accrual Period and (ii) with respect to the Distribution Date
in October 2003 only, the portion of the Closing Date Deposit Amount allocable
to principal.

         Trustee Fee Rate: With respect to each Mortgage Loan, 0.0033% per
annum.

         Trustee Float Period: With respect to the Distribution Date and the
related amounts in the Distribution Account, the period commencing on the
Business Day immediately preceding such Distribution Date and ending on such
Distribution Date.


                                      -33-
<PAGE>

         Underwriters' Exemption: Any exemption listed under footnote 1 of, and
amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (2002),
or any successor exemption.

         Underwriting Guidelines: The underwriting guidelines attached to the
Purchase Agreement.

         Unpaid Interest Amounts: As of any Distribution Date and any Class of
Certificates, the sum of (a) the portion of the Accrued Certificate Interest
Distribution Amount from Distribution Dates prior to the current Distribution
Date remaining unpaid immediately prior to the current Distribution Date and (b)
interest on the amount in clause (a) above at the applicable Pass-Through Rate
(to the extent permitted by applicable law).

         Unpaid Realized Loss Amount: With respect to any Class of Subordinated
Certificates and as to any Distribution Date, is the excess of (i) Applied
Realized Loss Amounts with respect to such Class over (ii) the sum of all
distributions in reduction of such Applied Realized Loss Amounts on all previous
Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates in respect of any Unpaid Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.

         Upper Tier Regular Interest: As described in the Preliminary Statement.

         Upper Tier REMIC: As described in the Preliminary Statement.

         U.S. Person: (i) A citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
State thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.

         Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.

         WAC Cap: With respect to the Mortgage Loans as of any Distribution
Date, the product of (i) the weighted average of the Adjusted Net Mortgage Rates
then in effect on the beginning of the related Due Period on the Mortgage Loans
and (ii) a fraction, the numerator of which is 30 and the denominator of which
is the actual number of days in the Interest Accrual Period related to such
Distribution Date.


                                      -34-
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for the benefit of the
Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust,
hereby accepts the Trust Fund.

         (b) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered or caused to be delivered to the Trustee for
the benefit of the Certificateholders the following documents or instruments
with respect to each Mortgage Loan so assigned:

         (i) the original Mortgage Note bearing all intervening endorsements
     showing a complete chain of endorsement from the originator to the last
     endorsee, endorsed "Pay to the order of _____________, without recourse"
     and signed (which may be by facsimile signature) in the name of the last
     endorsee by an authorized officer. To the extent that there is no room on
     the face of the Mortgage Notes for endorsements, the endorsement may be
     contained on an allonge, if state law so allows and the Trustee is so
     advised in writing by the Responsible Party that state law so allows;

         (ii) the original of any guaranty executed in connection with the
     Mortgage Note;

         (iii) the original Mortgage with evidence of recording thereon or a
     certified true copy of such Mortgage submitted for recording. If, in
     connection with any Mortgage Loan, the original Mortgage cannot be
     delivered with evidence of recording thereon on or prior to the Closing
     Date because of a delay caused by the public recording office where such
     Mortgage has been delivered for recordation or because such Mortgage has
     been lost or because such public recording office retains the original
     recorded Mortgage, the Responsible Party shall deliver or cause to be
     delivered to the Trustee a photocopy of such Mortgage, together with (A) in
     the case of a delay caused by the public recording office, an Officer's
     Certificate of the Responsible Party or a certificate from an escrow
     company, a title company or closing attorney stating that such Mortgage has
     been dispatched to the appropriate public recording office for recordation
     and that the original recorded Mortgage or a copy of such Mortgage
     certified by such public recording office to be a true and complete copy of
     the original recorded Mortgage will be promptly delivered to the Trustee
     upon receipt thereof by the Responsible Party; or (B) in the case of a
     Mortgage where a public recording office retains the original recorded
     Mortgage or in the case where a Mortgage is lost after recordation in a
     public recording office, a copy of such Mortgage certified by such public
     recording office to be a true and complete copy of the original recorded
     Mortgage;


                                      -35-
<PAGE>

         (iv) the originals of all assumption, modification, consolidation or
     extension agreements, with evidence of recording thereon;

         (v) the original Assignment of Mortgage for each Mortgage Loan endorsed
     in blank;

         (vi) the originals of all intervening assignments of Mortgage (if any)
     evidencing a complete chain of assignment from the applicable originator to
     the last endorsee with evidence of recording thereon, or if any such
     intervening assignment has not been returned from the applicable recording
     office or has been lost or if such public recording office retains the
     original recorded assignments of Mortgage, the Responsible Party shall
     deliver or cause to be delivered a photocopy of such intervening
     assignment, together with (A) in the case of a delay caused by the public
     recording office, an Officer's Certificate of the Responsible Party or a
     certificate from an escrow company, a title company or a closing attorney
     stating that such intervening assignment of Mortgage has been dispatched to
     the appropriate public recording office for recordation and that such
     original recorded intervening assignment of Mortgage or a copy of such
     intervening assignment of Mortgage certified by the appropriate public
     recording office to be a true and complete copy of the original recorded
     intervening assignment of Mortgage will be promptly delivered to the
     Trustee upon receipt thereof by the Responsible Party; or (B) in the case
     of an intervening assignment where a public recording office retains the
     original recorded intervening assignment or in the case where an
     intervening assignment is lost after recordation in a public recording
     office, a copy of such intervening assignment certified by such public
     recording office to be a true and complete copy of the original recorded
     intervening assignment;

         (vii) the original mortgagee title insurance policy or, in the event
     such original title policy is unavailable, a certified true copy of the
     related policy binder or commitment for title certified to be true and
     complete by the title insurance company; and

         (viii) the original of any security agreement, chattel mortgage or
     equivalent document executed in connection with the Mortgage (if provided).

         The Responsible Party shall cause to be delivered to the Trustee the
applicable recorded document promptly upon receipt from the respective recording
office but in no event later than 120 days from the Closing Date.

         From time to time, the Depositor or the Servicer, as applicable, shall
forward to the Trustee, additional original documents, additional documents
evidencing an assumption, modification, consolidation or extension of a Mortgage
Loan, in accordance with the terms of this Agreement upon receipt of such
documents. All such mortgage documents held by the Trustee as to each Mortgage
Loan shall constitute the "Custodial File".


                                     -36-
<PAGE>

         On or prior to the Closing Date, the Responsible Party shall deliver to
the Trustee, Assignments of Mortgages, in blank, for each Mortgage Loan. The
Responsible Party shall cause the Assignments of Mortgages and complete
recording information to be provided to the Servicer in a reasonably acceptable
manner. No later than thirty (30) Business Days following the later of the
Closing Date and the date of receipt by the Servicer of the complete recording
information for a Mortgage, the Servicer shall promptly submit or cause to be
submitted for recording, at the expense of the Responsible Party and at no
expense to the Trust Fund, the Trustee, the Servicer, or the Depositor, in the
appropriate public office for real property records, each Assignment of Mortgage
referred to in Section 2.01(b)(v). Notwithstanding the foregoing, however, for
administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignments of Mortgage shall not be required to be completed and
submitted for recording with respect to any Mortgage Loan (i) if the Trustee and
each Rating Agency have received an opinion of counsel, satisfactory in form and
substance to the Trustee and each Rating Agency to the effect that the
recordation of such Assignments of Mortgage in any specific jurisdiction is not
necessary to protect the Trustee's interest in the related Mortgage Note or (ii)
if the Rating Agencies have each notified the Depositor in writing that not
recording any such Assignments of Mortgage would not cause the initial ratings
on any LIBOR Certificates to be downgraded or withdrawn; provided, however, that
the Servicer shall not be held responsible or liable for any loss that occurs
because an Assignment of Mortgage was not recorded, but only to the extent that
the Servicer does not have prior knowledge of the act or omission that causes
such loss. However, with respect to the Assignments of Mortgage referred to in
clauses (i) and (ii) above, if foreclosure proceedings occur against a Mortgaged
Property, the Depositor shall notify the Servicer and the Servicer shall record
such Assignment of Mortgage at the expense of the Responsible Party. If the
Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to
"Deutsche Bank National Trust Company, as trustee under the Pooling and
Servicing Agreement dated as of September 1, 2003, Morgan Stanley ABS Capital I
Inc. Trust 2003-NC8". In the event that any such Assignment of Mortgage is lost
or returned unrecorded because of a defect therein, the Responsible Party shall
promptly cause to be delivered a substitute Assignment of Mortgage to cure such
defect and thereafter cause each such assignment to be duly recorded.

         In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Trustee within 90 days following the Closing Date, and in the event that the
Responsible Party does not cure such failure within 30 days of discovery or
receipt of written notification of such failure from the Depositor, the related
Mortgage Loan shall, upon the request of the Depositor, be repurchased by the
Responsible Party at the price and in the manner specified in Section 2.03. The
foregoing repurchase obligation shall not apply in the event that the
Responsible Party cannot deliver such original or copy of any document submitted
for recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided, that the Responsible Party shall instead deliver a
recording receipt of such recording office or, if such recording receipt is not
available, an officer's certificate of an officer of the Responsible Party,
confirming that such document has been accepted for recording.

         Notwithstanding anything to the contrary contained in this Section
2.01, in those instances where the public recording office retains or loses the
original Mortgage or assignment after it has been recorded, the obligations of
the Responsible Party shall be deemed to have been satisfied upon delivery by
the Responsible Party to the Trustee, prior to the Closing Date of a copy of
such Mortgage or assignment, as the case may be, certified (such certification
to be an original thereof) by the public recording office to be a true and
complete copy of the recorded original thereof.


                                      -37-
<PAGE>

         (c) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "MORGAN STANLEY ABS CAPITAL
I INC. TRUST 2003-NC8" and Deutsche Bank National Trust Company is hereby
appointed as Trustee in accordance with the provisions of this Agreement.

         (d) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the sale,
transfer, assignment, set over and conveyance by the Depositor to the Trust of
all the right, title and interest of the Depositor in and to the Trust Fund
(including, without limitation, the Mortgage Loans) pursuant to Section 2.01(a).
The Trustee on behalf of the Trust is hereby authorized and directed to enter
into the Cap Agreement.

         Section 2.02 Acceptance by the Trustee of the Mortgage Loans. The
Trustee shall acknowledge, on the Closing Date, receipt by the Trustee, of the
documents identified in the Initial Certification in the form annexed hereto as
Exhibit E, and declares that it holds and will hold such documents and the other
documents delivered to it pursuant to Section 2.01, and that it holds or will
hold such other assets as are included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders. The
Trustee shall maintain possession of the related Mortgage Notes in the State of
California unless otherwise permitted by the Rating Agencies.

         In connection with the Closing Date, the Trustee shall be required to
deliver via facsimile (with original to follow the next Business Day) to the
Depositor and the Servicer an Initial Certification prior to the Closing Date,
or, as the Depositor agrees to, on the Closing Date, certifying receipt of a
Mortgage Note and Assignment of Mortgage for each Mortgage Loan. The Trustee
shall not be responsible to verify the validity, sufficiency or genuineness of
any document in any Custodial File.

         Within 90 days after the Closing Date, the Trustee shall ascertain that
all documents identified in the Document Certification and Exception Report in
the form attached hereto as Exhibit F are in its possession, and shall deliver
to the Depositor and the Servicer a Document Certification and Exception Report,
in the form annexed hereto as Exhibit F, to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as an
exception and not covered by such certification): (i) all documents identified
in the Document Certification and Exception Report and required to be reviewed
by it are in its possession; (ii) such documents have been reviewed by it and
appear regular on their face and relate to such Mortgage Loan; (iii) based on
its examination and only as to the foregoing documents, the information set
forth in items (1), (2), (7) and (9) of the Mortgage Loan Schedule and items
(1), (9) and (17) of the Data Tape Information respecting such Mortgage Loan is
correct; and (iv) each Mortgage Note has been endorsed as provided in Section
2.01 of this Agreement. The Trustee shall not be responsible to verify the
validity, sufficiency or genuineness of any document in any Custodial File.


                                      -38-
<PAGE>

         The Trustee shall retain possession and custody of each Custodial File
in accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Custodial File as come into the possession of the Servicer from time to time.

         The Responsible Party shall deliver to the Servicer copies of all
trailing documents required to be included in the Custodial File at the same
time the original or certified copies thereof are delivered to the Trustee,
including but not limited to such documents as the title insurance policy and
any other Mortgage Loan documents upon return from the public recording office.
The documents shall be delivered by the Responsible Party at the Responsible
Party's expense to the Servicer.

         Section 2.03 Representations and Warranties; Remedies for Breaches of
Representations and Warranties with Respect to the Mortgage Loans. (a) The
Servicer hereby makes the representations and warranties set forth in Schedule
II hereto to the Depositor and the Trustee, as of the date set forth in such
schedule.

         (b) The Responsible Party hereby makes the representations and
warranties, set forth in Schedule III and Schedule IV hereto, to the Depositor,
the Servicer and the Trustee.

         (c) It is understood and agreed by the Servicer and the Responsible
Party that the representations and warranties set forth in Section 2.03 shall
survive the transfer of the Mortgage Loans by the Depositor to the Trustee, and
shall inure to the benefit of the Depositor and the Trustee notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Mortgage File. Upon
discovery by any of the Responsible Party, the Depositor, the Trustee or the
Servicer of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other.

         (d) Within 30 days of the earlier of either discovery by or notice to
the Responsible Party that any Mortgage Loan does not conform to the
requirements as determined in the Trustee's review of the related Custodial File
or within 60 days of the earlier of either discovery by or notice to the
Responsible Party of any breach of a representation or warranty, set forth in
Section 2.03(b), that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Responsible Party shall use its best efforts to cause to be remedied a material
defect in a document constituting part of a Mortgage File or promptly to cure
such breach in all material respects and, if such defect or breach cannot be
remedied, the Responsible Party shall, at the Depositor's option as specified in
writing and provided to the Responsible Party and the Trustee, (i) if such 30 or
60 day period, as applicable, expires prior to the second anniversary of the
Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from the
Trust Fund and substitute in its place a Substitute Mortgage Loan, in the manner
and subject to the conditions set forth in this Section 2.03; or (ii) repurchase
such Mortgage Loan at the Repurchase Price; provided, however, that any such
substitution pursuant to clause (i) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05, if
any, and a Request for Release substantially in the form of Exhibit J, and the
delivery of the Mortgage File to the Trustee for any such Substitute Mortgage
Loan. Notwithstanding the foregoing, a breach (i) which causes a Mortgage Loan
not to constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code or (ii) by the Responsible Party of any of the
representations and warranties set forth in clause (46), (47), (50), (53) or
(58) of Schedule III, in each case, will be deemed automatically to materially
and adversely affect the value of such Mortgage Loan and the interests of the
Trustee and Certificateholders in such Mortgage Loan. In the event that the
Trustee receives notice of a breach by the Responsible Party of any of the
representations and warranties set forth in clause (46), (47), (50), (53) or
(58) of Schedule III, the Trustee shall give notice of such breach to the
Responsible Party and request the Responsible Party to repurchase the Mortgage
Loan at the Repurchase Price within sixty (60) days of the Responsible Party
receipt of such notice. The Responsible Party shall repurchase each such
Mortgage Loan within 60 days of the earlier of discovery or receipt of notice
with respect to each such Mortgage Loan.


                                      -39-
<PAGE>

         (e) With respect to any Substitute Mortgage Loan or Loans, the
Responsible Party shall deliver to the Trustee for the benefit of the
Certificateholders the Mortgage Note, the Mortgage, the related assignment of
the Mortgage, and such other documents and agreements as are required by Section
2.01, with the Mortgage Note endorsed and the Mortgage assigned as required by
Section 2.01. No substitution is permitted to be made in any calendar month
after the Determination Date for such month. Scheduled Payments due with respect
to Substitute Mortgage Loans in the Due Period of substitution shall not be part
of the Trust Fund and will be retained by the Responsible Party on the next
succeeding Distribution Date. For the Due Period of substitution, distributions
to Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the Responsible Party shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.

         (f) The Servicer, based upon information provided by the Responsible
Party, shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Substitute Mortgage Loan or Loans and the Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Responsible Party shall be
deemed to have made with respect to such Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties made pursuant to
Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution
and the deposit to the Collection Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release the Mortgage File held for the benefit of
the Certificateholders relating to such Deleted Mortgage Loan to the Responsible
Party and shall execute and deliver at the Responsible Party's direction such
instruments of transfer or assignment prepared by the Responsible Party, in each
case without recourse, as shall be necessary to vest title in the Responsible
Party, of the Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this Section 2.03.

         (g) For any month in which the Responsible Party substitutes one or
more Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (if any) by which the aggregate unpaid
principal balance of all such Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (after application of the scheduled principal portion of
the Scheduled Payments due in the Due Period of substitution). The amount of
such shortage (the "Substitution Adjustment Amount") plus, if the Responsible
Party is not the Servicer, an amount equal to the aggregate of any unreimbursed
Advances with respect to such Deleted Mortgage Loans shall be deposited into the
Collection Account by the Responsible Party on or before the Distribution
Account Deposit Date for the Distribution Date in the month succeeding the
calendar month during which the related Mortgage Loan became required to be
purchased or replaced hereunder.


                                      -40-
<PAGE>

         (h) In addition to such repurchase obligation, the Responsible Party
shall indemnify the Depositor, any of its Affiliates, the Servicer and the
Trustee and hold such parties harmless against any losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand, defense
or assertion based on or grounded upon, or resulting from, a breach by the
Responsible Party of any of its representations and warranties or obligations
contained in this Agreement.

         (i) In the event that the Responsible Party shall have repurchased a
Mortgage Loan, the Repurchase Price therefor shall be deposited by the Servicer
in the Collection Account pursuant to Section 3.10 on or before the Distribution
Account Deposit Date for the Distribution Date in the month following the month
during which the Responsible Party became obligated hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the Repurchase Price, and
receipt of a Request for Release in the form of Exhibit J hereto, the Trustee
shall release the related Custodial File held for the benefit of the
Certificateholders to such Person as directed by the Servicer, and the Trustee
shall execute and deliver at such Person's direction such instruments of
transfer or assignment prepared by such Person, in each case without recourse,
as shall be necessary to transfer title from the Trustee.

         It is understood and agreed that the obligation of the Responsible
Party under this Agreement to cure or repurchase any Mortgage Loan as to which a
breach has occurred and is continuing shall constitute the sole remedy against
such Persons respecting such breach available to Certificateholders, the
Depositor, or the Trustee on their behalf.

         The provisions of this Section 2.03 shall survive delivery of the
respective Custodial Files to the Trustee for the benefit of the
Certificateholders.

         Section 2.04 The Depositor and the Mortgage Loans. The Depositor hereby
represents and warrants to the Trustee with respect to each Mortgage Loan as of
the date hereof or such other date set forth herein that as of the Closing Date,
and immediately prior to the transfer of the Mortgage Loans by it to the Trust,
the Depositor had good title to the Mortgage Loans, free and clear of any liens,
charges, claims or encumbrances whatsoever.

         The Depositor hereby assigns, transfers and conveys to the Trustee all
of its rights with respect to the Mortgage Loans.

         Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions. Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 30 days after the
Closing Date unless the Responsible Party delivers to the Trustee an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on either the Lower Tier REMIC or Upper Tier REMIC or
contributions after the Startup Day, as defined in Sections 860F(a)(2) and
860G(d) of the Code, respectively, or (ii) cause either the Lower Tier REMIC or
Upper Tier REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding.


                                      -41-
<PAGE>

         Section 2.06 Execution and Delivery of Certificates. The Trustee
acknowledges the transfer and assignment to it of the Trust Fund and,
concurrently with such transfer and assignment, has executed and delivered to or
upon the order of the Depositor, the Certificates in authorized denominations
evidencing directly or indirectly the entire ownership of the Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates.

         Section 2.07 REMIC Matters. The Preliminary Statement sets forth the
designations for federal income tax purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC Provisions shall be the Closing
Date. The "latest possible maturity date" is the Distribution Date occurring in
September 2033, which is the Distribution Date following the latest Mortgage
Loan maturity date.

         Section 2.08 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Trustee and the
Servicer that as of the date of this Agreement or as of such date specifically
provided herein:

         (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 convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;

         (c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute 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 as have been made on or prior to the Closing Date;


                                      -42-
<PAGE>

         (e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) 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 (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;

         (f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;

         (g) The Depositor is not in 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 that may materially and adversely affect its performance
hereunder; and

         (h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee on the Closing Date, the Depositor had good title to, and was the
sole owner of each Mortgage Loan, free of any interest of any other Person, and
the Depositor has transferred all right, title and interest in each Mortgage
Loan to the Trustee. 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 Trustee, for the benefit of the Certificateholders, all right,
title, and interest of the Depositor thereto as note holder and mortgagee or
(ii) to grant to the Trustee, for the benefit of the Certificateholders, the
security interest referred to in Section 10.04 hereof.

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.08 shall survive delivery of the
respective Custodial Files to the Trustee and shall inure to the benefit of the
Trustee.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         Section 3.01 Servicer to Service Mortgage Loans. (a) For and on behalf
of the Certificateholders, the Servicer shall service and administer the
Mortgage Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:


                                      -43-
<PAGE>

         (i) any relationship that the Servicer, any Subservicer or any
     Affiliate of the Servicer or any Subservicer may have with the related
     Mortgagor;

         (ii) the ownership or non-ownership of any Certificate by the Servicer
     or any Affiliate of the Servicer;

         (iii) the Servicer's obligation to make P&I Advances or Servicing
     Advances; or

         (iv) the Servicer's or any Subservicer's right to receive compensation
     for its services hereunder or with respect to any particular transaction.

         To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Subservicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer covenants that its computer and other systems used in servicing the
Mortgage Loans operate in a manner such that the Servicer can service the
Mortgage Loans in accordance with the terms of this Pooling and Servicing
Agreement. The Servicer shall also comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any standard
hazard insurance policy. Subject to Section 3.16, the Trustee shall execute, at
the written request of the Servicer, and furnish to the Servicer and any
Subservicer such documents provided to the Trustee as are necessary or
appropriate to enable the Servicer or any Subservicer to carry out their
servicing and administrative duties hereunder, and the Trustee hereby grants to
the Servicer, and this Agreement shall constitute, a power of attorney to carry
out such duties including a power of attorney to take title to Mortgaged
Properties after foreclosure on behalf of the Trustee. The Trustee shall execute
a separate power of attorney in favor of the Servicer for the purposes described
herein to the extent necessary or desirable to enable the Servicer to perform
its duties hereunder. The Trustee shall not be liable for the actions of the
Servicer or any Subservicers under such powers of attorney. Notwithstanding
anything contained herein to the contrary, neither the Servicer nor any
Subservicer shall without the Trustee's consent: (i) initiate any action, suit
or proceeding solely under the Trustee's name without indicating the Servicer's
or Subservicer's, as applicable, representative capacity, or (ii) take any
action with the intent to, or which actually does cause, the Trustee to be
registered to do business in any state.


                                      -44-
<PAGE>

         (b) Subject to Section 3.09(b) hereof, in accordance with the standards
of the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.
Any cost incurred by the Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.

         (c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (except for a reduction of interest payments resulting from the
application of the Soldiers' and Sailors' Relief Act of 1940, as amended, or any
similar state statutes) or (ii) permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and (B) cause
either the Upper Tier REMIC or the Lower Tier REMIC to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions after the startup day" under the REMIC Provisions, or (iii)
except as provided in Section 3.07(a), waive any Prepayment Charges.

         (d) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

         Section 3.02 Subservicing Agreements between the Servicer and
Subservicers. (a) The Servicer may enter into subservicing agreements with
subservicers (each, a "Subservicer"), for the servicing and administration of
the Mortgage Loans ("Subservicing Agreements"). The Servicer shall, within a
reasonable period of time, give notice to the Trustee of any such Subservicing
Agreement. The Trustee shall not be required to review or consent to such
Subservicing Agreements and shall have no liability in connection therewith.

         (b) Each Subservicer shall be (i) authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution that has deposit accounts
insured by the FDIC and (iii) a Freddie Mac or Fannie Mae approved mortgage
servicer. Each Subservicing Agreement must impose on the Subservicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Subservicing Agreement and will be familiar with
the terms thereof. The terms of any Subservicing Agreement will not be
inconsistent with any of the provisions of this Agreement. The Servicer and the
Subservicers may enter into and make amendments to the Subservicing Agreements
or enter into different forms of Subservicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Trustee, without the consent of
the Trustee. Any variation without the consent of the Trustee from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefor prohibited. The Servicer shall deliver to the
Trustee and the Depositor copies of all Subservicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution and
delivery of such instruments.


                                      -45-
<PAGE>

         (c) As part of its servicing activities hereunder, the Servicer (except
as otherwise provided in the last sentence of this paragraph), for the benefit
of the Trustee, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement, including, without limitation, any obligation to
make advances in respect of delinquent payments as required by a Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.

         Section 3.03 Successor Subservicers. The Servicer shall be entitled to
terminate any Subservicing Agreement and the rights and obligations of any
Subservicer pursuant to any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement. In the event of termination of
any Subservicer, all servicing obligations of such Subservicer shall be assumed
simultaneously by the Servicer without any act or deed on the part of such
Subservicer or the Servicer, and the Servicer either shall service directly the
related Mortgage Loans or shall enter into a Subservicing Agreement with a
successor Subservicer which qualifies under Section 3.02.

         Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).

         Section 3.04 Liability of the Servicer. Notwithstanding any
Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Subservicer or reference
to actions taken through a Subservicer or otherwise, the Servicer shall remain
obligated and primarily liable to the Trustee for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.


                                      -46-
<PAGE>

         Section 3.05 No Contractual Relationship between Subservicers and the
Trustee. Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee (or any successor Servicer) shall not be deemed
a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.

         Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee. In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of an Event of Default), the
Trustee, or its designee or the successor Servicer if the successor is not the
Trustee, shall thereupon assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, with copies thereof provided to the Trustee or the successor Servicer if
the successor is not the Trustee, prior to the Trustee or the successor Servicer
if the successor is not the Trustee, assuming such rights and obligations,
unless the Trustee elects to terminate any Subservicing Agreement in accordance
with its terms as provided in Section 3.03.

         Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Depositor, the Trustee, their designees or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.

         The Servicer at its expense shall, upon request of the Trustee, its
designee or the successor Servicer deliver to the assuming party all documents
and records relating to each Subservicing Agreement and the Mortgage Loans then
being serviced and an accounting of amounts collected and held by or on behalf
of it, and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.


                                      -47-
<PAGE>

         Section 3.07 Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any applicable Insurance Policy, follow such collection procedures as it
would follow with respect to mortgage loans comparable to the Mortgage Loans and
held for its own account. Consistent with the foregoing and Accepted Servicing
Practices, the Servicer may (i) waive any late payment charge or, if applicable,
any penalty interest, or (ii) extend the due dates for the Scheduled Payments
due on a Mortgage Note for a period of not greater than 180 days; provided, that
any extension pursuant to clause (ii) above shall not affect the amortization
schedule of any Mortgage Loan for purposes of any computation hereunder, except
as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements, subject to Section 4.01(d) pursuant to which the Servicer shall
not be required to make any such advances that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer may waive, in whole or in part, a
Prepayment Charge only under the following circumstances: (i) such waiver
relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and the related Mortgage Loan
or (ii) such Prepayment Charge is not permitted to be collected by applicable
law. If a Prepayment Charge is waived other than as permitted by the prior
sentence, then the Servicer is required to pay the amount of such waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by depositing such amount into the Collection Account together with and at the
time that the amount prepaid on the related Mortgage Loan is required to be
deposited into the Collection Account; provided, however, that the Servicer
shall not have an obligation to pay the amount of any uncollected Prepayment
Charge if the failure to collect such amount is the direct result of inaccurate
or incomplete information on the Mortgage Loan Schedule in effect at such time.

         (b) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders, to receive any Basis
Risk Payment and any Interest Rate Cap Payment and to secure their limited
recourse obligation to pay to the LIBOR Certificateholders Basis Risk
CarryForward Amounts.

         (ii) On each Distribution Date, the Trustee shall deposit the amount of
     any Basis Risk Payment and any Interest Rate Cap Payment for such date into
     the Excess Reserve Fund Account.

         (c) (i) On each Distribution Date on which there exists a Basis Risk
CarryForward Amount on any Class of Certificates, the Trustee shall (1) withdraw
from the Distribution Account and deposit in the Excess Reserve Fund Account, as
set forth in Section 4.02(a)(iii)(M), the lesser of (x) the Class X
Distributable Amount (without regard to the reduction in the definition thereof
with respect to the Basis Risk Payment) (to the extent remaining after the
distributions specified in Sections 4.02(a)(iii)(A)-(L)) and (y) the aggregate
Basis Risk CarryForward Amounts for such Distribution Date and (2) withdraw from
the Excess Reserve Fund Account amounts necessary to pay to such Class or
Classes of Certificates the Basis Risk CarryForward Amount. Such payments shall
be allocated to those Classes on a pro rata basis based upon the amount of Basis
Risk CarryForward Amount owed to each such Class and shall be paid in the
priority set forth in Sections 4.02(a)(iii)(N)-(O) hereof.


                                      -48-
<PAGE>

         (ii) The Trustee shall account for the Excess Reserve Fund Account as
     an asset of a grantor trust under subpart E, Part I of the subchapter J of
     the Code and not an asset of any REMIC created pursuant to this Agreement.
     The beneficial owners of the Excess Reserve Fund Account are the Class X
     Certificateholders. For all federal tax purposes, amounts transferred by
     the Upper Tier REMIC to the Excess Reserve Fund Account shall be treated as
     distributions by the Trustee to the Class X Certificateholders.

         (iii) Any Basis Risk CarryForward Amounts paid by the Trustee to the
     LIBOR Certificateholders shall be accounted for by the Trustee as amounts
     paid first to the Holders of the Class X Certificates and then to the
     respective Class or Classes of LIBOR Certificates. In addition, the Trustee
     shall account for the LIBOR Certificateholders' rights to receive payments
     of Basis Risk CarryForward Amounts as rights in a limited recourse interest
     rate cap contract written by the Class X Certificateholders in favor of the
     LIBOR Certificateholders.

         (iv) Notwithstanding any provision contained in this Agreement, the
     Trustee shall not be required to make any payments from the Excess Reserve
     Fund Account except as expressly set forth in this Section 3.07(c).

         (d) The Trustee shall establish and maintain the Distribution Account
on behalf of the Certificateholders. The Depositor shall cause to be deposited
into the Distribution Account on the Closing Date the Closing Date Deposit
Amount. The Trustee shall, promptly upon receipt, deposit in the Distribution
Account and retain therein the following:

         (i) the aggregate amount remitted by the Servicer to the Trustee
     pursuant to Section 3.11;

         (ii) any amount deposited by the Servicer pursuant to Section 3.12(b)
     in connection with any losses on Permitted Investments; and

         (iii) any other amounts deposited hereunder which are required to be
     deposited in the Distribution Account.

         In the event that the Servicer shall remit any amount not required to
be remitted, it may at any time direct the Trustee in writing to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 4.02.

         (e) The Trustee may invest the funds in the Distribution Account, in
one or more Permitted Investments, in accordance with Section 3.12. The Servicer
shall direct the Trustee to withdraw from the Distribution Account and to remit
to the Servicer no less than monthly, all income and gain realized from the
investment of funds deposited in the Distribution Account (except during the
Trustee Float Period). The Trustee may withdraw from the Distribution Account
any income or gain earned from the investment of funds deposited therein during
the Trustee Float Period for its own benefit.


                                      -49-
<PAGE>

         (f) The Servicer shall give notice to the Trustee, each Rating Agency
and the Depositor of any proposed change of the location of the Collection
Account within a reasonable period of time prior to any change thereof.

         Section 3.08 Subservicing Accounts. In those cases where a Subservicer
is servicing a Mortgage Loan pursuant to a Subservicing Agreement, the
Subservicer will be required to establish and maintain one or more accounts
(collectively, the "Subservicing Account"). The Subservicing Account shall be an
Eligible Account and shall otherwise be acceptable to the Servicer. The
Subservicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Subservicer's
receipt thereof, all proceeds of Mortgage Loans received by the Subservicer less
its servicing compensation to the extent permitted by the Subservicing
Agreement, and shall thereafter deposit such amounts in the Subservicing
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account. The Subservicer shall thereafter deposit such
proceeds in the Collection Account or remit such proceeds to the Servicer for
deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Subservicing Account. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on the
Mortgage Loans when the Subservicer receives such payments.

         Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts. (a) The Servicer shall enforce the obligations under each
paid-in-full, life-of-the-loan tax service contract in effect with respect to
each First Lien Mortgage Loan (each, a "Tax Service Contract"). Each Tax Service
Contract shall be assigned to the Trustee, or a successor Servicer at the
Servicer's expense in the event that the Servicer is terminated as Servicer of
the related Mortgage Loan.

         (b) To the extent that the services described in this paragraph (b) are
not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such functions. To the
extent the related Mortgage provides for Escrow Payments, the Servicer shall
establish and maintain, or cause to be established and maintained, one or more
accounts (the "Escrow Accounts"), which shall be Eligible Accounts. The Servicer
shall deposit in the clearing account (which account must be an Eligible
Account) in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in no event more than two Business Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from an Escrow Account may be made only to (i)
effect payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Servicer (or a Subservicer to the extent provided in
the related Subservicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Escrow Account; (v) clear and
terminate the Escrow Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement; or
(vi) recover amounts deposited in error. As part of its servicing duties, the
Servicer or Subservicers shall pay to the Mortgagors interest on funds in Escrow
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Escrow Accounts is insufficient, to pay such interest from its
or their own funds, without any reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow Payments, the Servicer shall determine
whether any such payments are made by the Mortgagor in a manner and at a time
that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Servicer assumes full responsibility for the
payment of all such bills within such time and shall effect payments of all such
bills irrespective of the Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make advances from its own
funds to effect such payments; provided, however, that such advances are deemed
to be Servicing Advances.


                                      -50-
<PAGE>

         Section 3.10 Collection Account. (a) On behalf of the Trustee, the
Servicer shall establish and maintain, or cause to be established and
maintained, one or more Eligible Accounts (such account or accounts, the
"Collection Account"), held in trust for the benefit of the Trustee. On behalf
of the Trustee, the Servicer shall deposit or cause to be deposited in the
clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the deposit of such funds into the clearing account, as and when
received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the Cut-off Date (other than in
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date), or payments (other than Principal Prepayments) received by it
on or prior to the Cut-off Date but allocable to a Due Period subsequent
thereto:

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

         (ii) all payments on account of interest (net of the related Servicing
     Fee) on each Mortgage Loan;

         (iii) all Insurance Proceeds and Condemnation Proceeds to the extent
     such Insurance Proceeds and Condemnation Proceeds are not to be applied to
     the restoration of the related Mortgaged Property or released to the
     related Mortgagor in accordance with the express requirements of law or in
     accordance with prudent and customary servicing practices and Liquidation
     Proceeds;

         (iv) any amounts required to be deposited pursuant to Section 3.12 in
     connection with any losses realized on Permitted Investments with respect
     to funds held in the Collection Account;


                                      -51-
<PAGE>

         (v) any amounts required to be deposited by the Servicer pursuant to
     the second paragraph of Section 3.13(a) in respect of any blanket policy
     deductibles;

         (vi) all proceeds of any Mortgage Loan repurchased or purchased in
     accordance with this Agreement; and

         (vii) all Prepayment Charges collected by the Servicer.

         The foregoing requirements for deposit in the Collection Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges need
not be deposited by the Servicer in the Collection Account and shall, upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.

         (b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee and the Depositor of the location of
the Collection Account maintained by it when established and prior to any change
thereof.

         Section 3.11 Withdrawals from the Collection Account. (a) The Servicer
shall, from time to time, make withdrawals from the Collection Account for any
of the following purposes or as described in Section 4.01:

         (i) on or prior to each Remittance Date, to remit to the Trustee (i)
     the Trustee Fee with respect to such Distribution Date and (ii) all
     Available Funds in respect of the related Distribution Date together with
     all amounts representing Prepayment Charges from the Mortgage Loans
     received during the related Prepayment Period;

         (ii) to reimburse the Servicer for P&I Advances, but only to the extent
     of amounts received which represent Late Collections (net of the related
     Servicing Fees) of Scheduled Payments on Mortgage Loans with respect to
     which such P&I Advances were made in accordance with the provisions of
     Section 4.01;

         (iii) to pay the Servicer or any Subservicer (A) any unpaid Servicing
     Fees or (B) any unreimbursed Servicing Advances with respect to each
     Mortgage Loan, but only to the extent of any Late Collections, Liquidation
     Proceeds, Condemnation Proceeds, Insurance Proceeds or other amounts as may
     be collected by the Servicer from a Mortgagor, or otherwise received with
     respect to such Mortgage Loan (or the related REO Property);

         (iv) to pay to the Servicer as servicing compensation (in addition to
     the Servicing Fee) on each Remittance Date any interest or investment
     income earned on funds deposited in the Collection Account;


                                      -52-
<PAGE>

         (v) to pay to the Responsible Party or the Servicer, with respect to
     each Mortgage Loan that has previously been repurchased or replaced
     pursuant to this Agreement all amounts received thereon subsequent to the
     date of purchase or substitution, as the case may be;

         (vi) to reimburse the Servicer for (A) any P&I Advance or Servicing
     Advance previously made which the Servicer has determined to be a
     Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
     accordance with the provisions of Section 4.01;

         (vii) to pay, or to reimburse the Servicer for advances in respect of,
     expenses incurred in connection with any Mortgage Loan pursuant to Section
     3.15;

         (viii) to reimburse the Servicer or the Depositor for expenses incurred
     by or reimbursable to the Servicer or the Depositor, as the case may be,
     pursuant to Section 6.03;

         (ix) to reimburse the Servicer or the Trustee, as the case may be, for
     expenses reasonably incurred in respect of the breach or defect giving rise
     to the repurchase obligation of the Responsible Party under this Agreement
     that were included in the Repurchase Price of the Mortgage Loan, including
     any expenses arising out of the enforcement of the repurchase obligation,
     to the extent not otherwise paid pursuant to the terms hereof;

         (x) to withdraw any amounts deposited in the Collection Account in
     error;

         (xi) to withdraw any amounts held in the Collection Account and not
     required to be remitted to the Trustee on the Remittance Date occurring in
     the month in which such amounts are deposited into the Collection Account,
     to reimburse the Servicer for unreimbursed P&I Advances;

         (xii) to invest funds in Permitted Investments in accordance with
     Section 3.12; and

         (xiii) to clear and terminate the Collection Account upon termination
     of this Agreement.

         (b) The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written notification (as set forth in Section
4.01(d) hereof) to the Depositor, on or prior to the next succeeding Remittance
Date, upon making any withdrawals from the Collection Account pursuant to
subclause (a)(vi) above.

         Section 3.12 Investment of Funds in the Collection Account and the
Distribution Account. (a) The Servicer may invest the funds in the Collection
Account and the Trustee may (but is not obligated to) invest funds in the
Distribution Account during the Trustee Float Period, and shall (except during
the Trustee Float Period) invest such funds in the Distribution Account at the
direction of the Servicer (for purposes of this Section 3.12, such Accounts are
referred to as an "Investment Account"), in one or more Permitted Investments
bearing interest or sold at a discount, and maturing, unless payable on demand
no later than the Business Day immediately preceding the date on which such
funds are required to be withdrawn from such account pursuant to this Agreement.
If no investment instruction is given in a timely manner, the Trustee shall hold
the funds in the Distribution Account uninvested. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account (other than investments made during the Trustee Float
Period) shall be made in the name of the Servicer. The Servicer shall be
entitled to sole possession (except with respect to investment direction of
funds and any income and gain realized on any investment in the Distribution
Account during the Trustee Float Period) over each such investment, and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Servicer, or with respect to investments during the
Trustee Float Period, the Trustee or its agent, together with any document of
transfer necessary to transfer title to such investment to the Servicer, or with
respect to investments during the Trustee Float Period, the Trustee or its
agent. In the event amounts on deposit in an Investment Account are at any time
invested in a Permitted Investment payable on demand, the Servicer, or with
respect to investments during the Trustee Float Period, the Trustee may:


                                      -53-
<PAGE>

         (x) consistent with any notice required to be given thereunder, demand
             that payment thereon be made on the last day such Permitted
             Investment may otherwise mature hereunder in an amount equal to the
             lesser of (1) all amounts then payable thereunder and (2) the
             amount required to be withdrawn on such date; and

         (y) demand payment of all amounts due thereunder that such Permitted
             Investment would not constitute a Permitted Investment in respect
             of funds thereafter on deposit in an Investment Account.

         (b) All income and gain realized from the investment of funds deposited
in the Collection Account, held by or on behalf of the Servicer, shall be for
the benefit of the Servicer and shall be subject to its withdrawal in the manner
set forth in Section 3.11. The Servicer shall deposit in the Collection Account
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon realization of such
loss.

         (c) All income and gain realized from the investment of funds deposited
in the Distribution Account held by the Trustee, shall be for the benefit of the
Servicer (except for any income or gain realized from the investment of funds on
deposit in the Distribution Account during the Trustee Float Period, which shall
be for the benefit of the Trustee) and shall be subject to the Trustee's
withdrawal in the manner set forth in Section 3.07(e). The Servicer shall
deposit in the Distribution Account (except with respect to the Trustee Float
Period) the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.

         (d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings.


                                      -54-
<PAGE>

         (e) The Trustee shall not be liable for the amount of any loss incurred
with respect of any investment or lack of investment of funds held in any
Investment Account or the Distribution Account (except that during the Trustee
Float Period, it will be responsible for reimbursing the Trust for such loss
incurred with respect to the making of any investment) if made in accordance
with this Section 3.12.

         (f) The Trustee or its Affiliates are permitted to receive additional
compensation that could be deemed to be in the Trustee's economic self-interest
for (i) serving as investment adviser, administrator, shareholder, servicing
agent, custodian or sub-custodian with respect to certain of the Permitted
Investments, (ii) using Affiliates to effect transactions in certain Permitted
Investments and (iii) effecting transactions in certain Permitted Investments.
Such compensation shall not be considered an amount that is reimbursable or
payable pursuant to this Agreement.

         Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage. (a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Property in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property, plus accrued interest at the Mortgage
Rate and related Servicing Advances. The Servicer will comply in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts to be collected by the Servicer
under any such policies (other than amounts to be applied to the restoration or
repair of the property subject to the related Mortgage or amounts to be released
to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to the Trustee, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).


                                      -55-
<PAGE>

         In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer acceptable to Fannie Mae or Freddie Mac insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with the first two sentences of this Section 3.13, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee claims under any such blanket policy in a timely fashion in accordance
with the terms of such policy.

         (b) The Servicer shall keep in force during the term of this Agreement
a policy or policies of insurance covering errors and omissions for failure in
the performance of the Servicer's obligations under this Agreement, which policy
or policies shall be in such form and amount that would meet the requirements of
Fannie Mae or Freddie Mac if it were the purchaser of the Mortgage Loans, unless
the Servicer has obtained a waiver of such requirements from Fannie Mae or
Freddie Mac. The Servicer shall also maintain a fidelity bond in the form and
amount that would meet the requirements of Fannie Mae or Freddie Mac, unless the
Servicer has obtained a waiver of such requirements from Fannie Mae or Freddie
Mac. The Servicer shall provide the Trustee upon request with copies of any such
insurance policies and fidelity bond. The Servicer shall be deemed to have
complied with this provision if an Affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any
such errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Subservicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.

         Section 3.14 Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if, in its sole business
judgment, the Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided, that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and such substitution is in
the best interest of the Certificateholders as determined by the Servicer. In
connection with any assumption, modification or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Scheduled Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.


                                      -56-
<PAGE>

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

         Section 3.15 Realization upon Defaulted Mortgage Loans. The Servicer
shall use its best efforts, consistent with Accepted Servicing Practices, to
foreclose upon or otherwise comparably convert (which may include an acquisition
of REO Property) the ownership of properties securing such of the Mortgage Loans
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07, and which are not released from this Agreement pursuant to any
other provision hereof. The Servicer shall use reasonable efforts to realize
upon such defaulted Mortgage Loans in such manner as will maximize the receipt
of principal and interest by the Trustee, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage from an uninsured cause, the Servicer shall not be required to expend its
own funds toward the restoration of such property unless it shall determine in
its sole discretion (i) that such restoration will increase the net proceeds of
liquidation of the related Mortgage Loan to the Trustee, after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds, Condemnation Proceeds or Liquidation
Proceeds from the related Mortgaged Property, as contemplated in Section 3.11.
The Servicer shall be responsible for all other costs and expenses incurred by
it in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related property, as contemplated in Section
3.11.


                                      -57-
<PAGE>

         The proceeds of any liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any income from an REO Property, will be
applied in the following order of priority: first, to reimburse the Servicer or
any Subservicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11 or 3.17; second, to accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Rate, to the date of the
liquidation or REO Disposition, or to the Due Date prior to the Remittance Date
on which such amounts are to be distributed if not in connection with a
liquidation or REO Disposition; third, to reimburse the Servicer for any related
unreimbursed P&I Advances, pursuant to Section 3.11; and fourth, as a recovery
of principal of the Mortgage Loan. If the amount of the recovery so allocated to
interest is less than a full recovery thereof, that amount will be allocated as
follows: first, to unpaid Servicing Fees; and second, as interest at the
Mortgage Rate (net of the Servicing Fee Rate). The portion of the recovery so
allocated to unpaid Servicing Fees shall be reimbursed to the Servicer or any
Subservicer pursuant to Section 3.11 or 3.17. The portions of the recovery so
allocated to interest at the Mortgage Rate (net of the Servicing Fee Rate) and
to principal of the Mortgage Loan shall be applied as follows: first, to
reimburse the Servicer or any Subservicer for any related unreimbursed Servicing
Advances in accordance with Section 3.11 or 3.17, and second, to the Trustee in
accordance with the provisions of Section 4.02, subject to the last paragraph of
Section 3.17 with respect to certain excess recoveries from an REO Disposition.

         Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, the Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee and the Depositor with a written
report of the environmental inspection.

         After reviewing the environmental inspection report, the Depositor
shall determine how the Servicer shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Depositor directs the Servicer to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all reasonable costs associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean-up costs, as
applicable, from the related Liquidation Proceeds, or if the Liquidation
Proceeds are insufficient to fully reimburse the Servicer, the Servicer shall be
entitled to be reimbursed from amounts in the Collection Account pursuant to
Section 3.11 hereof. In the event the Depositor directs the Servicer not to
proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Servicer shall be reimbursed from general collections for all Servicing Advances
made with respect to the related Mortgaged Property from the Collection Account
pursuant to Section 3.11 hereof.


                                      -58-
<PAGE>

         Section 3.16 Release of Mortgage Files. (a) Upon the payment in full of
any Mortgage Loan, or the receipt by the Servicer of a notification that payment
in full shall be escrowed in a manner customary for such purposes, the Servicer
will, within five (5) Business Days of the payment in full, notify the Trustee
by a certification (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Collection Account pursuant to Section
3.10 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Custodial File by submitting a Request for Release to the
Trustee. Upon receipt of such certification and Request for Release, the Trustee
shall promptly release the related Custodial File to the Servicer within two (2)
Business Days. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Insurance Policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the Trustee, of a Request for Release,
release the related Custodial File to the Servicer, and the Trustee shall, at
the direction of the Servicer, execute such documents as shall be necessary to
the prosecution of any such proceedings and the Servicer shall retain the
Mortgage File in trust for the benefit of the Trustee. Such Request for Release
shall obligate the Servicer to return each and every document previously
requested from the Custodial File to the Trustee when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Trustee a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, a copy of the Request for Release shall be released by the
Trustee to the Servicer or its designee. Upon receipt of a Request for Release
under this Section 3.16, the Trustee shall deliver the related Custodial File to
the Servicer by regular mail, unless the Servicer requests that the Trustee
deliver such Custodial File to the Servicer by overnight courier (in which case
such delivery shall be at the Servicer's expense); provided, however, that in
the event the Servicer has not previously received copies of the relevant
Mortgage Loan Documents necessary to service the related Mortgage Loan in
accordance with Accepted Servicing Practices, the Responsible Party shall
reimburse the Servicer for any overnight courier charges incurred for the
requested Custodial Files.

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


                                      -59-
<PAGE>

         Section 3.17 Title, Conservation and Disposition of REO Property. (a)
This Section shall apply only to REO Properties acquired for the account of the
Trustee and shall not apply to any REO Property relating to a Mortgage Loan
which was purchased or repurchased from the Trustee pursuant to any provision
hereof. In the event that title to any such REO Property is acquired, the
Servicer shall cause the deed or certificate of sale to be issued in the name of
the Trustee, on behalf of the Certificateholders.

         (b) The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee. The Servicer shall notify the
Trustee from time to time as to the status of each REO Property.

         (c) The Servicer shall use its best efforts to dispose of the REO
Property as soon as possible (subject to the Trustee's right to veto any
proposed sale of REO Property) and shall sell such REO Property in any event
within three years after title has been taken to such REO Property.
Notwithstanding its veto rights, the Trustee has no obligation with respect to
REO Dispositions.

         (d) [Reserved].

         (e) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall deposit such funds in the
Collection Account.

         (f) The Servicer shall deposit net of reimbursement to the Servicer for
any related outstanding Servicing Advances and unpaid Servicing Fees provided in
Section 3.11 hereof, or cause to be deposited, on a daily basis in the
Collection Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.

         (g) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.


                                      -60-
<PAGE>

         (h) Any net proceeds from an REO Disposition which are in excess of the
unpaid principal balance of the related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date of the REO Disposition shall be
retained by the Servicer as additional servicing compensation.

         (i) The Servicer shall use its reasonable best efforts to sell, or
cause the Subservicer to sell, any REO Property as soon as possible, but in no
event later than the conclusion of the third calendar year beginning after the
year of its acquisition by the Lower Tier REMIC unless (i) the Servicer applies
for an extension of such period from the Internal Revenue Service pursuant to
the REMIC Provisions and Code Section 856(e)(3), in which event such REO
Property shall be sold within the applicable extension period, or (ii) the
Servicer obtains for the Trustee an Opinion of Counsel, addressed to the
Depositor, the Trustee and the Servicer, to the effect that the holding by the
Lower Tier REMIC of such REO Property subsequent to such period will not result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code or cause the Lower Tier REMIC or Upper Tier REMIC to fail to
qualify as a REMIC under the REMIC Provisions or comparable provisions of
relevant state laws at any time. The Servicer shall manage, conserve, protect
and operate each REO Property for the Trustee solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) or result in the receipt by the Lower Tier REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
Section 860G(a)(1) of the Code. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by the
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the Trustee
on behalf of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Trustee on behalf of the
Certificateholders for the period prior to the sale of such REO Property;
provided, however, that any rent received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.

         Section 3.18 Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the Servicer shall adjust the Mortgage Rate on
the related Adjustment Date and shall adjust the Scheduled Payment on the
related mortgage payment adjustment date, if applicable, in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note. The
Servicer shall execute and deliver any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Rate and Scheduled Payment adjustments. The Servicer shall
promptly, upon written request therefor, deliver to the Trustee such
notifications and any additional applicable data regarding such adjustments and
the methods used to calculate and implement such adjustments. Upon the discovery
by the Servicer or the receipt of notice from the Trustee that the Servicer has
failed to adjust a Mortgage Rate or Scheduled Payment in accordance with the
terms of the related Mortgage Note, the Servicer shall deposit in the Collection
Account from its own funds the amount of any interest loss caused as such
interest loss occurs.

         Section 3.19 Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide, or cause the Subservicer to
provide, to the Depositor, the Trustee, the OTS or the FDIC and the examiners
and supervisory agents thereof, access to the documentation regarding the
Mortgage Loans in its possession required by applicable regulations of the OTS.
Such access shall be afforded without charge, but only upon reasonable and prior
written request and during normal business hours at the offices of the Servicer,
the Depositor, the Trustee or any Subservicer. Nothing in this Section shall
derogate from the obligation of any such party to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of any such party to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.


                                      -61-
<PAGE>

         Section 3.20 Documents, Records and Funds in Possession of the Servicer
to Be Held for the Trustee. The Servicer shall account fully to the Trustee for
any funds received by the Servicer or which otherwise are collected by the
Servicer as Liquidation Proceeds, Condemnation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan. All Mortgage Files and funds collected or held by,
or under the control of, the Servicer in respect of any Mortgage Loans, whether
from the collection of principal and interest payments or from Liquidation
Proceeds, including, but not limited to, any funds on deposit in its Collection
Account, shall be held by the Servicer for and on behalf of the Trustee and
shall be and remain the sole and exclusive property of the Trustee, subject to
the applicable provisions of this Agreement. The Servicer also agrees that it
shall not create, incur or subject any Mortgage File or any funds that are
deposited in the Collection Account, the Distribution Account or any Escrow
Account, or any funds that otherwise are or may become due or payable to the
Trustee for the benefit of the Certificateholders, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance, or assert by
legal action or otherwise any claim or right of setoff against any Mortgage File
or any funds collected on, or in connection with, a Mortgage Loan, except,
however, that the Servicer shall be entitled to set off against and deduct from
any such funds any amounts that are properly due and payable to the Servicer
under this Agreement.

         Section 3.21 Servicing Compensation. (a) As compensation for its
activities hereunder, the Servicer shall, with respect to each Mortgage Loan, be
entitled to retain from deposits to the Collection Account and from Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and REO Proceeds related to
such Mortgage Loan, the Servicing Fee with respect to each Mortgage Loan (less
any portion of such amounts retained by any Subservicer). In addition, the
Servicer shall be entitled to recover unpaid Servicing Fees out of related late
collections and as otherwise permitted under Section 3.11. The right to receive
the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Servicer's responsibilities and
obligations under this Agreement; provided, however, that the Servicer may pay
from the Servicing Fee any amounts due to a Subservicer pursuant to a
Subservicing Agreement entered into under Section 3.02.

         (b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account, and pursuant to Section 3.07(e), to direct
the Trustee to withdraw from the Distribution Account and remit to the Servicer
(except for monies invested during the Trustee Float Period), as additional
servicing compensation, interest or other income earned on deposits therein on
its behalf.


                                      -62-
<PAGE>

         (c) The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of the Subservicer to the extent not
retained by it and the fees and expenses of independent accountants and any
agents appointed by the Servicer), and shall not be entitled to reimbursement
therefor from the Trust Fund except as specifically provided in Section 3.11.

         Section 3.22 Annual Statement as to Compliance. The Servicer will
deliver or cause to be delivered to the Depositor, the Rating Agencies and the
Trustee on or before March 1st of each calendar year, commencing in 2004, an
Officer's Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer during the preceding calendar year and of
performance under this Agreement or a similar agreement has been made under such
officers' supervision, and (ii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. Promptly after receipt of such
Officer's Certificate, the Depositor shall review such Officer's Certificate
and, if applicable, consult with the Servicer as the to the nature of any
defaults by the Servicer in the fulfillment of any of the Servicer's
obligations.

         Section 3.23 Annual Independent Public Accountants' Servicing
Statement; Financial Statements. Not later than March 1st of each calendar year
commencing in 2004, the Servicer, at its expense, shall cause a nationally
recognized firm of independent certified public accountants to furnish to the
Depositor, the Servicer, the Rating Agencies and the Trustee a report stating
that (i) it has obtained a letter of representation regarding certain matters
from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal year and (ii) on the basis of an examination conducted by such
firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Subservicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Subservicers. Promptly after receipt of such report, the Depositor shall review
such report and, if applicable, consult with the Servicer as to the nature of
any defaults by the Servicer in the fulfillment of any of the Servicer's
obligations.

         Section 3.24 Trustee to Act as Servicer. (a) Subject to Section 7.02,
in the event that the Servicer shall for any reason no longer be the Servicer
hereunder (including by reason of an Event of Default), the Trustee or its
successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the predecessor Servicer pursuant to Section 3.10 or any
acts or omissions of the predecessor Servicer hereunder), (ii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder, including
but not limited to repurchases or substitutions pursuant to Section 2.03, (iii)
responsible for expenses of the predecessor Servicer pursuant to Section 2.03 or
(iv) deemed to have made any representations and warranties of the Servicer
hereunder. Any such assumption shall be subject to Section 7.02.


                                      -63-
<PAGE>

         (b) Every Subservicing Agreement entered into by the Servicer shall
contain a provision giving the successor Servicer the option to terminate such
agreement in the event a successor Servicer is appointed.

         (c) If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the Servicer under any Subservicing Agreement in accordance with the terms
thereof; provided, that the Trustee (or any other successor Servicer) shall not
incur any liability or have any obligations in its capacity as successor
Servicer under a Subservicing Agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the Subservicing Agreement arising prior to
the date of such succession.

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

         Section 3.25 Compensating Interest. The Servicer shall remit to the
Trustee on each Remittance Date an amount from its own funds equal to the
Compensating Interest payable by the Servicer on such Remittance Date.

         Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act. (a) With respect
to each Mortgage Loan, the Servicer agrees to fully furnish, in accordance with
the Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and TransUnion Credit Information Company (three of
the credit repositories) on a monthly basis.

         (b) The Servicer shall comply with Title V of the Gramm-Leach-Bliley
Act of 1999 and all applicable regulations promulgated thereunder, relating to
the Mortgage Loans and the related borrowers and shall provide all required
notices thereunder.

                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

         Section 4.01 Advances. (a) The amount of P&I Advances to be made by the
Servicer for any Remittance Date shall equal, subject to Section 4.01(c), the
sum of (i) the aggregate amount of Scheduled Payments (with each interest
portion thereof net of the related Servicing Fee), due during the Due Period
immediately preceding such Remittance Date in respect of the Mortgage Loans,
which Scheduled Payments were not received as of the close of business on the
related Determination Date, plus (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Prepayment Period and
as to which such REO Property an REO Disposition did not occur during the
related Prepayment Period, an amount equal to the excess, if any, of the
Scheduled Payments (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date in respect of
the related Mortgage Loans, over the net income from such REO Property
transferred to the Collection Account for distribution on such Remittance Date.


                                      -64-
<PAGE>

         (b) On each Remittance Date, the Servicer shall remit in immediately
available funds to the Trustee an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Remittance Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case, it will cause to be made an appropriate entry in the records of
Collection Account that Amounts Held for Future Distribution have been, as
permitted by this Section 4.01, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans and REO Properties. Any Amounts Held for Future Distribution and
so used shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account on or before any future
Remittance Date to the extent required.

         (c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from coverage under this Agreement, except as otherwise provided
in this Section.

         (d) Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
P&I Advance or Servicing Advance would, if made, constitute a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance. The determination by the Servicer
that it has made a Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance or that any proposed P&I Advance or Servicing Advance, if made, would
constitute a Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance,
respectively, shall be evidenced by an Officer's Certificate of the Servicer
delivered to the Trustee.

         (e) Except as otherwise provided herein, the Servicer shall be entitled
to reimbursement pursuant to Section 3.11 hereof for Servicing Advances from
recoveries from the related Mortgagor or from all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loan.

         Section 4.02 Priorities of Distribution. (a) On each Distribution Date,
the Trustee will make the disbursements and transfers from amounts then on
deposit in the Distribution Account in the following order of priority and to
the extent of the Available Funds remaining:

         (i) to the holders of each Class of Certificates in the following order
     of priority:


                                      -65-
<PAGE>

                  (A) to the Class A-1 Certificates and Class A-2 Certificates,
         the related Accrued Certificate Interest Distribution Amount and any
         Unpaid Interest Amounts for such Distribution Date, in each case
         pursuant to the allocation set forth in clauses (iv) and (v) of this
         Section 4.02(a);

                  (B) to the Class M-1 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;

                  (C) to the Class M-2 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;

                  (D) to the Class M-3 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;

                  (E) to the Class B-1 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;

                  (F) to the Class B-2 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;
         and

                  (G) to the Class B-3 Certificates, the Accrued Certificate
         Interest Distribution Amount for such Class on such Distribution Date;

         (ii) (A) on each Distribution Date (a) before the related Stepdown Date
     or (b) with respect to which a Trigger Event is in effect, to the holders
     of the related Class or Classes of LIBOR Certificates then entitled to
     distributions of principal as set forth below, from amounts remaining on
     deposit in the Distribution Account after making distributions pursuant to
     clause (i) above, an amount equal to the Principal Distribution Amount in
     the following order of priority:

                  (a) to the Class A-1 and Class A-2 Certificates, allocated as
         described in Section 4.02(c), until the respective Class Certificate
         Balances thereof are reduced to zero; and

                  (b) sequentially to the Class M-1, Class M-2, Class M-3, Class
         B-1, Class B-2 and Class B-3 Certificates, in that order, until the
         respective Class Certificate Balances are reduced to zero;

                  (B) on each Distribution Date (a) on and after the related
         Stepdown Date and (b) as long as a Trigger Event is not in effect, to
         the holders of the related Class or Classes of LIBOR Certificates then
         entitled to distribution of principal, from amounts remaining on
         deposit in the Distribution Account after making distributions pursuant
         to clause (i) above, an amount equal to, in the aggregate, the
         Principal Distribution Amount in the following amounts and order of
         priority:

                  (a) to the Class A Certificates, the lesser of (x) the
             Principal Distribution Amount and (y) the Class A Principal
             Distribution Amount, allocated as described in Section 4.02(c),
             until the respective Class Certificate Balances thereof are reduced
             to zero;

                                      -66-
<PAGE>


                  (b) to the Class M-1 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above and (y) the Class M-1 Principal Distribution
             Amount, until the Class Certificate Balance thereof has been
             reduced to zero;

                  (c) to the Class M-2 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above and to the Class M-1 Certificates in clause
             (ii)(B)(b) above and (y) the Class M-2 Principal Distribution
             Amount, until the Class Certificate Balance thereof has been
             reduced to zero;

                  (d) to the Class M-3 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above, to the Class M-1 Certificates in clause
             (ii)(B)(b) above and to the Class M-2 Certificates in clause
             (ii)(B)(c) above and (y) the Class M-3 Principal Distribution
             Amount, until the Class Certificate Balance thereof has been
             reduced to zero;

                  (e) to the Class B-1 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above, to the Class M-1 Certificates in clause
             (ii)(B)(b) above, to the Class M-2 Certificates in clause
             (ii)(B)(c) and to the Class M-3 Certificates in clause (ii)(B)(d)
             above and (y) the Class B-1 Principal Distribution Amount, until
             the Class Certificate Balance thereof has been reduced to zero;

                  (f) to the Class B-2 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above, to the Class M-1 Certificates in clause
             (ii)(B)(b) above, to the Class M-2 Certificates in clause
             (ii)(B)(c) above, to the Class M-3 Certificates in clause
             (ii)(B)(d) above and to the Class B-1 Certificates in clause
             (ii)(B)(e) above and (y) the Class B-2 Principal Distribution
             Amount, until the Class Certificate Balance thereof has been
             reduced to zero; and

                  (g) to the Class B-3 Certificates, the lesser of (x) the
             excess of (i) the Principal Distribution Amount over (ii) the
             amount distributed to the Class A Certificateholders in clause
             (ii)(B)(a) above, to the Class M-1 Certificates in clause
             (ii)(B)(b) above, to the Class M-2 Certificates in clause
             (ii)(B)(c) above, to the Class M-3 Certificates in clause
             (ii)(B)(d) above, to the Class B-1 Certificates in clause
             (ii)(B)(e) above and to the Class B-2 Certificates in clause
             (ii)(B)(f) above and (y) the Class B-3 Principal Distribution
             Amount, until the Class Certificate Balance thereof has been
             reduced to zero;


                                      -67-
<PAGE>

         (iii) any amount remaining after the distributions in clauses (i) and
     (ii) above, plus as specifically indicated below, from amounts on deposit
     in the Excess Reserve Fund Account, shall be distributed in the following
     order of priority:

                  (A) to the holders of the Class M-1 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (B) to the holders of the Class M-1 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (C) to the holders of the Class M-2 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (D) to the holders of the Class M-2 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (E) to the holders of the Class M-3 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (F) to the holders of the Class M-3 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (G) to the holders of the Class B-1 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (H) to the holders of the Class B-1 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (I) to the holders of the Class B-2 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (J) to the holders of the Class B-2 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (K) to the holders of the Class B-3 Certificates, any Unpaid
         Interest Amounts for such Class;

                  (L) to the holders of the Class B-3 Certificates, any Unpaid
         Realized Loss Amount for such Class;

                  (M) to the Excess Reserve Fund Account, the amount of any
         Basis Risk Payment for such Distribution Date;

                  (N) from funds on deposit in the Excess Reserve Fund Account
         (not including any Interest Rate Cap Payment included in such account)
         with respect to such Distribution Date, an amount equal to any Basis
         Risk CarryForward Amount with respect to any LIBOR Certificate for such
         Distribution Date to the LIBOR Certificates in the same order and
         priority in which the Accrued Certificate Interest Distribution Amount
         is allocated among such Classes of Certificates;


                                      -68-
<PAGE>

                  (O) from any Interest Rate Cap Payments on deposit in the
         Excess Reserve Fund Account with respect to such Distribution Date, an
         amount equal to any unpaid remaining Basis Risk CarryForward Amount
         with respect to the Offered Certificates for such Distribution Date
         (after giving effect to distributions pursuant to clause (N) above) to
         the Offered Certificates pro rata, based upon their respective Class
         Certificate Balance;

                  (P) to the holders of the Class X Certificates, the remainder
         of the Class X Distributable Amount and any remaining Interest Rate Cap
         Payments not distributed pursuant to Sections 4.02(a)(iii)(A)-(O); and

                  (Q) to the holders of the Class R Certificates, any remaining
         amount;

         (iv) Solely for purposes of interest allocation calculations, the
     portion of the interest component of Available Funds attributable to Group
     I Mortgage Loans will be allocated:

                  (a) first, to the Class A-1 Certificates, the Accrued
         Certificate Interest Distribution Amount and any Unpaid Interest
         Amounts for the Class A-1 Certificates; and

                  (b) second, to the Class A-2 Certificates, the Accrued
         Certificate Interest Distribution Amount and any Unpaid Interest
         Amounts for the Class A-2 Certificates, to the extent not otherwise
         previously paid from the interest component of Available Funds
         attributable to Group II Mortgage Loans; and

         (v) Solely for purposes of interest allocation calculations, the
     portion of the interest component of Available Funds attributable to Group
     II Mortgage Loans will be allocated:

                  (a) first, to the Class A-2 Certificates, the Accrued
         Certificate Interest Distribution Amount and any Unpaid Interest
         Amounts for the Class A-2 Certificates; and

                  (b) second, to the Class A-1 Certificates, the Accrued
         Certificate Interest Distribution Amount and any Unpaid Interest
         Amounts for the Class A-1 Certificates to the extent not otherwise
         previously paid from the interest component of Available Funds
         attributable to Group I Mortgage Loans.

         If on any Distribution Date, as a result of the foregoing allocation
rules, any Class of Class A Certificates does not receive the related Accrued
Certificate Interest Distribution Amount or the related Unpaid Interest Amounts,
if any, then that unpaid amount will be recoverable by the holders of that
class, with interest thereon, on future Distribution Dates, as Unpaid Interest
Amounts, subject to the priorities described above.


                                      -69-
<PAGE>

         (b) On each Distribution Date, all amounts representing Prepayment
     Charges from the Mortgage Loans received during the related Prepayment
     Period will be distributed to the holders of the Class P Certificates.

         (c) All principal distributions to the holders of the Class A
     Certificates on any Distribution Date shall be allocated between the Class
     A-1 Certificates and the Class A-2 Certificates on a pro rata basis, based
     on the Class A Principal Allocation Percentage for such Classes for such
     Distribution Date; provided, however, that (i) if the Class Certificate
     Balance of the Class A-1 Certificates is reduced to zero, then the
     remaining amount of principal distributions distributable to the Class A-1
     Certificates on such Distribution Date, and the amount of those principal
     distributions distributable on all subsequent Distribution Dates, shall be
     distributed to the holders of the Class A-2 Certificates, until the Class
     Certificate Balance of the Class A-2 Certificates has been reduced to zero
     and (ii) if the Class Certificate Balance of the Class A-2 Certificates is
     reduced to zero, then the remaining amount of principal distributions
     distributable to the Class A-2 Certificate on such Distribution Date, and
     the amount of those principal distributions distributable on all subsequent
     Distribution Dates, shall be distributed to the holders of the Class A-1
     Certificates until the Class Certificate Balance of the Class A-1
     Certificates has been reduced to zero. Any payments of principal to the
     Class A-1 Certificates shall be made first from Available Funds relating to
     the Group I Mortgage Loans, and any payments of principal to the Class A-2
     Certificates shall be made first from Available Funds relating to the Group
     II Mortgage Loans.

         (d) On any Distribution Date, any Relief Act Shortfalls and Net
     Prepayment Interest Shortfalls for such Distribution Date will be allocated
     as a reduction in the following order:

                  (1) First, to the amount of interest payable to the Class X
         Certificates; and

                  (2) Second, pro rata, as a reduction of the Accrued
         Certificate Interest for the Class A, Class M and Class B Certificates,
         based on the amount of interest to which such classes would otherwise
         be entitled.

         Section 4.03 Monthly Statements to Certificateholders. (a) Not later
than each Distribution Date, the Trustee shall make available to each
Certificateholder, the Servicer, the Depositor and each Rating Agency a
statement setting forth with respect to the related distribution:

         (i) the amount thereof allocable to principal, separately identifying
     the aggregate amount of any Principal Prepayments and Liquidation Proceeds
     included therein;

         (ii) the amount thereof allocable to interest, any Unpaid Interest
     Amounts included in such distribution and any remaining Unpaid Interest
     Amounts after giving effect to such distribution, any Basis Risk
     CarryForward Amount for such Distribution Date and the amount of all Basis
     Risk CarryForward Amount covered by withdrawals from the Excess Reserve
     Fund Account on such Distribution Date;


                                      -70-
<PAGE>

         (iii) if the distribution to the Holders of such Class of Certificates
     is less than the full amount that would be distributable to such Holders if
     there were sufficient funds available therefor, the amount of the shortfall
     and the allocation thereof as between principal and interest, including any
     Basis Risk CarryForward Amount not covered by amounts in the Excess Reserve
     Fund Account;

         (iv) the Class Certificate Balance of each Class of Certificates after
     giving effect to the distribution of principal on such Distribution Date;

         (v) the Pool Stated Principal Balance for the following Distribution
     Date;

         (vi) the amount of the Servicing Fees paid to or retained by the
     Servicer or Subservicer (with respect to the Subservicers, in the
     aggregate) with respect to such Distribution Date;

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

         (viii) the amount of P&I Advances included in the distribution on such
     Distribution Date and the aggregate amount of P&I Advances reported by the
     Servicer as outstanding as of the close of business on the last Business
     Day of the immediately preceding month;

         (ix) the number and aggregate outstanding principal balances of
     Mortgage Loans (1) as to which the Scheduled Payment is delinquent 31 to 60
     days, 61 to 90 days and 91 or more days, (2) that have become REO Property,
     (3) that are in foreclosure and (4) that are in bankruptcy, in each case as
     of the close of business on the last Business Day of the immediately
     preceding month;

         (x) for each of the preceding 12 calendar months, or all calendar
     months since the related Cut-off Date, whichever is less, the aggregate
     dollar amount of the Scheduled Payments (1) due on all Outstanding Mortgage
     Loans on each of the Due Dates in each such month and (2) delinquent 60
     days or more on each of the Due Dates in each such month;

         (xi) with respect to any Mortgage Loan that became an REO Property
     during the preceding calendar month, the loan number and Stated Principal
     Balance of such Mortgage Loan as of the close of business on the
     Determination Date preceding such Distribution Date and the date of
     acquisition thereof;

         (xii) the total number and aggregate principal balance of any REO
     Properties (and market value, if available) as of the close of business on
     the Determination Date preceding such Distribution Date;

         (xiii) whether a Trigger Event has occurred and is continuing
     (including the calculation of thereof and the aggregate outstanding balance
     of all 60+ Day Delinquent Mortgage Loans);


                                      -71-
<PAGE>

         (xiv) the amount on deposit in the Excess Reserve Fund Account (after
     giving effect to distributions on such Distribution Date);

         (xv) the aggregate amount of Applied Realized Loss Amounts incurred
     during the preceding calendar month and aggregate Applied Realized Loss
     Amounts through such Distribution Date;

         (xvi) the amount of any Net Monthly Excess Cash Flow on such
     Distribution Date and the allocation thereof to the Certificateholders with
     respect to Applied Realized Loss Amounts and Unpaid Interest Amounts;

         (xvii) the Subordinated Amount and Required Subordinated Amount;

         (xviii) Prepayment Charges collected by Servicer;

         (xix) the Interest Rate Cap Payment, if any, for such Distribution
     Date; and

         (xx) the Cumulative Loss Percentage.

         (b) The Trustee's responsibility for providing the above statement to
the Certificateholders, each Rating Agency, the Servicer and the Depositor is
limited to the availability, timeliness and accuracy of the information derived
from the Servicer. The Trustee will provide the above statement via the
Trustee's internet website. The Trustee's website will initially be located at
https:\\www.corporatetrust.db.com and assistance in using the website can be
obtained by calling the Trustee's investor relations desk at 1-800-735-7777. A
paper copy of the statement will also be made available upon request.

         (c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this Section
4.03 aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.

         (d) Not later than the Determination Date, the Servicer shall furnish
to the Trustee a monthly remittance advice statement (in a format mutually
agreed upon by the Servicer and the Trustee) containing such information as
shall be reasonably requested by the Trustee to enable the Trustee to provide
the reports required by Section 4.03(a) as to the accompanying remittance and
the period ending on the close of business on the last Business Day of the
immediately preceding month (the "Servicer Remittance Report").

         The Servicer shall furnish to the Trustee an individual loan accounting
report, as of the related Determination Date, to document Mortgage Loan payment
activity on an individual Mortgage Loan basis. With respect to each month, the
corresponding individual loan accounting report (in electronic format) shall be
received by the Trustee no later than the related Determination Date, which
report shall contain the following:


                                      -72-
<PAGE>

         (i) with respect to each Scheduled Payment, the amount of such
     remittance allocable to principal (including a separate breakdown of any
     Principal Prepayment, including the date of such prepayment, and any
     Prepayment Charges, along with a detailed report of interest on principal
     prepayment amounts remitted in accordance with Section 3.25);

         (ii) with respect to each Scheduled Payment, the amount of such
     remittance allocable to interest;

         (iii) the amount of servicing compensation received by the Servicer
     during the prior distribution period;

         (iv) the individual and aggregate Stated Principal Balance of the
     Mortgage Loans;

         (v) the aggregate of any expenses reimbursed to the Servicer during the
     prior distribution period pursuant to Section 3.11; and

         (vi) the number and aggregate outstanding principal balances of
     Mortgage Loans (a) delinquent (1) 31 to 60 days, (2) 61 to 90 days, (3) 91
     days or more; (b) as to which foreclosure has commenced; and (c) as to
     which REO Property has been acquired.

         Section 4.04 Certain Matters Relating to the Determination of LIBOR.
LIBOR shall be calculated in accordance with the definition of LIBOR. Until all
of the LIBOR Certificates are paid in full, the Trustee will at all times retain
at least four Reference Banks for the purpose of determining LIBOR with respect
to each LIBOR Determination Date. The Trustee initially shall designate the
Reference Banks (after consultation with the Depositor). Each "Reference Bank"
shall be a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Trustee and shall have an established place of
business in London. If any such Reference Bank should be unwilling or unable to
act as such or if the Trustee should terminate its appointment as Reference
Bank, the Trustee shall promptly appoint or cause to be appointed another
Reference Bank (after consultation with the Depositor). The Trustee shall have
no liability or responsibility to any Person for (i) the selection of any
Reference Bank for purposes of determining LIBOR or (ii) any inability to retain
at least four Reference Banks which is caused by circumstances beyond its
reasonable control.

         (i) The Pass-Through Rate for each Class of LIBOR Certificates for each
     Interest Accrual Period shall be determined by the Trustee on each LIBOR
     Determination Date so long as the LIBOR Certificates are outstanding on the
     basis of LIBOR and the respective formulae appearing in footnotes
     corresponding to the LIBOR Certificates in the table relating to the
     Certificates in the Preliminary Statement. The Trustee shall not have any
     liability or responsibility to any Person for its inability, following a
     good-faith reasonable effort, to obtain quotations from the Reference Banks
     or to determine the arithmetic mean referred to in the definition of LIBOR,
     all as provided for in this Section 4.04 and the definition of LIBOR. The
     establishment of LIBOR and each Pass-Through Rate for the LIBOR
     Certificates by the Trustee shall (in the absence of manifest error) be
     final, conclusive and binding upon each Holder of a Certificate and the
     Trustee.


                                      -73-
<PAGE>

         Section 4.05 Allocation of Applied Realized Loss Amounts. Any Applied
Realized Loss Amounts will be allocated to the most junior Class of Subordinate
Certificates then outstanding in reduction of the Class Certificate Balance
thereof.

                                   ARTICLE V

                                THE CERTIFICATES

         Section 5.01 The Certificates. The Certificates shall be substantially
in the forms attached hereto as exhibits. The Certificates shall be issuable in
registered form, in the minimum denominations, integral multiples in excess
thereof (except that one Certificate in each Class may be issued in a different
amount which must be in excess of the applicable minimum denomination) and
aggregate denominations per Class set forth in the Preliminary Statement.

         The Depositor hereby directs the Trustee to register the Class X
Certificates and the Class P Certificates as follows: "Deutsche Bank National
Trust Company, as Indenture Trustee on behalf of the Noteholders of the Morgan
Stanley ABS Capital I Inc. NIM Trust 2003-NC8N", and to deliver such Class X
Certificates and Class P Certificates to Deutsche Bank National Trust Company,
as trustee of the NIM Trust.

         Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date or (y) by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time such signatures
were affixed, authorized to sign on behalf of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to be
so authorized prior to the countersignature and delivery of any such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless countersigned by the Trustee by manual signature, and
such countersignature upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly executed and delivered
hereunder. All Certificates shall be dated the date of their countersignature.
On the Closing Date, the Trustee shall countersign the Certificates to be issued
at the direction of the Depositor, or any affiliate thereof.

         The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.


                                      -74-
<PAGE>

         Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates. (a) The Trustee shall maintain, or cause to be
maintained in accordance with the provisions of Section 5.06, a Certificate
Register for the Trust Fund in which, subject to the provisions of subsections
(b) and (c) below and to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trustee shall execute and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of the
same Class and aggregate Percentage Interest.

         At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.

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

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

         (b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In
determining whether a transfer is being made pursuant to an effective
registration statement, the Trustee shall be entitled to rely solely upon a
written notice to such effect from the Depositor. Except with respect to the
transfer of the Class X and Class P Certificates to the NIM Trust on the Closing
Date, in the event that a transfer of a Private Certificate which is a Physical
Certificate is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer shall certify to
the Trustee in writing the facts surrounding the transfer in substantially the
form set forth in Exhibit H (the "Transferor Certificate") and either (i) there
shall be delivered to the Trustee a letter in substantially the form of Exhibit
I (the "Rule 144A Letter") or (ii) there shall be delivered to the Trustee at
the expense of the transferor an Opinion of Counsel that such transfer may be
made without registration under the Securities Act. In the event that a transfer
of a Private Certificate which is a Book-Entry Certificate is to be made in
reliance upon an exemption from the Securities Act and such laws, in order to
assure compliance with the Securities Act and such laws, the Certificateholder
desiring to effect such transfer will be deemed to have made as of the transfer
date each of the certifications set forth in the Transferor Certificate in
respect of such Certificate and the transferee will be deemed to have made as of
the transfer date each of the certifications set forth in the Rule 144A Letter
in respect of such Certificate, in each case as if such Certificate were
evidenced by a Physical Certificate. The Depositor shall provide to any Holder
of a Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee and the Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Private Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.


                                      -75-
<PAGE>

         Except with respect to the transfer of the Class X and Class P
Certificates to the NIM Trust on the Closing Date, no transfer of an
ERISA-Restricted Certificate shall be made unless the Trustee shall have
received either (i) a representation from the transferee of such Certificate
acceptable to and in form and substance satisfactory to the Trustee (in the
event such Certificate is a Private Certificate or a Residual Certificate, such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit I), to the
effect that such transferee is not a Plan or (ii) in the case of an
ERISA-Restricted Certificate other than a Residual Certificate or a Class P
Certificate that has been the subject of an ERISA-Qualifying Underwriting, and
the purchaser is an insurance company, a representation that the purchaser is an
insurance company that is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of PTCE 95-60) and that the purchase and holding of such Certificates are
covered under Sections I and III of PTCE 95-60 or (iii) in the case of any such
ERISA-Restricted Certificate other than a Residual Certificate or Class P
Certificate presented for registration in the name of a Plan, an Opinion of
Counsel satisfactory to the Trustee and the Servicer, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer or the Trust Fund,
addressed to the Trustee, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code or similar violation of Similar Law and will
not subject the Trustee or the Servicer to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. For purposes of the
preceding sentence, with respect to an ERISA-Restricted Certificate that is not
a Private Certificate or a Residual Certificate, in the event the representation
letter referred to in the preceding sentence is not furnished, such
representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquirer's) acceptance of the
ERISA-Restricted Certificates. Notwithstanding anything else to the contrary
herein, (a) any purported transfer of an ERISA-Restricted Certificate, other
than a Class P Certificate or Residual Certificate, to or on behalf of a Plan
without the delivery to the Trustee of an Opinion of Counsel satisfactory to the
Trustee as described above shall be void and of no effect and (b) any purported
transfer of a Class P Certificate or Residual Certificate to a transferee that
does not make the representation in clause (i) above shall be void and of no
effect.


                                      -76-

<PAGE>

         To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.

         (c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:

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

                  (ii) No Ownership Interest in a Residual Certificate may be
         registered on the Closing Date or thereafter transferred, and the
         Trustee shall not register the Transfer of any Residual Certificate
         unless, in addition to the certificates required to be delivered to the
         Trustee under subparagraph (b) above, the Trustee shall have been
         furnished with an affidavit (a "Transfer Affidavit") of the initial
         owner or the proposed transferee in the form attached hereto as
         Exhibit G;

                  (iii) Each Person holding or acquiring any Ownership Interest
         in a Residual Certificate shall agree (A) to obtain a Transfer
         Affidavit from any other Person to whom such Person attempts to
         Transfer its Ownership Interest in a Residual Certificate, (B) to
         obtain a Transfer Affidavit from any Person for whom such Person is
         acting as nominee, trustee or agent in connection with any Transfer of
         a Residual Certificate and (C) not to Transfer its Ownership Interest
         in a Residual Certificate or to cause the Transfer of an Ownership
         Interest in a Residual Certificate to any other Person if it has actual
         knowledge that such Person is a Non-Permitted Transferee;

                  (iv) Any attempted or purported Transfer of any Ownership
         Interest in a Residual Certificate in violation of the provisions of
         this Section 5.02(c) shall be absolutely null and void and shall vest
         no rights in the purported Transferee. If any purported transferee
         shall become a Holder of a Residual Certificate in violation of the
         provisions of this Section 5.02(c), then the last preceding Permitted
         Transferee shall be restored to all rights as Holder thereof
         retroactive to the date of registration of Transfer of such Residual
         Certificate. The Trustee shall be under no liability to any Person for
         any registration of Transfer of a Residual Certificate that is in fact
         not permitted by Section 5.02(b) and this Section 5.02(c) or for making
         any payments due on such Certificate to the Holder thereof or taking
         any other action with respect to such Holder under the provisions of
         this Agreement so long as the Transfer was registered after receipt of
         the related Transfer Affidavit, Transferor Certificate and the Rule
         144A Letter. The Trustee shall be entitled but not obligated to recover
         from any Holder of a Residual Certificate that was in fact a
         Non-Permitted Transferee at the time it became a Holder or, at such
         subsequent time as it became a Non-Permitted Transferee, all payments
         made on such Residual Certificate at and after either such time. Any
         such payments so recovered by the Trustee shall be paid and delivered
         by the Trustee to the last preceding Permitted Transferee of such
         Certificate; and

                                      -77-
<PAGE>

                  (v) The Depositor shall use its best efforts to make
         available, upon receipt of written request from the Trustee, all
         information necessary to compute any tax imposed under Section 860E(e)
         of the Code as a result of a Transfer of an Ownership Interest in a
         Residual Certificate to any Holder who is a Non-Permitted Transferee.

         The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee or the
Servicer, to the effect that the elimination of such restrictions will not cause
either the Lower Tier REMIC or the Upper Tier REMIC hereunder to fail to qualify
as a REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust Fund, a Certificateholder or another Person.
Each Person holding or acquiring any Ownership Interest in a Residual
Certificate hereby consents to any amendment of this Agreement which, based on
an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Residual
Certificate is not transferred, directly or indirectly, to a Person that is a
Non-Permitted Transferee and (b) to provide for a means to compel the Transfer
of a Residual Certificate which is held by a Person that is a Non-Permitted
Transferee to a Holder that is a Permitted Transferee.

         (d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.

         (e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.

                                      -78-
<PAGE>

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

         If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, or (y) the Depositor at its option
advises the Trustee in writing (and the Trustee consents) that it elects to
terminate the book-entry system through the Depository, the Trustee shall notify
all Certificate Owners, through the Depository, of the occurrence of any such
event and of the availability of definitive, fully registered Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the
Trustee shall issue the Definitive Certificates. Neither the Servicer, the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instruction and each may conclusively rely on, and shall be protected in relying
on, such instructions. The Depositor shall provide the Trustee with an adequate
inventory of Certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder;
provided, that the Trustee shall not by virtue of its assumption of such
obligations become liable to any party for any act or failure to act of the
Depository.

         Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Depositor, the Servicer and the
Trustee such security or indemnity as may be required by them to hold each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

         Section 5.04 Persons Deemed Owners. The Servicer, the Trustee, the
Depositor and any agent of the Servicer, the Depositor or the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Servicer, the
Trustee, the Depositor nor any agent of the Servicer, the Depositor or the
Trustee shall be affected by any notice to the contrary.



                                      -79-
<PAGE>

         Section 5.05 Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing from
the Trustee, (b) state that such Certificateholders desire to communicate with
other Certificateholders with respect to their rights under this Agreement or
under the Certificates and (c) provide a copy of the communication which such
Certificateholders propose to transmit, or if the Depositor or Servicer shall
request such information in writing from the Trustee, then the Trustee shall,
within ten Business Days after the receipt of such request, provide the
Depositor, the Servicer or such Certificateholders at such recipients' expense
the most recent list of the Certificateholders of such Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

         Section 5.06 Maintenance of Office or Agency. The Trustee will maintain
or cause to be maintained at its expense an office or offices or agency or
agencies in New York, New York where Certificates may be surrendered for
registration of transfer or exchange. The Trustee initially designates the
offices of its agent for such purposes located at DTC Transfer Agent Services,
55 Water Street, Jeanette Park Entrance, New York, New York 10041. The Trustee
shall give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         Section 6.01 Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith only
to the extent of the obligations specifically and respectively imposed upon and
undertaken by them herein.

         Section 6.02 Merger or Consolidation of the Depositor or the Servicer.
(a) The Depositor and the Servicer will each keep in full effect its existence,
rights and franchises as a corporation or federally chartered savings bank, as
the case may be, under the laws of the United States or under the laws of one of
the states thereof and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         (b) The Servicer is and shall continue to be an institution which is a
Fannie Mae-approved and Freddie Mac-approved seller/servicer in good standing,
shall maintain a net worth of at least $30,000,000 (as determined in accordance
with generally accepted accounting principles) and shall maintain its license to
do business or service residential mortgage loans in any jurisdictions in which
the Mortgaged Properties are located.

         (c) Any Person into which the Depositor or the Servicer may be merged
or consolidated, or any Person resulting from any merger or consolidation to
which the Depositor or the Servicer shall be a party, or any person succeeding
to the business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall make the covenant set
forth in Section 6.02(b).

                                      -80-
<PAGE>

         Section 6.03 Limitation on Liability of the Depositor, the Servicer and
Others. Neither the Depositor, the Servicer nor any of their directors,
officers, employees or agents of the Depositor shall be under any liability to
the Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Servicer or any such Person against any breach of representations or warranties
made by it herein or protect the Depositor, Servicer or any such Person from any
liability which would otherwise be imposed by reasons of willful misfeasance,
bad faith or negligence (or gross negligence in the case of the Depositor) in
the performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor or the Servicer and any director, officer,
employee or agent of the Depositor and the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Depositor, the Servicer and
any director, officer, employee or agent of the Depositor and the Servicer shall
be indemnified by the Trust Fund and held harmless against any loss, liability
or expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates other than any loss, liability or
expense related to any specific Mortgage Loan or Mortgage Loans (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement or which relates to litigation or other legal action to enforce the
terms of this Agreement or to defend itself hereunder, unless such legal action
results from the willful misfeasance, bad faith or negligence of the Servicer)
and any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence (or gross negligence in the case of the Depositor) in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither Depositor nor the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its respective duties hereunder and which in its opinion may
involve it in any expense or liability; provided, however, that each of the
Depositor and the Servicer may in its discretion undertake any such action (or
direct the Trustee to undertake such actions pursuant to Section 2.03 hereof for
the benefit of the Certificateholders) that it may deem necessary or desirable
in respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Servicer shall be entitled to be reimbursed therefor out of the
Collection Account.

         Section 6.04 Limitation on Resignation of the Servicer. Subject to
Sections 7.01 and 10.07, the Servicer shall not assign this Agreement or resign
from the obligations and duties hereby imposed on it except by mutual consent of
the Servicer, the Depositor and the Trustee or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Depositor and the Trustee which Opinion of Counsel
shall be in form and substance acceptable to the Depositor and the Trustee. No
such resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder.



                                      -81-
<PAGE>

         Section 6.05 Additional Indemnification by the Servicer; Third Party
Claims. The Servicer shall indemnify the Responsible Party, the Depositor and
the Trustee and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to any breach by the Servicer, of (i) any of its
representations and warranties referred to in Section 2.03(a), or (ii) the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Depositor and the Trustee if such claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Depositor and the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
the Depositor, the Responsible Party or the Trustee in respect of such claim.

                                  ARTICLE VII

                                    DEFAULT

         Section 7.01 Events of Default. "Event of Default", wherever used
herein, means any one of the following events:

         (a) any failure by the Servicer to remit to the Trustee any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Depositor or by the Trustee, or to the Servicer, the Depositor
and the Trustee by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates; or

         (b) the failure on the part of the Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement which continues unremedied for a period
of forty-five days (except that such number of days shall be fifteen in the case
of a failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the earlier of (i) the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Depositor or by the Trustee, or to the
Servicer, the Depositor and the Trustee by Certificateholders entitled to at
least 25% of the Voting Rights in the Certificates and (ii) actual knowledge of
such failure by a Servicing Officer of the Servicer; or

         (c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

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



                                      -82-
<PAGE>

         (e) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or

         (f) any failure of the Servicer to make any P&I Advance on any
Remittance Date required to be made from its own funds pursuant to Section 4.01
which continues unremedied for one Business Day immediately following the
Remittance Date; or

         (g) a breach of any representation and warranty of the Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders and which continues unremedied for a period
of thirty days after the date upon which written notice of such breach is given
to the Servicer by the Trustee or by the Depositor, or to the Servicer, the
Trustee and the Depositor by Certificateholders entitled to at least 25% of the
Voting Rights in the Certificates; or

         (h) if the continued servicing of the Mortgage Loans by the Servicer,
in and of itself, would cause a downgrade, qualification or withdrawal of the
rating assigned to any Class of Certificates by any Rating Agency.

         If an Event of Default described in clauses (a) through (h) of this
Section 7.01 shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, or at the
direction of a majority of the Voting Rights the Trustee shall, by notice in
writing to the Servicer (with a copy to each Rating Agency), terminate all of
the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder; provided, however, that the Trustee shall not be
required to give written notice to the Servicer of the occurrence of an Event of
Default described in clauses (b) through (i) of this Section 7.01 unless and
until a Responsible Officer of the Trustee has actual knowledge of the
occurrence of such an event. In the event that a Responsible Officer of the
Trustee has actual knowledge of the occurrence of an event of default described
in clause (a) of this Section 7.01, the Trustee shall give written notice to the
Servicer of the occurrence of such an event within one Business Day of the first
day on which such Responsible Officer obtains actual knowledge of such
occurrence. On and after the receipt by the Servicer of such written notice, all
authority and power of the Servicer hereunder, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee. Subject
to Section 7.02, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans.



                                      -83-
<PAGE>

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive from the Trust Fund, prior
to transfer of its servicing obligations hereunder, payment of all accrued and
unpaid Servicing Fees and reimbursement for all outstanding P&I Advances and
Servicing Advances.

         Section 7.02 Trustee to Act; Appointment of Successor. On and after the
time the Servicer receives a notice of termination pursuant to Section 3.24 or
Section 7.01, the Trustee shall, subject to and to the extent provided in
Section 3.05, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make P&I Advances and Servicing Advances, pursuant
to Section 3.24 or Section 7.01. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans that the Servicer would
have been entitled to charge to the Collection Account if the Servicer had
continued to act hereunder including, if the Servicer was receiving the
Servicing Fee, the Servicing Fee and the income on investments or gain related
to the Collection Account and the Distribution Account which the Servicer would
be entitled to receive (in addition to income on investments or gain related to
the Distribution Account for the benefit of the Trustee during the Trustee Float
Period). Notwithstanding the foregoing, if the Trustee has become the successor
to the Servicer in accordance with Section 7.01, the Trustee may, if it shall be
unwilling to so act, or shall, if it is prohibited by applicable law from making
P&I Advances and Servicing Advances pursuant to Section 4.01, if it is otherwise
unable to so act or at the written request of Certificateholders entitled to at
least a majority of the Voting Rights, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency, as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. Any successor to the Servicer shall make
the covenant set forth in Section 6.02(b). Any successor to the Servicer shall
be an institution which is willing to service the Mortgage Loans and which
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, containing an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 incurred
prior to termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; provided, that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior to
such assignment and delegation will not be qualified or reduced, as a result of
such assignment and delegation. Pending appointment of a successor to the
Servicer hereunder, the Trustee, unless the Trustee is prohibited by law from so
acting, shall, subject to Section 3.05, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of the Servicing Fee Rate and amounts paid
to the Servicer from investments. The Trustee and such successor Servicer shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Neither the Trustee nor any other successor to
the Servicer shall be deemed to be in default hereunder by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the Servicer
to deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.



                                      -84-
<PAGE>

         In the event that the Servicer is terminated pursuant to Section 7.01,
the terminated Servicer shall be responsible for the servicing transfer, provide
notices to the Mortgagors, arrange for and transfer the Servicing Files to a
successor Servicer, pay all of its own out-of-pocket costs and expenses at its
own expense and pay all costs and expenses relating to the transfer of the
Servicing Files to a successor Servicer. In the event that the terminated
Servicer fails to perform the foregoing obligations, then the terminated
Servicer shall pay all reasonable out-of-pocket costs and expenses of a
servicing transfer that are incurred by all parties including a successor
Servicer (excluding set-up costs and other administrative expenses of the
successor Servicer), and in all other cases the successor Servicer shall pay for
such costs and expenses but shall not be entitled to reimbursement therefor from
the Trust Fund. Such amounts payable by the terminated Servicer shall be paid by
the terminated Servicer promptly upon presentation of reasonable documentation
of such costs. If the Trustee is the predecessor Servicer (except in the case
where the Trustee in its role as successor Servicer is being terminated pursuant
to Section 7.01 by reason of an Event of Default caused solely by the Trustee as
the successor Servicer and not by the predecessor Servicer's actions or
omissions), such costs shall be paid by the prior terminated Servicer promptly
upon presentation of reasonable documentation of such costs.

         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer, maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 3.13.

         Section 7.03 Notification to Certificateholders. (a) Upon any
termination of or appointment of a successor to the Servicer, the Trustee shall
give prompt written notice thereof to Certificateholders and each Rating Agency.

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

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         Section 8.01 Duties of the Trustee. The Trustee, before the occurrence
of an Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. In case an Event of Default has
occurred and remains uncured, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.



                                      -85-
<PAGE>

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they are in the form
required by this Agreement. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order, or other instrument.

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

         Unless an Event of Default known to the Trustee has occurred and is
continuing:

         (a) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of the duties and obligations specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement which it believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;

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

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

         Section 8.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 8.01:

         (a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no responsibility to
ascertain or confirm the genuineness of any signature of any such party or
parties;

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



                                      -86-
<PAGE>

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

         (d) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Holders of Certificates
evidencing not less than 25% of the Voting Rights allocated to each Class of
Certificates;

         (e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;

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

         (g) the Trustee shall not be liable for any loss on any investment of
funds pursuant to this Agreement (other than as issuer of the investment
security and with respect to the investment of funds in the Distribution Account
not made at the direction of the Servicer during the Trustee Float Period);

         (h) except as otherwise provided in Section 7.01, the Trustee shall not
be deemed to have knowledge of an Event of Default until a Responsible Officer
of the Trustee shall have received written notice thereof; and

         (i) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby.

         Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document other than with respect to the Trustee's execution and
countersignature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or the Servicer of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.

         The Trustee shall have no responsibility for filing or recording any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer).

                                      -87-
<PAGE>

         The Trustee executes the Certificates not in its individual capacity
but solely as Trustee of the Trust Fund created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal undertaking or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.

         Section 8.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Trustee.

         Section 8.05 Trustee's Fees and Expenses. As compensation for its
activities under this Agreement, the Trustee may withdraw from the Distribution
Account on each Distribution Date the Trustee Fee for the Distribution Date and
any interest or investment income earned on funds deposited in the Distribution
Account during the Trustee Float Period. The Trustee and any director, officer,
employee, or agent of the Trustee shall be indemnified by the Servicer against
any loss, liability, or expense (including reasonable attorney's fees) resulting
from any error in any tax or information return prepared by the Servicer or
incurred in connection with any claim or legal action relating to:

         (a) this Agreement,

         (b) the Certificates, or

         (c) the performance of any of the Trustee's duties under this
Agreement,

other than any loss, liability, or expense incurred because of willful
misfeasance, bad faith, or negligence in the performance of any of the Trustee's
duties under this Agreement. This indemnity shall survive the termination of
this Agreement or the resignation or removal of the Trustee under this
Agreement. Without limiting the foregoing, except as otherwise agreed upon in
writing by the Depositor and the Trustee, and except for any expense,
disbursement, or advance arising from the Trustee's negligence, bad faith, or
willful misconduct, the Servicer shall pay or reimburse the Trustee, for all
reasonable expenses, disbursements, and advances incurred or made by the Trustee
in accordance with this Agreement with respect to:

                  (A) the reasonable compensation, expenses, and disbursements
         of its counsel not associated with the closing of the issuance of the
         Certificates,

                  (B) the reasonable compensation, expenses, and disbursements
         of any accountant, engineer, or appraiser that is not regularly
         employed by the Trustee, to the extent that the Trustee must engage
         them to perform services under this Agreement, and

                  (C) printing and engraving expenses in connection with
         preparing any Definitive Certificates.



                                      -88-
<PAGE>

         Except as otherwise provided in this Agreement or a separate letter
agreement between the Trustee and the Depositor, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee, Registrar, or
paying agent under this Agreement or for any other expenses incurred by the
Trustee.

         Section 8.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a corporation or association organized and doing
business under the laws of a state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority and with a credit rating which would not cause any of
the Rating Agencies to reduce their respective then current ratings of the
Certificates (or having provided such security from time to time as is
sufficient to avoid such reduction) as evidenced in writing by each Rating
Agency. If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07. The
entity serving as Trustee may have normal banking and trust relationships with
the Depositor and its affiliates or the Servicer and its affiliates; provided,
however, that such entity cannot be an affiliate of the Depositor or the
Servicer other than the Trustee in its role as successor to the Servicer.

         Section 8.07 Resignation and Removal of the Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice of resignation to the Depositor, the Servicer and each Rating
Agency not less than 60 days before the date specified in such notice, when,
subject to Section 8.08, such resignation is to take effect, and acceptance by a
successor trustee in accordance with Section 8.08 meeting the qualifications set
forth in Section 8.06. If no successor trustee meeting such qualifications shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice or resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or a tax is imposed with respect to
the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the imposition of such tax would be avoided by the appointment of a
different trustee, then the Depositor or the Servicer may remove the Trustee and
appoint a successor trustee by written instrument, in triplicate, one copy of
which shall be delivered to the Trustee, one copy to the Servicer and one copy
to the successor trustee.

         The Holders of Certificates entitled to at least a majority of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which shall be
delivered by the successor Trustee to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. The
successor trustee shall notify each Rating Agency of any removal of the Trustee.

                                      -89-
<PAGE>

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.

         Section 8.08 Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. The Depositor, the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties, and obligations.

         No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does not adversely affect the
then current rating of the Certificates.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.

         Section 8.09 Merger or Consolidation of the Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder; provided, that such corporation shall be eligible under Section 8.06
without the execution or filing of any paper or further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding.

         Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider appropriate. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.

                                      -90-
<PAGE>

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

         (a) To the extent necessary to effectuate the purposes of this Section
8.10, all rights, powers, duties and obligations conferred or imposed upon the
Trustee, except for the obligation of the Trustee under this Agreement to
advance funds on behalf of the Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the applicable Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the Trustee;

         (b) No trustee hereunder shall be held personally liable because of any
act or omission of any other trustee hereunder and such appointment shall not,
and shall not be deemed to, constitute any such separate trustee or co-trustee
as agent of the Trustee;

         (c) The Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee; and

         (d) The Servicer, and not the Trustee, shall be liable for the payment
of reasonable compensation, reimbursement and indemnification to any such
separate trustee or co-trustee.

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

                                      -91-
<PAGE>

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

         Section 8.11 Tax Matters. It is intended that the assets with respect
to which any REMIC election pertaining to the Trust Fund is to be made, as set
forth in the Preliminary Statement, shall constitute, and that the conduct of
matters relating to such assets shall be such as to qualify such assets as, a
"real estate mortgage investment conduit" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Trustee covenants
and agrees that it shall act as agent (and the Trustee is hereby appointed to
act as agent) on behalf of the Lower Tier and Upper Tier REMIC and that in such
capacity it shall:

         (a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit (REMIC) Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file with the Internal
Revenue Service and applicable state or local tax authorities income tax or
information returns for each taxable year with respect to the Lower Tier and
Upper Tier REMIC containing such information and at the times and in the manner
as may be required by the Code or state or local tax laws, regulations, or
rules, and furnish to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby;

         (b) within thirty days of the Closing Date, the Trustee will apply for
an employer identification number from the Internal Revenue Service via Form
SS-4 or any other acceptable method for all tax entities and shall also furnish
to the Internal Revenue Service, on Form 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;

         (c) make an election that each of the Lower Tier REMIC and the Upper
Tier REMIC be treated as a REMIC on the federal tax return for its first taxable
year (and, if necessary, under applicable state law);

         (d) prepare and forward to the Certificateholders and to the Internal
Revenue Service and, if necessary, state tax authorities, all information
returns and reports as and when required to be provided to them in accordance
with the REMIC Provisions, including the calculation of any original issue
discount using the prepayment assumption (as described in the Prospectus
Supplement);

         (e) provide information necessary for the computation of tax imposed on
the transfer of a Residual Certificate to a Person that is a Non-Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax);



                                      -92-
<PAGE>

         (f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding so as
to maintain the status of each of the Upper Tier REMIC and Lower Tier REMIC as a
REMIC under the REMIC Provisions;

         (g) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of either the Lower
Tier REMIC or the Upper Tier REMIC created hereunder;

         (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on the Lower Tier REMIC and the
Upper Tier REMIC created hereunder before its termination when and as the same
shall be due and payable (but such obligation shall not prevent the Trustee or
any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings);

         (i) cause federal, state or local income tax or information returns to
be signed by the Trustee or such other person as may be required to sign such
returns by the Code or state or local laws, regulations or rules;

         (j) maintain records relating to the Lower Tier REMIC and the Upper
Tier REMIC created hereunder, including the income, expenses, assets, and
liabilities thereof on a calendar year basis and on the accrual method of
accounting and the fair market value and adjusted basis of the assets determined
at such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and

         (k) as and when necessary and appropriate, represent the Lower Tier
REMIC and the Upper Tier REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
the Lower Tier REMIC and the Upper Tier REMIC created hereunder, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Lower Tier REMIC and the Upper Tier
REMIC created hereunder, and otherwise act on behalf of each REMIC in relation
to any tax matter or controversy involving it.

         The Trustee shall treat the rights of the Class P Certificateholders to
Prepayment Charges, the rights of the Class X Certificateholders to receive
Interest Rate Cap Payments (subject to the obligation to pay Basis Risk
CarryForward Amounts) and the rights of the LIBOR Certificateholders to receive
Basis Risk CarryForward Amounts as the beneficial ownership of interests in a
grantor trust, and not as an obligation of either the Lower Tier REMIC or Upper
Tier REMIC created hereunder, for federal income tax purposes.



                                      -93-
<PAGE>

         To enable the Trustee to perform its duties under this Agreement, the
Depositor shall provide to the Trustee within ten days after the Closing Date
all information or data that the Trustee requests in writing and determines to
be relevant for tax purposes to the valuations and offering prices of the
Certificates, including the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value to each Class of
Certificates of the right to receive Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor any additional information or
data that the Trustee may, from time to time, reasonably request to enable the
Trustee to perform its duties under this Agreement. The Depositor hereby
indemnifies the Trustee for any losses, liabilities, damages, claims, or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.

         If any tax is imposed on "prohibited transactions" of either the Lower
Tier REMIC or Upper Tier REMIC created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of the
Lower Tier REMIC as defined in Section 860G(c) of the Code, on any contribution
to either the Lower Tier REMIC or Upper Tier REMIC after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including
any minimum tax imposed on either REMIC pursuant to Sections 23153 and 24874 of
the California Revenue and Taxation Code, if not paid as otherwise provided for
herein, the tax shall be paid by (i) the Trustee if such tax arises out of or
results from negligence of the Trustee in the performance of any of its
obligations under this Agreement, (ii) the Servicer, in the case of any such
minimum tax, and otherwise if such tax arises out of or results from a breach by
the Servicer of any of its obligations under this Agreement, (iii) the
Responsible Party if such tax arises out of or results from the Responsible
Party's obligation to repurchase a Mortgage Loan pursuant to Section 2.03 or
(iv) in all other cases, or if the Trustee, the Servicer, or the Responsible
Party fails to honor its obligations under the preceding clause (i), (ii) or
(iii), any such tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 4.02(a).

         Section 8.12 Periodic Filings. (a) The Trustee and the Servicer shall
reasonably cooperate with the Depositor in connection with the Trust's
satisfying the reporting requirements under the Securities Exchange Act of 1934,
as amended. The Trustee shall prepare on behalf of the Trust any Forms 8-K and
10-K customary for similar securities as required by the Exchange Act and the
Rules and Regulations of the Securities and Exchange Commission thereunder, and
the Trustee shall sign and file (via the Securities and Exchange Commission's
Electronic Data Gathering and Retrieval System) such Forms on behalf of the
Depositor, if an officer of the Depositor signs the Certification (as defined
below), or otherwise on behalf of the Trust. In the event the Trustee is signing
on behalf of the Depositor pursuant to the preceding sentence, the Depositor
hereby grants to the Trustee a limited power of attorney to execute and file
each such document on behalf of the Depositor. Such power of attorney shall
continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust. Notwithstanding the foregoing, the Trustee shall
prepare such Form to be signed by the Depositor and the Depositor shall sign
such Form, unless the Securities and Exchange Commission has indicated that it
will accept a Certification signed by the Depositor where the related Form 10-K
is signed by the Trustee on behalf of the Depositor.

                                      -94-
<PAGE>

         (b) Each Form 8-K shall be filed by the Trustee within 15 days after
each Distribution Date, including a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
March 30th of each year (or such earlier date as may be required by the Exchange
Act and the Rules and Regulations of the Securities and Exchange Commission),
the Trustee shall file a Form 10-K, in substance as required by applicable law
or applicable Securities and Exchange Commission staff's interpretations. Such
Form 10-K shall include as exhibits the Servicer's annual statement of
compliance described under Section 3.22 and the accountant's report described
under Section 3.23, in each case to the extent they have been timely delivered
to the Trustee. If they are not so timely delivered, the Trustee shall file an
amended Form 10-K including such documents as exhibits reasonably promptly after
they are delivered to the Trustee. The Trustee shall have no liability with
respect to any failure to properly prepare or file such periodic reports
resulting from or relating to the Trustee's inability or failure to obtain any
information not resulting from its own negligence, willful misconduct or bad
faith. The Form 10-K shall also include a certification in the form attached
hereto as Exhibit L (the "Certification"), which shall, except as described
below, be signed by the senior officer of the Depositor in charge of
securitization. Notwithstanding the foregoing, if it is determined by the
Depositor that the Certification may be executed by multiple persons, the
Trustee shall sign the Certification in respect of items 1 through 3 thereof and
the Servicer shall cause the senior officer in charge of servicing at the
Servicer to sign the Certification in respect of items 3 through 5 thereof and
the Trustee may rely on the Certification signed by the Servicer to the same
extent as provided in subsection (c) below.

         (c) In the event the Certification is to be signed by an officer of the
Depositor, the Trustee shall sign a certification (in the form attached hereto
as Exhibit M) for the benefit of the Depositor and its officers, directors and
Affiliates in respect of items 1 through 3 thereof of the Certification
(provided, however, that the Trustee shall not undertake an analysis of the
accountant's report attached as an exhibit to the Form 10-K), and the Servicer
shall sign a certification (in the form attached hereto as Exhibit N) for the
benefit of the Depositor, the Trustee and their respective officers, directors
and Affiliates in respect of items 1 through 3 of the Certification. Each such
certification shall be delivered to the Depositor no later than March 10th of
each year (or if such day is not a Business Day, the immediately preceding
Business Day) and the Depositor shall deliver the Certification to be filed to
the Trustee no later than March 20th of each year (or if such day is not a
Business Day, the immediately preceding Business Day). In the event that prior
to the filing date of the Form 10-K in March of each year, the Trustee or the
Servicer has actual knowledge of information material to the Certification, that
party shall promptly notify the Depositor and each of the other parties signing
the certifications. In addition, (i) the Trustee shall indemnify and hold
harmless the Depositor and its officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any breach of the Trustee's obligations under this
Section 8.12(c) or the Trustee's negligence, bad faith or willful misconduct in
connection therewith, and (ii) the Servicer shall indemnify and hold harmless
the Depositor, the Trustee and their respective officers, directors and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of or based upon any breach of the Servicer's
obligations under this Section 8.12(c) or any material misstatement or omission,
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for in the preceding sentence is
unavailable or insufficient to hold harmless any indemnified party, then (i) the
Trustee agrees in connection with a breach of the Trustee's obligations under
this Section 8.12(c) or the Trustee's negligence, bad faith or willful
misconduct in connection therewith that it shall contribute to the amount paid
or payable by the Depositor as a result of the losses, claims, damages or
liabilities of the Depositor in such proportion as is appropriate to reflect the
relative fault of the Depositor, on the one hand, and the Trustee, on the other,
and (ii) the Servicer agrees that it shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities of such indemnified party in such proportion as is appropriate to
reflect the relative fault of such indemnified party, on the one hand, and the
Servicer, on the other, in connection with a breach of the Servicer's
obligations under this Section 8.12(c) or any material misstatement or omission,
negligence, bad faith or willful misconduct of the Servicer in connection
therewith.



                                      -95-
<PAGE>

         (d) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.

         (e) Prior to January 30 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall file a Form 15 Suspension
Notification with respect to the Trust.

         Section 8.13 Tax Classification of the Excess Reserve Fund Account and
the Cap Agreement. For federal income tax purposes, the Trustee shall treat the
Excess Reserve Fund Account and the Cap Agreement as beneficially owned by the
holders of the Class X Certificates and shall treat such portion of the Trust
Fund as a grantor trust, within the meaning of subpart E, Part I of subchapter J
of the Code. The Trustee shall treat the rights that each Class of LIBOR
Certificates has to receive payments of Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account as rights to receive payments under an interest rate
cap contract written by the Class X Certificateholder in favor of each such
Class and beneficially owned by each such Class through the grantor trust.
Accordingly, each Class of Certificates (excluding the Class X, Class P and
Class R Certificates) will be comprised of two components - an Upper Tier
Regular Interest and an interest in an interest rate cap contract, and the Class
X Certificates will be comprised of three components - an Upper-Tier Regular
Interest, the Cap Agreement and an interest in the Excess Reserve Fund Account,
subject to obligation to pay Basis Risk CarryForward Amounts. The Trustee shall
allocate the issue price for a Class of Certificates among the respective
components for purposes of determining the issue price of the Upper Tier Regular
Interest component based on information received from the Depositor.

                                   ARTICLE IX

                                   TERMINATION

         Section 9.01 Termination upon Liquidation or Purchase of the Mortgage
Loans. Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase, on or after the
Optional Termination Date, by the Servicer of all Mortgage Loans (and REO
Properties) at the price equal to the sum of (i) 100% of the unpaid principal
balance of each Mortgage Loan (other than in respect of REO Property) plus
accrued and unpaid interest thereon at the applicable Mortgage Rate and (ii) the
lesser of (x) the appraised value of any REO Property as determined by the
higher of two appraisals completed by two independent appraisers selected by the
Servicer at the expense of the Servicer, plus accrued and unpaid interest on
each Mortgage Loan at the applicable Mortgage Rate, and (y) the unpaid principal
balance of each Mortgage Loan related to any REO Property, plus accrued and
unpaid interest thereon at the applicable Mortgage Rate and (b) the later of (i)
the maturity or other liquidation (or any Advance with respect thereto) of the
last Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement. In no event shall the
trusts created hereby continue beyond the expiration of 21 years from the death
of the survivor of the descendants of Joseph P. Kennedy, the late Ambassador of
the United States to the Court of St. James's, living on the date hereof.

                                      -96-
<PAGE>

         Notwithstanding anything to the contrary contained herein, no such
purchase shall be permitted unless (i) after distribution of the proceeds
thereof to the Certificateholders (other than the Holders of the Class X, Class
P and Residual Certificates) pursuant to Section 9.02, the distribution of the
remaining proceeds to the Class X and Class P Certificates is sufficient to pay
the outstanding principal amount of and accrued and unpaid interest on the NIM
Securities, to the extent the NIM Securities are then outstanding, or (ii) prior
to such purchase, the Servicer remits to the Trustee an amount (which amount
shall be directly remitted to the Indenture Trustee for deposit in the Note
Account) that, together with such remaining proceeds, will be sufficient to pay
the outstanding principal amount of and accrued and unpaid interest on the NIM
Securities, to the extent the NIM Securities are then outstanding.

         Section 9.02 Final Distribution on the Certificates. If on any
Remittance Date, the Servicer determines that there are no Outstanding Mortgage
Loans and no other funds or assets in the Trust Fund other than the funds in the
Collection Account, the Servicer shall direct the Trustee promptly to send a
Notice of Final Distribution to each Certificateholder. If the Servicer elects
to terminate the Trust Fund pursuant to clause (a) of Section 9.01, at least 20
days prior to the date the Notice of Final Distribution is to be mailed to the
affected Certificateholders, the Servicer shall notify the Depositor and the
Trustee of the date the Servicer intends to terminate the Trust Fund and of the
applicable repurchase price of the Mortgage Loans and REO Properties.

         A Notice of Final Distribution, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 10th day and not later
than the 15th day of the month next preceding the month of such final
distribution. Any such Notice of Final Distribution shall specify (a) the
Distribution Date upon which final distribution on the Certificates will be made
upon presentation and surrender of Certificates at the office therein
designated, (b) the amount of such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such Notice
of Final Distribution to each Rating Agency at the time such Notice of Final
Distribution is given to Certificateholders.





                                      -97-
<PAGE>

         In the event such Notice of Final Distribution is given, the Servicer
shall cause all funds in the Collection Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the Servicer the Custodial Files for the
Mortgage Loans.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class (after
reimbursement of all amounts due to the Servicer, the Depositor and the Trustee
hereunder), in each case on the final Distribution Date and in the order set
forth in Section 4.02, in proportion to their respective Percentage Interests,
with respect to Certificateholders of the same Class, up to an amount equal to
(i) as to each Class of Regular Certificates (except the Class X Certificate),
the Certificate Balance thereof plus for each such Class and the Class X
Certificate accrued interest thereon in the case of an interest-bearing
Certificate and all other amounts to which such Classes are entitled pursuant to
Section 4.02 and (ii) as to the Residual Certificates, the amount, if any, which
remains on deposit in the Distribution Account (other than the amounts retained
to meet claims) after application pursuant to clause (i) above.

         In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund
which remain subject hereto.

         Section 9.03 Additional Termination Requirements. In the event the
Servicer exercises its purchase option with respect to the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on either the Lower Tier
REMIC or the Upper Tier REMIC as defined in Section 860F of the Code or (ii)
cause either the Lower Tier REMIC or the Upper Tier REMIC to fail to qualify as
a REMIC at any time that any Certificates are outstanding:

         (a) The Trustee shall sell all of the assets of the Trust Fund to the
Servicer, and, within 90 days of such sale, shall distribute to the
Certificateholders the proceeds of such sale in complete liquidation of each of
the Lower Tier REMIC and the Upper Tier REMIC; and

         (b) The Trustee shall attach a statement to the final federal income
tax return for each of the Lower Tier REMIC and the Upper Tier REMIC stating
that pursuant to Treasury Regulations Section 1.860F-1, the first day of the
90-day liquidation period for each such REMIC was the date on which the Trustee
sold the assets of the Trust Fund to the Servicer.

                                      -98-
<PAGE>

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

         Section 10.01 Amendment. This Agreement may be amended from time to
time by the Depositor, the Responsible Party, the Servicer and the Trustee,
without the consent of any of the Certificateholders (i) to cure any ambiguity
or mistake, (ii) to correct any defective provision herein or to supplement any
provision herein which may be inconsistent with any other provision herein,
(iii) to add to the duties of the Depositor or the Servicer, (iv) to add any
other provisions with respect to matters or questions arising hereunder or (v)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided, that any action pursuant to clause (iv)
or (v) above shall not, as evidenced by an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust Fund), adversely
affect in any material respect the interests of any Certificateholder; provided,
further, that the amendment shall not be deemed to adversely affect in any
material respect the interests of the Certificateholders if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Certificates; it being understood and
agreed that any such letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating. The Trustee, the
Depositor, the Responsible Party and the Servicer also may at any time and from
time to time amend this Agreement, but without the consent of the
Certificateholders to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or helpful to (i) maintain the qualification of the
Lower Tier REMIC and the Upper Tier REMIC under the Code, (ii) avoid or minimize
the risk of the imposition of any tax on the Lower Tier REMIC or the Upper Tier
REMIC pursuant to the Code that would be a claim at any time prior to the final
redemption of the Certificates or (iii) comply with any other requirements of
the Code; provided, that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to, as applicable, (i) maintain such
qualification, (ii) avoid or minimize the risk of the imposition of such a tax
or (iii) comply with any such requirements of the Code.

         This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Responsible Party and the Trustee, but with the consent of the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 66?% of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (i), without the consent of the Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating not less than
66?% or (iii) reduce the aforesaid percentages of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all such Certificates then outstanding.


                                      -99-
<PAGE>

         Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless (i) it shall have
first received an Opinion of Counsel, which opinion shall not be an expense of
the Trustee or the Trust Fund, to the effect that such amendment will not cause
the imposition of any tax on either the Lower Tier REMIC or the Upper Tier REMIC
or the Certificateholders or cause any such REMIC to fail to qualify as a REMIC
at any time that any Certificates are outstanding and (ii) the party seeking
such amendment shall have provided written notice to the Rating Agencies (with a
copy of such notice to the Trustee) of such amendment, stating the provisions of
the Agreement to be amended.

         Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicer, any Certificate beneficially owned by the Depositor
shall be deemed not to be outstanding (and shall not be considered when
determining the percentage of Certificateholders consenting or when calculating
the total number of Certificates entitled to consent) for purposes of
determining if the requisite consents of Certificateholders under this Section
10.01 have been obtained.

         Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section 10.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with and (ii) either
(A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.

         Section 10.02 Recordation of Agreement; Counterparts. This Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the direction and expense of the Depositor, but only
upon receipt of an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.


                                     -100-
<PAGE>

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

         Section 10.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 10.04 Intention of Parties. It is the express intent of the
parties hereto that the conveyance (i) of the Mortgage Loans by the Depositor
and (ii) of the Trust Fund by the Depositor to the Trustee each be, and be
construed as, an absolute sale thereof. It is, further, not the intention of the
parties that such conveyances be deemed a pledge thereof. However, in the event
that, notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, as the case may be, or if for any other reason this
Agreement is held or deemed to create a security interest in either such assets,
then (i) this Agreement shall be deemed to be a security agreement within the
meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyances provided for in this Agreement shall be deemed to be an assignment
and a grant by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the assets transferred,
whether now owned or hereafter acquired.

         The Depositor, for the benefit of the Certificateholders, shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Trust Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement. The Depositor shall arrange for filing any
Uniform Commercial Code continuation statements in connection with any security
interest granted or assigned to the Trustee for the benefit of the
Certificateholders.

         Section 10.05 Notices. (a) The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:

                  1. Any material change or amendment to this Agreement;

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

                  3. The resignation or termination of the Servicer or the
Trustee and the appointment of any successor;

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

                  5. The final payment to Certificateholders.



                                     -101-
<PAGE>

         (b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

                  1. Each report to Certificateholders described in Section
4.03; and

                  2. Any notice of a purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03 or 3.11.

         All directions, demands, consents and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to: (a) in
the case of the Depositor, Morgan Stanley ABS Capital I Inc., 1221 Avenue of the
Americas, New York, New York 10036, Attention: Michelle Wilke, Esq., Facsimile:
(212) 762-8896, or such other address as the Depositor may hereafter furnish to
the Servicer and the Trustee; (b) in the case of the Servicer, The Provident
Bank, One East Fourth Street, Cincinnati, Ohio, Attention: Randy Decker, or such
other address as may be hereafter furnished to the Depositor, the Responsible
Party and the Trustee by the Servicer in writing; (c) in the case of the Trustee
to the Corporate Trust Office, Deutsche Bank National Trust Company, 1761 East
St. Andrew Place, Santa Ana, California 92705, Attention: Trust
Administration-MS03C8, or such other address as the Trustee may hereafter
furnish to the Depositor, the Responsible Party or Servicer; (d) in the case of
the Responsible Party, NC Capital Corporation, 18400 Van Karman, Suite 1000,
Irvine, California 92612, Attention: Patrick Flanagan, President, or such other
address as the Responsible Party may hereafter furnish to the Depositor, the
Trustee or the Servicer; and (e) in the case of each of the Rating Agencies, the
address specified therefor in the definition corresponding to the name of such
Rating Agency. Notices to Certificateholders shall be deemed given when mailed,
first class postage prepaid, to their respective addresses appearing in the
Certificate Register.

         Section 10.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.

         Section 10.07 Assignment; Sales; Advance Facilities. Notwithstanding
anything to the contrary contained herein, except as provided in Section 6.02,
this Agreement may not be assigned by the Servicer without the prior written
consent of the Trustee and the Depositor; provided, however, the Servicer is
hereby authorized to enter into an Advance Facility under which (l) the Servicer
sells, assigns or pledges to an Advancing Person the Servicer's rights under
this Agreement to be reimbursed for any P&I Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all P&I Advances or
Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party is
required before the Servicer may enter into an Advance Facility. Notwithstanding
the existence of any Advance Facility under which an Advancing Person agrees to
fund P&I Advances and/or Servicing Advances on the Servicer's behalf, the
Servicer shall remain obligated pursuant to this Agreement to make P&I Advances
and Servicing Advances pursuant to and as required by this Agreement, and shall
not be relieved of such obligations by virtue of such Advance Facility.



                                     -102-
<PAGE>

         Reimbursement amounts shall consist solely of amounts in respect of P&I
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related P&I Advance(s) and/or
Servicing Advance(s).

         The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.

         An Advancing Person who purchases or receives an assignment or pledge
of the rights to be reimbursed for P&I Advances and/or Servicing Advances,
and/or whose obligations hereunder are limited to the funding of P&I Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Sub-Servicer set forth in this Agreement.

         The documentation establishing any Advance Facility shall require that
such reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed P&I Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first-in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan-by-loan information with
respect to each such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
trustee for all P&I Advances and Servicing Advances funded by the Servicer to
the extent the related rights to be reimbursed therefor have not been sold,
assigned or pledged to an Advancing Person.

         Any amendment to this Section 10.07 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Responsible Party and the Servicer, without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement,
upon receipt by the Trustee of an Opinion of Counsel that such amendment has no
material adverse effect on the Certificateholders or written confirmation from
the Rating Agencies that such amendment will not adversely affect the ratings on
the Certificates. Prior to entering into an Advance Facility, the applicable
Servicer shall notify the lender under such facility in writing that: (a) the
Advances financed by and/or pledged to the lender are obligations owed to the
Servicer on a non-recourse basis payable only from the cash flows and proceeds
received under this Agreement for reimbursement of Advances only to the extent
provided herein, and the Trustee and the Trust are not otherwise obligated or
liable to repay any Advances financed by the lender; (b) the Servicer will be
responsible for remitting to the lender the applicable amounts collected by it
as reimbursement for Advances funded by the lender, subject to the restrictions
and priorities created in this Agreement; and (c) the Trustee shall not have any
responsibility to track or monitor the administration of the financing
arrangement between the Servicer and the lender.



                                     -103-
<PAGE>

         Section 10.08 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the trust created hereby, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the trust
created hereby, or otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.

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

         No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

         Section 10.09 Inspection and Audit Rights. The Servicer agrees that, on
reasonable prior notice, it will permit any representative of the Depositor or
the Trustee during such Person's normal business hours, to examine all the books
of account, records, reports and other papers of such Person relating to the
Mortgage Loans, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants selected by the Depositor or
the Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Servicer hereby authorizes said accountants to
discuss with such representative such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense of the Servicer incident to the exercise by the Depositor
or the Trustee of any right under this Section 10.09 shall be borne by the
Servicer.



                                     -104-
<PAGE>

         Section 10.10 Certificates Nonassessable and Fully Paid. It is the
intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.

         Section 10.11 Rule of Construction. Article and section headings are
for the convenience of the reader and shall not be considered in interpreting
this Pooling and Servicing Agreement or the intent of the parties hereto.

         Section 10.12 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE
LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.

                            [SIGNATURE PAGE FOLLOWS]




                                     -105-
<PAGE>




             [Signature Page to the Pooling and Servicing Agreement]

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

                              MORGAN STANLEY ABS CAPITAL I INC.,
                                   as Depositor


                              By:  /s/ STEVEN SHAPIRO
                                   --------------------------------------
                                   Name: STEVEN SHAPIRO
                                   Title: EXECUTIVE DIRECTOR


                              DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                   solely as Trustee and not in
                                   its individual capacity


                              By:  /s/ JEREMY CONYERS
                                   --------------------------------------
                                   Name: JEREMY CONYERS
                                   Title: ASSOCIATE




                              By:  /s/ ALAN SUEDA
                                   --------------------------------------
                                   Name: ALAN SUEDA
                                   Title: ASSOCIATE


                              THE PROVIDENT BANK, as Servicer


                              By:  /s/ DAVID M. FRIEDMAN
                                   --------------------------------------
                                   Name: DAVID M. FRIEDMAN
                                   Title: SR. VICE PRESIDENT


                              NC CAPITAL CORPORATION,
                                   as Responsible Party


                              By:  /s/ KEVIN CLOYD
                                   --------------------------------------
                                   Name: KEVIN CLOYD
                                   Title: PRESIDENT





                                     -106-
<PAGE>








                                   SCHEDULE I

                             Mortgage Loan Schedule

                   [Delivered to Trustee on the Closing Date]




                                     S-I-1
<PAGE>
                                   SCHEDULE II

                       Mortgage Pass-Through Certificates,
                                 Series 2003-NC8

                 Representations and Warranties of the Servicer

         THE PROVIDENT BANK (the "Servicer") hereby makes the representations
and warranties set forth in this Schedule II to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule II shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series.

                  (1) The Servicer is an Ohio banking corporation duly
         organized, validly existing and in good standing under the laws of the
         state of Ohio as now being conducted and is in good standing under the
         laws of, and is licensed and qualified to transact any and all business
         contemplated by this Pooling and Servicing Agreement to be conducted by
         the Servicer in any state in which a Mortgaged Property securing a
         Mortgage Loan is located or is otherwise not required under applicable
         law to effect such licensing or qualification and, in any event, is in
         compliance with the doing business laws of any such State, to the
         extent necessary to ensure its ability to enforce each Mortgage Loan
         and to service the Mortgage Loans in accordance with the terms of this
         Pooling and Servicing Agreement;

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

                  (3) The execution and delivery of this Pooling and Servicing
         Agreement by the Servicer, the servicing of the Mortgage Loans by the
         Servicer hereunder, the consummation by the Servicer of any other of
         the transactions herein contemplated, and the fulfillment of or
         compliance with the terms hereof are in the ordinary course of business
         of the Servicer and will not (A) result in a breach of any term or
         provision of the organizational documents of the Servicer or (B)
         conflict with, result in a breach, violation or acceleration of, or
         result in a default under, the terms of any other material agreement or
         instrument to which the Servicer is a party or by which it may be
         bound, or any law, statute, rule, order, regulation, judgment or decree
         applicable to the Servicer or its property of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over the Servicer; and the Servicer is not a party to, bound by, or in
         breach or violation of any indenture or other agreement or instrument,
         or subject to or in violation of any law, statute, rule, order,
         regulation, judgment or decree of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over it,
         which (w) materially and adversely affects or, to the Servicer's
         knowledge, would in the future materially and adversely affect, the
         ability of the Servicer to perform its obligations under this Pooling
         and Servicing Agreement, (x) materially and adversely affects or, to
         the Servicer's knowledge, would in the future materially and adversely
         affect, the business, operations, financial condition, properties or
         assets of the Servicer taken as a whole, (y) impair the ability of the
         Trust to realize on the Mortgage Loans, or (z) impair the value of the
         Mortgage Loans;



                                     S-II-1
<PAGE>

                  (4) The Servicer is an approved seller/servicer for Fannie Mae
         and an approved servicer for Freddie Mac in good standing and is a HUD
         approved mortgagee pursuant to Section 203 and Section 211 of the
         National Housing Act;

                  (5) The Servicer has the facilities, procedures, and
         experienced personnel necessary for the sound servicing of mortgage
         loans of the same type as the Mortgage Loans;

                  (6) The Servicer does not believe, nor does it have any reason
         or cause to believe, that it cannot perform each and every covenant
         contained in this Pooling and Servicing Agreement;

                  (7) No action, suit, proceeding or investigation is pending or
         threatened against the Servicer, before any court, administrative
         agency or other tribunal asserting the invalidity of this Pooling and
         Servicing Agreement, seeking to prevent the consummation of any of the
         transactions contemplated by this Pooling and Servicing Agreement or
         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 Servicer, or in any material
         impairment of the right or ability of the Servicer to carry on its
         business substantially as now conducted, or in any material liability
         on the part of the Servicer, or which would draw into question the
         validity of this Pooling and Servicing Agreement or the Mortgage Loans
         or of any action taken or to be taken in connection with the
         obligations of the Servicer contemplated herein, or which would be
         likely to impair materially the ability of the Servicer to perform
         under the terms of this Pooling and Servicing Agreement;

                  (8) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Servicer of, or compliance by the Servicer with,
         this Pooling and Servicing Agreement or the servicing of the Mortgage
         Loans as evidenced by the consummation by the Servicer of the
         transactions contemplated by this Pooling and Servicing Agreement,
         except for such consents, approvals, authorizations or orders, if any,
         that have been obtained prior to the Closing Date;



                                     S-II-2
<PAGE>

(9)      The Servicer covenants that its computer and other systems used in
         servicing the Mortgage Loans operate in a manner such that the Servicer
         can service the Mortgage Loans in accordance with the terms of this
         Pooling and Servicing Agreement; and

(10)     With respect to each Mortgage Loan, to the extent the Servicer serviced
         such Mortgage Loan and to the extent the Servicer provided monthly
         reports to the three credit repositories, the Servicer has fully
         furnished, in accordance with the Fair Credit Reporting Act and its
         implementing regulations, accurate and complete information (i.e.,
         favorable and unfavorable) on its borrower credit files to Equifax,
         Experian, and Trans Union Credit Information Company (three of the
         credit repositories), on a monthly basis.




                                     S-II-3
<PAGE>

                                  SCHEDULE III

                       Mortgage Pass-Through Certificates,
                                 Series 2003-NC8

             Representations and Warranties as to the Mortgage Loans

         NC Capital Corporation hereby makes the representations and warranties
set forth in this Schedule III as to the Mortgage Loans only to the Depositor,
the Servicer and the Trustee, as of September 25, 2003 or such other date as may
be specified below. Capitalized terms used but not otherwise defined in this
Schedule III shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.

                  (1) Mortgage Loans as Described. NC Capital Corporation has
         delivered to the Purchaser, as of September 1, 2003, the Data Tape
         Information and that Data Tape Information and the information set
         forth on the Mortgage Loan Schedule (other than item (16) thereof, as
         to which NC Capital Corporation makes no representation or warranty)
         are true and correct, including, without limitation, the terms of the
         Prepayment Charges, if any, as of September 1, 2003;

                  (2) Payments Current. All payments required to be made up to
         September 1, 2003 for the Mortgage Loan under the terms of the Mortgage
         Note, other than payments not yet 30 days delinquent, have been made
         and credited. Except with respect to thirty-two (32) Mortgage Loans, no
         payment required under the Mortgage Loan is 30 days or more delinquent
         nor has any payment under the Mortgage Loan been 30 days or more
         delinquent at any time since the origination of the Mortgage Loan. The
         first Scheduled Payment was or shall be made with respect to the
         Mortgage Loan on its Due Date or within the grace period, all in
         accordance with the terms of the related Mortgage Note;

                  (3) No Outstanding Charges. Except with respect to thirty-two
         (32) Mortgage Loans that are more than 30 days but less that 60 days
         delinquent, there are no defaults in complying with the terms of the
         Mortgage, and all taxes, governmental assessments, insurance premiums,
         water, sewer and municipal charges, leasehold payments or ground rents
         which previously became due and owing have been paid, or an escrow of
         funds has been established in an amount sufficient to pay for every
         such item which remains unpaid and which has been assessed but is not
         yet due and payable. Neither NC Capital Corporation nor any Affiliate
         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 under the Mortgage
         Loan, except for interest accruing from the date of the Mortgage Note
         or date of disbursement of the Mortgage Loan proceeds, whichever is
         earlier, to the day which precedes by one month the Due Date of the
         first installment of principal and interest;

                  (4) Original Terms Unmodified. The terms of the Mortgage Note
         and Mortgage have not been impaired, waived, altered or modified in any
         respect from the date of origination, except by a written instrument
         which has been recorded, if necessary to protect the interests of the
         Purchaser, and which has been delivered to the Trustee and the terms of
         which are reflected in the Mortgage Loan Schedule, the Data Tape
         Information or included in the Mortgage File. The substance of any such
         waiver, alteration or modification has been approved by the title
         insurer, if any, to the extent required by the policy, and its terms
         are reflected on the Mortgage Loan Schedule. No Mortgagor has been
         released, in whole or in part, except in connection with an assumption
         agreement, approved by the title insurer, to the extent required by the
         policy, and which assumption agreement is part of the Mortgage Loan
         File delivered to the Trustee and the terms of which are reflected in
         the Mortgage Loan Schedule and the Data Tape Information;



                                    S-III-1
<PAGE>

                  (5) No Defenses. The Mortgage Loan is not subject to any right
         of rescission, set-off, counterclaim or defense, including, without
         limitation, 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, and no such right of rescission,
         set-off, counterclaim or defense has been asserted with respect
         thereto, and no Mortgagor was a debtor in any state or federal
         bankruptcy or insolvency proceeding at the time the Mortgage Loan was
         originated;

                  (6) Hazard Insurance. Pursuant to the terms of the Mortgage,
         all buildings or other improvements upon the Mortgaged Property are
         insured by a generally acceptable insurer against loss by fire, hazards
         of extended coverage and such other hazards as are provided for in the
         Fannie Mae Guides or by Freddie Mac, as well as all additional
         requirements set forth in Section 3.13 of the Pooling and Servicing
         Agreement. If required by the National Flood Insurance Act of 1968, as
         amended, the Mortgage Loan is covered by a flood insurance policy
         meeting the requirements of the current guidelines of the Federal
         Insurance Administration is in effect which policy conforms to Fannie
         Mae and Freddie Mac, as well as all additional requirements set forth
         in Section 3.13 of the Pooling and Servicing Agreement. All individual
         insurance policies contain a standard mortgagee clause naming NC
         Capital Corporation and its successors and assigns as mortgagee, and
         all premiums thereon have been paid. The Mortgage obligates the
         Mortgagor thereunder to maintain the hazard insurance policy at the
         Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
         authorizes the holder of the Mortgage to obtain and maintain such
         insurance at such Mortgagor's cost and expense, and to seek
         reimbursement therefor from the Mortgagor. Where required by state law
         or regulation, the Mortgagor has been given an opportunity to choose
         the carrier of the required hazard insurance, provided the policy is
         not a "master" or "blanket" hazard insurance policy covering a
         condominium, or any hazard insurance policy covering the common
         facilities of a planned unit development. The hazard 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 Trustee upon the consummation of the transactions
         contemplated by this Agreement. NC Capital Corporation has not engaged
         in, and has no knowledge of the Mortgagor's having engaged in, any act
         or omission which would impair the coverage of any such policy, the
         benefits of the endorsement provided for herein, or the validity and
         binding effect of either, including, without limitation, no unlawful
         fee, commission, kickback or other unlawful compensation or value of
         any kind has been or will be received, retained or realized by any
         attorney, firm or other person or entity, and no such unlawful items
         have been received, retained or realized by NC Capital Corporation;

                                    S-III-2
<PAGE>

                  (7) Compliance with Applicable Laws. 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 and disclosure laws
         applicable to the Mortgage Loan, including, without limitation, any
         provisions relating to Prepayment Charges, have been complied with, the
         consummation of the transactions contemplated hereby will not involve
         the violation of any such laws or regulations, and NC Capital
         Corporation shall maintain in its possession, available for the
         Purchaser's or the Trustee's inspection, and shall deliver to the
         Purchaser upon demand, evidence of compliance with all such
         requirements;

                  (8) No Satisfaction of Mortgage. Other than with respect to
         any Mortgage Loan that was subject to a Principal Prepayment in Full
         occurring after the Cut-off Date but prior to the Closing Date, the
         Mortgage has not been satisfied, cancelled, subordinated or rescinded,
         in whole or in part, and the Mortgaged Property has not been released
         from the lien of the Mortgage, in whole or in part, nor has any
         instrument been executed that would effect any such release,
         cancellation, subordination or rescission. NC Capital Corporation has
         not waived the performance by the Mortgagor of any action, if the
         Mortgagor's failure to perform such action would cause the Mortgage
         Loan to be in default, nor has NC Capital Corporation waived any
         default resulting from any action or inaction by the Mortgagor;

                  (9) Location and Type of Mortgaged Property. The Mortgaged
         Property is located in the state identified in the Mortgage Loan
         Schedule and consists of a single parcel of real property with a
         detached single family residence erected thereon, or a two- to
         four-family dwelling, or an individual condominium unit in a low rise
         condominium project, or an individual unit in a planned unit
         development or a de minimis planned unit development which is in each
         case four stories or less; provided, however, that any condominium
         unit, planned unit development, mobile home (double wide only) or
         manufactured dwelling shall conform with the applicable Fannie Mae and
         Freddie Mac requirements regarding such dwellings and that no Mortgage
         Loan is secured by a single parcel of real property with a cooperative
         housing corporation, a log home or, except as specified on the Mortgage
         Loan Schedule, a mobile home erected thereon or by a mixed use
         property, a property in excess of 10 acres or other unique property
         types. As of the date of origination, no portion of the Mortgaged
         Property was used for commercial purposes, and since the date of
         origination, no portion of the Mortgaged Property has been used for
         commercial purposes; provided, that Mortgaged Properties which contain
         a home office shall not be considered as being used for commercial
         purposes as long as the Mortgaged Property has not been altered for
         commercial purposes and is not storing any chemicals or raw materials
         other than those commonly used for homeowner repair, maintenance and/or
         household purposes. With respect to any Mortgage Loan secured by a
         Mortgaged Property improved by manufactured housing, (i) such Mortgage
         Loan conforms with the applicable Fannie Mae or Freddie Mac
         requirements regarding mortgage loans related to manufactured
         dwellings, (ii) the related manufactured housing unit is permanently
         affixed to the land, (iii) the related manufactured housing unit and
         the related land are subject to a Mortgage properly filed in the
         appropriate public recording office and naming NC Capital Corporation
         as mortgagee, and (iv) the applicable laws of the jurisdiction in which
         the related Mortgaged Property is located will deem the manufactured
         dwelling located on such Mortgaged Property to be a part of the real
         property on which such dwelling is located;

                                    S-III-3
<PAGE>

                  (10) Valid First or Second Lien. The Mortgage is a valid,
         subsisting, enforceable and perfected first lien (with respect to a
         First Lien Mortgage Loan) or second lien (with respect to a Second Lien
         Mortgage Loan) on the Mortgaged Property, including all buildings and
         improvements on the Mortgaged Property and all installations and
         mechanical, electrical, plumbing, heating and air conditioning systems
         located in or annexed to such buildings, and all additions, alterations
         and replacements made at any time with respect to the foregoing. The
         lien of the Mortgage is subject only to:

                           (i) with respect to any Second Lien Mortgage Loan,
                  the lien of the first Mortgage on the related Mortgaged
                  Property;

                           (ii) the lien of current real property taxes and
                  assessments not yet due and payable;

                           (iii) covenants, conditions and restrictions, rights
                  of way, easements and other matters of the public record as of
                  the date of recording acceptable to prudent mortgage lending
                  institutions generally and specifically referred to in the
                  lender's title insurance policy delivered to the originator of
                  the Mortgage Loan and (a) specifically referred to or
                  otherwise considered in the appraisal made for the originator
                  of the Mortgage Loan or (b) which do not adversely affect the
                  Appraised Value of the Mortgaged Property set forth in such
                  appraisal; 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 the
                  Mortgage or the use, enjoyment, value or marketability of the
                  related Mortgaged Property;

                  (11) Validity of Mortgage Documents. The Mortgage Note and the
         Mortgage and any other agreement executed and delivered by a Mortgagor
         in connection with a Mortgage Loan are genuine, and each is the legal,
         valid and binding obligation of the maker thereof enforceable in
         accordance with its terms (including, without limitation, any
         provisions therein relating to Prepayment Charges). All parties to the
         Mortgage Note, the Mortgage and any other such related agreement had
         legal capacity to enter into the Mortgage Loan and to execute and
         deliver the Mortgage Note, the Mortgage and any such agreement, and the
         Mortgage Note, the Mortgage and any other such related agreement have
         been duly and properly executed by other such related parties. No
         fraud, error, omission, misrepresentation, negligence 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. NC Capital Corporation has reviewed
         all of the documents constituting the Servicing File and has made such
         inquiries as it deems necessary to make and confirm the accuracy of the
         representations set forth herein;



                                    S-III-4
<PAGE>

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

                  (13) Ownership. Immediately prior to the transfer contemplated
         by the Purchase Agreement, NC Capital Corporation was the sole owner of
         record and holder of the Mortgage Loan and the indebtedness evidenced
         by each Mortgage Note and upon the sale of the Mortgage Loans to the
         Purchaser, NC Capital Corporation retained the Mortgage Files or any
         part thereof with respect thereto not delivered to the Purchaser or the
         Purchaser's designee, in trust only for the purpose of servicing and
         supervising the servicing of each Mortgage Loan. The Mortgage Loan was
         not assigned or pledged, and NC Capital Corporation had good,
         indefeasible and marketable title thereto, and has full right to
         transfer and sell the Mortgage Loan to the Purchaser free and clear of
         any encumbrance, equity, participation interest, lien, pledge, charge,
         claim or security interest, and has full right and authority subject to
         no interest or participation of, or agreement with, any other party, to
         sell and assign each Mortgage Loan pursuant to the Purchase Agreement
         and following the sale of each Mortgage Loan, the Purchaser will own
         such Mortgage Loan free and clear of any encumbrance, equity,
         participation interest, lien, pledge, charge, claim or security
         interest;

                  (14) Doing Business. All parties which have had any interest
         in the Mortgage Loan, whether as mortgagee, assignee, pledgee or
         otherwise, are (or, during the period in which they held and disposed
         of such interest, were) (1) in compliance with any and all applicable
         licensing requirements of the laws of the state wherein the Mortgaged
         Property is located, and (2) either (i) organized under the laws of
         such state, or (ii) qualified to do business in such state, or (iii) a
         federal savings and loan association, a savings bank or a national bank
         having a principal office in such state, or (3) not doing business in
         such state;

                  (15) LTV. No Mortgage Loan has an LTV greater than 100%;



                                    S-III-5
<PAGE>

                  (16) Title Insurance. The Mortgage Loan is covered by an ALTA
         lender's title insurance policy, or with respect to any Mortgage Loan
         for which the related Mortgaged Property is located in California a
         CLTA lender's title insurance policy, or other generally acceptable
         form of policy or insurance acceptable to Fannie Mae or Freddie Mac
         with respect to Mortgage Loans and each such title insurance policy is
         issued by a title insurer acceptable to Fannie Mae or Freddie Mac and
         qualified to do business in the jurisdiction where the Mortgaged
         Property is located, insuring NC Capital Corporation, its successors
         and assigns, as to the first priority lien (with respect to a First
         Lien Mortgage Loan) or second priority lien (with respect to a Second
         Lien Mortgage Loan) of the Mortgage in the original principal amount of
         the Mortgage Loan, subject only to the exceptions contained in clauses
         (i), (ii), (iii) and (iv) of representation 10 of this Schedule III,
         and in the case of Adjustable Rate Mortgage Loans, against any loss by
         reason of the invalidity or unenforceability of the lien resulting from
         the provisions of the Mortgage providing for adjustment to the Mortgage
         Rate and Scheduled Payment. Where required by state law or regulation,
         the Mortgagor has been given the opportunity to choose the carrier of
         the required mortgage title insurance. Additionally, such lender's
         title insurance policy affirmatively insures ingress and egress, and
         against encroachments by or upon the Mortgaged Property or any interest
         therein. NC Capital Corporation, its successor and assigns, are the
         sole insureds of such lender's title insurance policy, and such
         lender's title insurance policy is valid and remains in full force and
         effect and will be in force and effect upon the consummation of the
         transactions contemplated by this Agreement. No claims have been made
         under such lender's title insurance policy, and no prior holder of the
         related Mortgage, including NC Capital Corporation, has done, by act or
         omission, anything which would impair the coverage of such lender's
         title insurance policy, including, without limitation, no unlawful fee,
         commission, kickback or other unlawful compensation or value of any
         kind has been or will be received, retained or realized by any
         attorney, firm or other person or entity, and no such unlawful items
         have been received, retained or realized by NC Capital Corporation;

                  (17) No Defaults. Except with respect to thirty-two (32)
         Mortgage Loans that are more than 30 days but less than 60 days
         delinquent, other than payments due but not yet 30 or more days
         delinquent, there is no default, breach, violation or event which would
         permit acceleration existing under the Mortgage or the Mortgage Note
         and no event which, with the passage of time or with notice and the
         expiration of any grace or cure period, would constitute a default,
         breach, violation or event which would permit acceleration, and neither
         NC Capital Corporation nor its Affiliates or any of their respective
         predecessors have waived any default, breach, violation or event which
         would permit acceleration;

                  (18) No Mechanics' Liens. As of the date of origination, there
         are no mechanics' or similar liens or claims which have been filed for
         work, labor or material (and no rights are outstanding that under law
         could give rise to such liens) affecting the related Mortgaged Property
         which are or may be liens prior to, or equal or coordinate with, the
         lien of the related Mortgage;

                  (19) Location of Improvements; No Encroachments. All
         improvements which were considered in determining the Appraised Value
         of the Mortgaged Property lay wholly within the boundaries and building
         restriction lines of the Mortgaged Property, and no improvements on
         adjoining properties encroach upon the Mortgaged Property. As of the
         date of origination, there are no improvements located on or being part
         of the Mortgaged Property in violation of any applicable zoning law or
         regulation;



                                    S-III-6
<PAGE>

                  (20) Origination; Payment Terms. Either (a) the Mortgage Loan
         was originated by a Mortgagee approved by the Secretary of Housing and
         Urban Development pursuant to Sections 203 and 211 of the National
         Housing Act, a savings and loan association, a savings bank, a
         commercial bank, credit union, insurance company or other similar
         institution which is supervised and examined by a federal or state
         authority, or (b) the following requirements have been met with respect
         to the Mortgage Loan: NC Capital Corporation meets the requirements set
         forth in clause (a), and (i) such Mortgage Loan was underwritten in
         accordance with standards established by NC Capital Corporation, using
         application forms and related credit documents approved by NC Capital
         Corporation, (ii) NC Capital Corporation approved each application and
         the related credit documents before a commitment by the correspondent
         was issued, and no such commitment was issued until NC Capital
         Corporation agreed to fund such Mortgage Loan, (iii) the closing
         documents for such Mortgage Loan were prepared on forms approved by NC
         Capital Corporation and (iv) such Mortgage Loan was actually funded by
         NC Capital Corporation and was purchased by NC Capital Corporation at
         closing or soon thereafter. The documents, instruments and agreements
         submitted for loan underwriting were not falsified and contain no
         untrue statement of material fact or omit to state a material fact
         required to be stated therein or necessary to make the information and
         statements therein not misleading. Principal payments on the Mortgage
         Loan commenced no more than sixty days after funds were disbursed in
         connection with the Mortgage Loan. The Mortgage Rate is as set forth on
         Mortgage Loan Schedule hereto (including in the case of Adjustable Rate
         Mortgage Loans, the interest rate and payment limitations set forth on
         Mortgage Loan Schedule hereto). All Mortgage Loans have Due Dates on
         the first day of each month except as specified on the Mortgage Loan
         Schedule. Each Mortgage Note is payable in equal monthly installments
         of principal and interest, which installments of interest, with respect
         to Adjustable Rate Mortgage Loans, are subject to change due to the
         adjustments to the Mortgage Rate on each Interest Rate Adjustment Date,
         with interest calculated and payable in arrears and is not calculated
         on a simple interest basis. The monthly principal payments on each
         Mortgage Loan is sufficient to amortize the Mortgage Loan fully by the
         stated maturity date, over an original term of not more than thirty
         years from commencement of amortization. There is no negative
         amortization allowed in the terms of any Mortgage Note. None of the
         Mortgage Loans allows for negative amortization or the conversion of
         the interest rate thereon from an adjustable rate to a fixed rate or
         from a fixed rate to an adjustable rate. No Mortgage Loan is a Balloon
         Loan;

                  (21) Customary Provisions. The Mortgage contains customary and
         enforceable provisions such as to render the rights and remedies of the
         holder thereof adequate for the realization against the Mortgaged
         Property of the benefits of the security provided thereby, including,
         (i) in the case of a Mortgage designated as a deed of trust, by
         trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
         default by a Mortgagor on a Mortgage Loan and foreclosure on, or
         trustee's sale of, the Mortgaged Property pursuant to the proper
         procedures, the holder of the Mortgage Loan will be able to deliver
         good and merchantable title to the Mortgaged Property. There is no
         homestead or other exemption available to a Mortgagor which would
         interfere with the right to sell the Mortgaged Property at a trustee's
         sale or the right to foreclose the Mortgage, subject to applicable
         federal and state laws and judicial precedent with respect to
         bankruptcy and right of redemption or similar law;

                  (22) Index. With respect to Adjustable Rate Mortgage Loans,
         the Index set forth in the Mortgage Note is LIBOR;



                                    S-III-7
<PAGE>

                  (23) Occupancy of the Mortgaged Property. As of the Closing
         Date the Mortgaged Property is lawfully occupied under applicable law.
         All inspections, licenses and certificates required to be made or
         issued with respect to all occupied portions of the Mortgaged Property
         and, with respect to the use and occupancy of the same, including, but
         not limited to, certificates of occupancy and fire underwriting
         certificates, have been made or obtained from the appropriate
         authorities;

                  (24) No Additional Collateral. The Mortgage Note is not and
         has not been secured by any collateral except the lien of the
         corresponding Mortgage and the security interest of any applicable
         security agreement or chattel mortgage;

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

                  (26) Delivery of Mortgage Documents. The Mortgage Note, the
         Mortgage, the Assignment of Mortgage and any other documents required
         to be delivered under this Agreement for each Mortgage Loan have been
         delivered to the Purchaser;

                  (27) Transfer of Mortgage Loans. The Assignment of Mortgage is
         in recordable form, other than the assignee's name and recording
         information not yet returned from the recording office, and is
         acceptable for recording under the laws of the jurisdiction in which
         the Mortgaged Property is located. The transfer, assignment and
         conveyance of the Mortgage Notes and the Mortgages by NC Capital
         Corporation are not subject to the bulk transfer or similar statutory
         provisions in effect in any applicable jurisdiction;

                  (28) Due-on-Sale. With respect to each Fixed Rate Mortgage
         Loan, the Mortgage contains an enforceable provision for the
         acceleration of the payment of the unpaid principal balance of the
         Mortgage Loan in the event that the Mortgaged Property is sold or
         transferred without the prior written consent of the mortgagee
         thereunder, and to the best of NC Capital Corporation's knowledge, such
         provision is enforceable;

                  (29) No Buydown Provisions No Graduated Payments or Contingent
         Interests. The Mortgage Loan does not contain provisions pursuant to
         which Scheduled Payments are paid or partially paid with funds
         deposited in any separate account established by NC Capital
         Corporation, the Mortgagor, or anyone on behalf of the Mortgagor, or
         paid by any source other than the Mortgagor nor does it contain any
         other similar provisions which may constitute a "buydown" provision.
         The Mortgage Loan is not a graduated payment mortgage loan and the
         Mortgage Loan does not have a shared appreciation or other contingent
         interest feature;

                  (30) Assumability. With respect to each Adjustable Rate
         Mortgage Loan, the Mortgage Loan Documents provide that after the
         related first Interest Rate Adjustment Date, a related Mortgage Loan
         may only be assumed if the party assuming such Mortgage Loan meets
         certain credit requirements stated in the Mortgage Loan Documents;



                                    S-III-8
<PAGE>

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

                  (32) Mortgaged Property Undamaged; No Condemnation
         Proceedings. There is no proceeding pending or threatened for the total
         or partial condemnation of the Mortgaged Property. The Mortgaged
         Property is undamaged by waste, fire, earthquake or earth movement,
         windstorm, flood, tornado or other casualty so as to affect adversely
         the value of the Mortgaged Property as security for the Mortgage Loan
         or the use for which the premises were intended and each Mortgaged
         Property is in good repair. There have not been any condemnation
         proceedings with respect to the Mortgaged Property and NC Capital
         Corporation has no knowledge of any such proceedings in the future;

                  (33) Collection Practices; Escrow Payments; Interest Rate
         Adjustments. The origination, servicing and collection practices used
         by NC Capital Corporation and its Affiliates with respect to the
         Mortgage Loan have been in all respects in compliance with Accepted
         Servicing Practices, applicable laws and regulations, and have been in
         all respects legal and proper. With respect to escrow deposits and
         Escrow Payments, if any, all such payments are in the possession of, or
         under the control of, NC Capital Corporation and there exist no
         deficiencies in connection therewith for which customary arrangements
         for repayment thereof have not been made. All Escrow Payments have been
         collected in full compliance with state and federal law and the
         provisions of the related Mortgage Note and Mortgage. An escrow of
         funds is not prohibited by applicable law and has been established in
         an amount sufficient to pay for every item that remains unpaid and has
         been assessed but is not yet due and payable. No escrow deposits or
         Escrow Payments or other charges or payments due NC Capital Corporation
         have been capitalized under the Mortgage or the Mortgage Note. All
         Mortgage Rate adjustments have been made in strict compliance with
         state and federal law and the terms of the related Mortgage Note. If,
         pursuant to the terms of the Mortgage Note, another index was selected
         for determining the Mortgage Rate, the same index was used with respect
         to each Mortgage Note which required a new index to be selected, and
         such selection did not conflict with the terms of the related Mortgage
         Note. NC Capital Corporation or an Affiliate executed and delivered any
         and all notices required under applicable law and the terms of the
         related Mortgage Note and Mortgage regarding the Mortgage Rate and the
         monthly payment adjustments. Any interest required to be paid pursuant
         to state, federal and local law has been properly paid and credited;



                                    S-III-9
<PAGE>

                  (34) Other Insurance Policies. No action, inaction or event
         has occurred and no state of facts exists or has existed that has
         resulted or will result in the exclusion from, denial of, or defense to
         coverage under any insurance policy or bankruptcy bond related to the
         Mortgage Loans, irrespective of the cause of such failure of coverage.
         In connection with the placement of any such insurance, no commission,
         fee, or other compensation has been or will be received by NC Capital
         Corporation or by any officer, director, or employee of NC Capital
         Corporation or any designee of NC Capital Corporation or any
         corporation in which NC Capital Corporation or any officer, director,
         or employee had a financial interest at the time of placement of such
         insurance;

                  (35) No Violation of Environmental Laws. There is no pending
         action or proceeding directly involving the Mortgaged Property in which
         compliance with any environmental law, rule or regulation is an issue;
         there is no violation of any environmental law, rule or regulation with
         respect to the Mortgaged Property; and nothing further remains to be
         done to satisfy in full all requirements of each such law, rule or
         regulation constituting a prerequisite to use and enjoyment of said
         property;

                  (36) Soldiers' and Sailors' Civil Relief Act. The Mortgagor
         has not notified NC Capital Corporation, and NC Capital Corporation has
         no knowledge of any relief requested or allowed to the Mortgagor under
         the Soldiers' and Sailors' Civil Relief Act of 1940;

                  (37) Appraisal. The Mortgage File contains an appraisal of the
         related Mortgaged Property signed by a qualified appraiser, acceptable
         to NC Capital Corporation, who had no interest, direct or indirect in
         the Mortgaged Property or in any loan made on the security thereof, and
         whose compensation is not affected by the approval or disapproval of
         the Mortgage Loan, and the appraisal and appraiser both satisfy the
         requirements of Fannie Mae or Freddie Mac and Title XI of the Financial
         Institutions Reform, Recovery, and Enforcement Act of 1989 and the
         regulations promulgated thereunder, all as in effect on the date the
         Mortgage Loan was originated;

                  (38) Disclosure Materials. The Mortgagor has executed a
         statement to the effect that the Mortgagor has received all disclosure
         materials required by, and the originator has complied with all
         applicable law with respect to the making of the Mortgage Loans;

                  (39) Construction or Rehabilitation of Mortgaged Property. No
         Mortgage Loan was made in connection with the construction or
         rehabilitation of a Mortgaged Property or facilitating the trade-in or
         exchange of a Mortgaged Property;

                  (40) Value of Mortgaged Property. NC Capital Corporation has
         no knowledge of any circumstances existing that could reasonably be
         expected to adversely affect the value or the marketability of any
         Mortgaged Property or Mortgage Loan or to cause the Mortgage Loans to
         prepay during any period materially faster or slower than similar
         mortgage loans held by NC Capital Corporation generally secured by
         properties in the same geographic area as the related Mortgaged
         Property;



                                    S-III-10
<PAGE>

                  (41) No Defense to Insurance Coverage. No action has been
         taken or failed to be taken, no event has occurred and no state of
         facts exists or has existed on or prior to the Closing Date (whether or
         not known to NC Capital Corporation on or prior to such date) which has
         resulted or will result in an exclusion from, denial of, or defense to
         coverage under any primary mortgage insurance (including, without
         limitation, any exclusions, denials or defenses which would limit or
         reduce the availability of the timely payment of the full amount of the
         loss otherwise due thereunder to the insured) whether arising out of
         actions, representations, errors, omissions, negligence, or fraud of NC
         Capital Corporation, the related Mortgagor or any party involved in the
         application for such coverage, including the appraisal, plans and
         specifications and other exhibits or documents submitted therewith to
         the insurer under such insurance policy, or for any other reason under
         such coverage, but not including the failure of such insurer to pay by
         reason of such insurer's breach of such insurance policy or such
         insurer's financial inability to pay;

                  (42) Escrow Analysis. With respect to each Mortgage, NC
         Capital Corporation or its Affiliate has within the last twelve months
         (unless such Mortgage was originated within such twelve month period)
         analyzed the required Escrow Payments for each Mortgage and adjusted
         the amount of such payments so that, assuming all required payments are
         timely made, any deficiency will be eliminated on or before the first
         anniversary of such analysis, or any overage will be refunded to the
         Mortgagor, in accordance with RESPA and any other applicable law;

                  (43) Prior Servicing. Each Mortgage Loan has been serviced in
         all material respects in strict compliance with Accepted Servicing
         Practices;

                  (44) Credit Information. As to each consumer report (as
         defined in the Fair Credit Reporting Act, Public Law 91-508) or other
         credit information furnished by NC Capital Corporation to the
         Purchaser, that Seller has full right and authority and is not
         precluded by law or contract from furnishing such information to the
         Purchaser;

                  (45) Leaseholds. If the Mortgage Loan is secured by a
         long-term residential lease, (1) the lessor under the lease holds a fee
         simple interest in the land; (2) the terms of such lease expressly
         permit the mortgaging of the leasehold estate, the assignment of the
         lease without the lessor's consent and the acquisition by the holder of
         the Mortgage of the rights of the lessee upon foreclosure or assignment
         in lieu of foreclosure or provide the holder of the Mortgage with
         substantially similar protections; (3) the terms of such lease do not
         (a) allow the termination thereof upon the lessee's default without the
         holder of the Mortgage being entitled to receive written notice of, and
         opportunity to cure, such default, (b) allow the termination of the
         lease in the event of damage or destruction as long as the Mortgage is
         in existence, (c) prohibit the holder of the Mortgage from being
         insured (or receiving proceeds of insurance) under the hazard insurance
         policy or policies relating to the Mortgaged Property or (d) permit any
         increase in rent other than pre-established increases set forth in the
         lease; (4) the original term of such lease is not less than 15 years;
         (5) the term of such lease does not terminate earlier than five years
         after the maturity date of the Mortgage Note; and (6) the Mortgaged
         Property is located in a jurisdiction in which the use of leasehold
         estates in transferring ownership in residential properties is a
         generally accepted practice;

                                    S-III-11
<PAGE>

                  (46) Predatory Lending Regulations; High Cost Loans. None of
         the Mortgage Loans are classified as (a) "high cost" loans under the
         Home Ownership and Equity Protection Act of 1994 or (b) "high cost,"
         "threshold," "covered" or "predatory" loans under any other applicable
         federal, state or local law (including without limitation any
         regulation or ordinance) (or a similarly classified loan using
         different terminology under a law imposing heightened regulatory
         scrutiny or additional legal liability for residential mortgage loans
         having high interest rates, points and/or fees);

                  (47) Prepayment Penalty. No Mortgage Loan has a prepayment
         penalty period in excess of three years. Any prepayment penalty is in
         an amount equal to the lesser of (a) the maximum amount permitted under
         applicable state law, and (b) if the Mortgaged Property is secured by
         residential real property located in a state other than Arizona, Maine,
         Massachusetts, New York, South Carolina or Wisconsin, six months
         interest on the related prepaid amount;

                  (48) [Reserved];

                  (49) Conformance with Agency and Underwriting Standards. The
         Mortgage Loan was underwritten in accordance with the Underwriting
         Guidelines. The Mortgage Note and Mortgage are on forms acceptable to
         Freddie Mac or Fannie Mae and neither the NC Capital Corporation nor
         any Affiliate has made any representations to a Mortgagor that are
         inconsistent with the mortgage instruments used;

                  (50) Single-premium credit life insurance policy. In
         connection with the origination of any Mortgage Loan, no proceeds from
         any Mortgage Loan were used to finance a single-premium credit life
         insurance policy;

                  (51) Acceptable Investment. There are no circumstances or
         conditions with respect to the Mortgage, the Mortgaged Property, the
         Mortgagor, the Mortgage File or the Mortgagor's credit standing that
         can reasonably be expected to cause private institutional investors who
         invest in mortgage loans similar to the Mortgage Loan to regard the
         Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to
         become delinquent, or adversely affect the value or marketability of
         the Mortgage Loan, or cause the Mortgage Loans to prepay during any
         period materially faster or slower than the mortgage loans originated
         by the NC Capital Corporation or any Affiliates generally;

                  (52) Condominiums/Planned Unit Developments. If the Mortgaged
         Property is a condominium unit or a planned unit development (other
         than a de minimis planned unit development) such condominium or planned
         unit development project such Mortgage Loan was originated in
         accordance with, and the Mortgaged Property meets the guidelines set
         forth in the Originator's Underwriting Guidelines;

                  (53) No Mortgaged Property Located in Georgia. No Mortgage
         Loan secured by property located in the State of Georgia was originated
         prior to March 7, 2003 and after October 1, 2002;



                                    S-III-12
<PAGE>

                  (54) Conversion to Fixed Interest Rate. With respect to each
         Adjustable Rate Mortgage Loan, the Mortgage Loan is not a Convertible
         Mortgage Loan;

                  (55) No Default under First Lien. With respect to each Second
         Lien Mortgage Loan, the related first lien mortgage loan is in full
         force and effect, and there is no default, breach, violation or event
         which would permit acceleration existing under such first lien mortgage
         or mortgage note, and no event which, with the passage of time or with
         notice and the expiration of any grace or cure period, would constitute
         a default, breach, violation or event which would permit acceleration
         thereunder;

                  (56) Right to Cure First Lien. With respect to each Second
         Lien Mortgage Loan, the related first lien mortgage contains a
         provision which provides for giving notice of default or breach to the
         mortgagee under such Second Lien Mortgage Loan and allows such
         mortgagee to cure any default under the related first lien mortgage;

                  (57) No Failure to Cure Default. With respect to each Second
         Lien Mortgage Loan, NC Capital Corporation has not received a written
         notice of default of any senior mortgage loan related to the Mortgaged
         Property which has not been cured;

                  (58) Qualified Mortgage. The Mortgage Loan is a "qualified
         mortgage" within the meaning of Section 860G(a)(3) of the Code; and

                  (59) Compliance with Anti-Money Laundering Laws. NC Capital
         Corporation has complied with all applicable anti-money laundering laws
         and regulations, including, without limitation, the USA Patriot Act of
         2001.





                                    S-III-13
<PAGE>


                                   SCHEDULE IV

         NC Capital Corporation hereby makes the representations and warranties
set forth in this Schedule IV to the Depositor and the Trustee, as of the
Closing Date:

         (a)      Due Organization and Authority. The Responsible Party is a
                  corporation duly organized, validly existing and in good
                  standing under the laws of the state of California 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 wherein it owns or leases any material properties
                  or 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 Responsible Party, and
                  in any event the Responsible Party is in compliance with the
                  laws of any such state to the extent necessary; the
                  Responsible Party has the full corporate power, authority and
                  legal right to execute and deliver this Agreement and to
                  perform its obligations hereunder; the execution, delivery and
                  performance of this Agreement by the Responsible Party and the
                  consummation of the transactions contemplated hereby have been
                  duly and validly authorized; this Agreement and all agreements
                  contemplated hereby have been duly executed and delivered and
                  constitute the valid, legal, binding and enforceable
                  obligations of the Responsible Party, regardless of whether
                  such enforcement is sought in a proceeding in equity or at
                  law; and all requisite corporate action has been taken by the
                  Responsible Party to make this Agreement and all agreements
                  contemplated hereby valid and binding upon the Responsible
                  Party in accordance with their terms;

         (b)      No Conflicts. Neither the execution and delivery of this
                  Agreement, the consummation of the transactions contemplated
                  hereby, nor the fulfillment of or compliance with the terms
                  and conditions of this Agreement, will conflict with or result
                  in a breach of any of the terms, conditions or provisions of
                  the Responsible Party's charter or by-laws or any legal
                  restriction or any agreement or instrument to which the
                  Responsible Party is now a party or by which it is bound, 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 Responsible
                  Party or its property is subject, or result in the creation or
                  imposition of any lien, charge or encumbrance that would have
                  an adverse effect upon any of its properties pursuant to the
                  terms of any mortgage, contract, deed of trust or other
                  instrument;

                                     S-IV-1
<PAGE>

         (c)      No Litigation Pending. There is no action, suit, proceeding or
                  investigation pending or threatened against the Responsible
                  Party, before any court, administrative agency or other
                  tribunal asserting the invalidity of this Agreement, seeking
                  to prevent the consummation of any of the transactions
                  contemplated by this Agreement or 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 Responsible Party, or
                  in any material impairment of the right or ability of the
                  Responsible Party to carry on its business substantially as
                  now conducted, or in any material liability on the part of the
                  Responsible Party, or which would draw into question the
                  validity of this Agreement or of any action taken or to be
                  taken in connection with the obligations of the Responsible
                  Party contemplated herein, or which would be likely to impair
                  materially the ability of the Responsible Party to perform
                  under the terms of this Agreement; and

         (d)      No Consent Required. No consent, approval, authorization or
                  order of, or registration or filing with, or notice to any
                  court or governmental agency or body including HUD, the FHA or
                  the VA is required for the execution, delivery and performance
                  by the Responsible Party of or compliance by the Responsible
                  Party with 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.





                                     S-IV-2

<PAGE>



                                    EXHIBIT A

To be added to the Class A-1 Certificates while it remains a Private
Certificate. [IF THIS CERTIFICATE IS A PHYSICAL CERTIFICATE, NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE PROPOSED
TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER (THE "TRANSFEROR LETTER")
IN THE FORM OF EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE
TRUSTEE RECEIVES A RULE 144A LETTER (THE "144A LETTER") IN THE FORM OF EXHIBIT I
TO THE AGREEMENT REFERRED TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF
COUNSEL, DELIVERED AT THE EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE
MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE, THE PROPOSED TRANSFEROR WILL BE
DEEMED TO HAVE MADE EACH OF THE CERTIFICATIONS SET FORTH IN THE TRANSFEROR
LETTER AND THE PROPOSED TRANSFEREE WILL BE DEEMED TO HAVE MADE EACH OF THE
CERTIFICATIONS SET FORTH IN THE RULE 144A LETTER, IN EACH CASE AS IF SUCH
CERTIFICATE WERE EVIDENCED BY A PHYSICAL CERTIFICATE.]

In the event that a transfer of a Private Certificate which is a Book-Entry
Certificate is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer will be deemed to
have made as of the transfer date each of the certifications set forth in the
Transferor Certificate in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the certifications set forth
in the Rule 144A Letter in respect of such Certificate, in each case as if such
Certificate were evidenced by a Physical Certificate.

Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

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




                                      A-1
<PAGE>



Certificate No.:                                 A-1-[  ]
                                                 A-2-[  ]
                                                 M-1-[  ]
                                                 M-2-[  ]
                                                 M-3-[  ]
                                                 B-1-[  ]
                                                 B-2-[  ]
                                                 B-3-[  ]

Cut-off Date:                                    September 1, 2003

First Distribution Date:                         October 25, 2003

Initial Certificate Balance of this
Certificate ("Denomination"):                    $[                        ]

Initial Certificate Balances of all              [A-1] [____________________]
Certificates of this Class:                      [A-2] [____________________]
                                                 [M-1] [____________________]
                                                 [M-2] [____________________]
                                                 [M-3] [____________________]
                                                 [B-1] [____________________]
                                                 [B-2] [____________________]
                                                 [B-3] [____________________]

CUSIP:                                           [A-1] [____________________]
                                                 [A-2] [____________________]
                                                 [M-1] [____________________]
                                                 [M-2] [____________________]
                                                 [M-3] [____________________]
                                                 [B-1] [____________________]
                                                 [B-2] [____________________]
                                                 [B-3] [____________________]

ISIN:                                            [A-1] [____________________]
                                                 [A-2] [____________________]
                                                 [M-1] [____________________]
                                                 [M-2] [____________________]
                                                 [M-3] [____________________]
                                                 [B-1] [____________________]
                                                 [B-2] [____________________]
                                                 [B-3] [____________________]



                                      A-2
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
               Mortgage Pass-Through Certificates, Series 2003-NC8
                          [Class A-][Class M-][Class B]

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Principal in respect of this Certificate is distributable
monthly as set forth herein. Accordingly, the Certificate Balance at any time
may be less than the Certificate Balance as set forth herein. This Certificate
does not evidence an obligation of, or an interest in, and is not guaranteed by
the Depositor, the Responsible Party, the Servicer or the Trustee referred to
below or any of their respective affiliates. Neither this Certificate nor the
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.

                  This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Morgan Stanley ABS Capital
I Inc., as depositor (the "Depositor"), The Provident Bank, as servicer (the
"Servicer"), NC Capital Corporation, as responsible party (the "Responsible
Party"), and Deutsche Bank National Trust Company, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *



                                      A-3
<PAGE>



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

Dated:

                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                not in its individual capacity,
                                but solely as Trustee



                           By _______________________________________


Countersigned:


By __________________________________
  Authorized Signatory of
  DEUTSCHE BANK NATIONAL TRUST COMPANY,
  not in its individual capacity, but solely as Trustee




                                      A-4
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
                       Mortgage Pass-Through Certificates

                  This Certificate is one of a duly authorized issue of
Certificates designated as Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
Mortgage Pass-Through Certificates, of the Series specified on the face hereof
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust Fund created by the Agreement.

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

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

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes, or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Responsible Party, the Servicer and
the Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing the requisite Percentage Interest, as provided in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.


                                      A-5
<PAGE>

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

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

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Responsible Party and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall be affected by
any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.




                                      A-6
<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

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

_______________________________________________________________________________.
Dated:



                                         _______________________________________
                                         Signature by or on behalf of assignor



                                      A-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to , ______________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.

                  This information is provided by _____________________________,
the assignee named above, or __________________________________________________,
as its agent.




                                      A-8
<PAGE>


                                    EXHIBIT B

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT THAT
SUCH TRANSFEREE IS NOT AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA"),
WHICH IS SUBJECT TO TITLE I OF ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE
CODE, OR A PLAN SUBJECT TO MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW"), OR A PERSON INVESTING ON BEHALF OF OR WITH
PLAN ASSETS OF SUCH A PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED,
OR ANY ATTEMPT IS MADE TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION
406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO
SIMILAR LAW, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR
ACQUISITION SHALL BE VOID AND OF NO EFFECT.

Certificate No.:                                 P-1
Cut-off Date:                                    September 1, 2003
First Distribution Date:                         October 25, 2003
Percentage Interest of this
Certificate ("Denomination"):                    100%




                                      B-1
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
               Mortgage Pass-Through Certificates, Series 2003-NC8
                                     Class P

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Responsible
Party, the Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

                  This certifies that Deutsche Bank National Trust Company, as
indenture trustee, is the registered owner of the Percentage Interest evidenced
by this Certificate (obtained by dividing the denomination of this Certificate
by the aggregate of the denominations of all Certificates of the Class to which
this Certificate belongs) in certain monthly distributions pursuant to a Pooling
and Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among Morgan Stanley ABS Capital I Inc., as depositor (the
"Depositor"), The Provident Bank, as servicer (the "Servicer"), NC Capital
Corporation, as responsible party (the "Responsible Party"), and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purpose, or the office or agency
maintained by the Trustee.

                  No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Pooling and
Servicing Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.


                                      B-2
<PAGE>

                  No transfer of a Certificate of this Class shall be made
unless the Trustee shall have received a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
"employee benefit plan" as defined in Section 3(8) of ERISA, which is subject to
Title I of ERISA, a plan as described in Section 4975 of the Code, or any
materially similar provisions of applicable federal, state or local law
("Similar Law"), or a person acting on behalf of or investing plan assets of any
such plan, which representation letter shall not be an expense of the Trustee.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *




                                      B-3
<PAGE>


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

Dated:

                               DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                    not in its individual capacity,
                                    but solely as Trustee


                               By:
                                    --------------------------------------


Countersigned:


By:
     -----------------------------------------------
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity, but solely as Trustee





                                      B-4
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
                       Mortgage Pass-Through Certificates

                  This Certificate is one of a duly authorized issue of
Certificates designated as Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
Mortgage Pass-Through Certificates, of the Series specified on the face hereof
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust Fund created by the Agreement.

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

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

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, the Responsible Party and
the Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing the requisite Percentage Interest, as provided in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.



                                      B-5
<PAGE>

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

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

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Responsible Party and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall be affected by
any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.




                                      B-6
<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

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

Dated:


                                         _______________________________________
                                         Signature by or on behalf of assignor



                                      B-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

         Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to , ______________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number ____________, or, if mailed by check, to _______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.

                  This information is provided by _____________________________,
the assignee named above, or __________________________________________________,
as its agent.




                                      B-8
<PAGE>


                                    EXHIBIT C

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

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED (I) TO A
PERSON OTHER THAN A PERMITTED TRANSFEREE IN COMPLIANCE WITH SECTION 5.02(D) OF
THE AGREEMENT OR (II) UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN "EMPLOYEE
BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), WHICH IS SUBJECT TO TITLE I OF
ERISA, OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR A PLAN SUBJECT TO
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW"), OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH
A PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED, OR ANY ATTEMPT IS
MADE TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA, A
PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF
ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR ACQUISITION SHALL BE
VOID AND OF NO EFFECT.

Certificate No.:                                 R-1
Cut-off Date:                                    September 1, 2003
First Distribution Date:                         October 25, 2003
Percentage Interest of this
Certificate ("Denomination"):                    100%




                                      C-1
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
               Mortgage Pass-Through Certificates, Series 2003-NC8
                                     Class R

                  evidencing a percentage interest in the distributions
                  allocable to the sCertificates of the above-referenced Class.

                  Distributions in respect of this Certificate is distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Responsible Party or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.

                  This certifies that Morgan Stanley & Co. Incorporated is the
registered owner of the Percentage Interest specified above of any monthly
distributions due to the Class R Certificates pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among Morgan Stanley ABS Capital I Inc., as depositor (the
"Depositor"), The Provident Bank, as servicer (the "Servicer"), NC Capital
Corporation, as responsible party (the "Responsible Party"), and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  Any distribution of the proceeds of any remaining assets of
the Trust Fund will be made only upon presentment and surrender of this Class R
Certificate at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York.

                  No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, a plan
subject to Section 4975 of the Code, or a plan subject to Similar Law, or a
person acting on behalf of any such plan or arrangement nor using the assets of
any such plan or arrangement to effect such transfer, which representation
letter shall not be an expense of the Trustee, the Servicer or the Trust Fund.
In the event that such representation is violated, or any attempt is made to
transfer to any such employee benefit plan or plan, such attempted transfer or
acquisition shall be void and of no effect.



                                      C-2
<PAGE>

                  Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R Certificate shall be a
Permitted Transferee and shall promptly notify the Trustee of any change or
impending change in its status as a Permitted Transferee, (ii) no Ownership
Interest in this Class R Certificate may be registered on the Closing Date or
thereafter transferred, and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates required to be delivered to
the Trustee under Section 5.02(b) of the Agreement, the Trustee shall have been
furnished with a Transfer Affidavit of the initial owner or the proposed
transferee in the form attached as Exhibit G to the Agreement, (iii) each Person
holding or acquiring any Ownership Interest in this Class R Certificate shall
agree (A) to obtain a Transfer Affidavit from any other Person to whom such
Person attempts to Transfer its Ownership Interest this Class R Certificate, (B)
to obtain a Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any Transfer of this Class R
Certificate, (C) not to cause income with respect to the Class R Certificate to
be attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of such Person or any other U.S.
Person and (D) not to Transfer the Ownership Interest in this Class R
Certificate or to cause the Transfer of the Ownership Interest in this Class R
Certificate to any other Person if it has actual knowledge that such Person is a
Non-Permitted Transferee and (iv) any attempted or purported Transfer of the
Ownership Interest in this Class R Certificate in violation of the provisions
herein shall be absolutely null and void and shall vest no rights in the
purported Transferee.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *




                                      C-3
<PAGE>

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

Dated:



                                     DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                          not in its individual capacity,
                                          but solely as Trustee



                                     By:
                                          ----------------------------------


Countersigned:


By:
     -----------------------------------------------
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity, but solely as Trustee





                                      C-4
<PAGE>

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
                       Mortgage Pass-Through Certificates

                  This Certificate is one of a duly authorized issue of
Certificates designated as Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
Mortgage Pass-Through Certificates, of the Series specified on the face hereof
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust Fund created by the Agreement.

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

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

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, the Responsible Party and
the Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing the requisite Percentage Interest, as provided in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.


                                      C-5
<PAGE>

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

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

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Responsible Party and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall be affected by
any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.




                                      C-6
<PAGE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

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

Dated:


                                       ________________________________________
                                       Signature by or on behalf of assignor



                                      C-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.

                  This information is provided by _____________________________,
the assignee named above, or __________________________________________________,
as its agent.





                                      C-8
<PAGE>


                                    EXHIBIT D

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

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION
3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), WHICH IS SUBJECT TO TITLE I OF ERISA OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR, A PLAN SUBJECT TO APPLICABLE FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE
CODE, OR A PERSON ACTING ON BEHALF OF OR INVESTING PLAN ASSETS OF ANY SUCH PLAN,
OTHER THAN AN INSURANCE COMPANY WHICH IS PURCHASING SUCH CERTIFICATES WITH FUNDS
CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN
SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"))
UNDER SUCH CONDITIONS THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE
COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE REPRESENTATION LETTER OR THE OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.



                                      D-1
<PAGE>


Certificate No.:                              X-1

Cut-off Date:                                 September 1, 2003

First Distribution Date:                      October 25, 2003
Initial Certificate Balance of this
Certificate:                                  $[________________]

Initial Certificate Balances of all
Certificates of this Class:                   $[________________]

Percentage Interest of this
Certificate ("Denomination"):                 100%





                                      D-2
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
               Mortgage Pass-Through Certificates, Series 2003-NC8
                                     Class X

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Responsible Party or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

                  This certifies that Deutsche Bank National Trust Company, as
indenture trustee, is the registered owner of the Percentage Interest evidenced
by this Certificate (obtained by dividing the denomination of this Certificate
by the aggregate of the denominations of all Certificates of the Class to which
this Certificate belongs) in certain monthly distributions pursuant to a Pooling
and Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among Morgan Stanley ABS Capital I Inc., as depositor (the
"Depositor"), The Provident Bank, as servicer (the "Servicer"), NC Capital
Corporation, as responsible party (the "Responsible Party"), and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purposes or the office or agency
maintained by the Trustee.

                  No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Pooling and
Servicing Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.


                                      D-3
<PAGE>

                  No transfer of a Certificate of this Class shall be made
unless the Trustee shall have received either (i) a representation letter from
the transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a plan subject to Section 4975 of the Code, or any
materially similar provisions of applicable Federal, state or local law
("Similar Law"), or a person acting on behalf of or investing plan assets of any
such plan, which representation letter shall not be an expense of the Trustee,
or (ii) if the transferee is an insurance company, a representation letter that
it is purchasing such Certificates with the assets of its general account and
that the purchase and holding of such Certificates are covered under Sections I
and III of PTCE 95-60, or (iii) in the case of a Certificate presented for
registration in the name of an "employee benefit plan" as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, or a plan subject to
Section 4975 of the Code, or a plan subject to Similar Law, or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel satisfactory
to the Trustee and the Servicer, which Opinion of Counsel shall not be an
expense of the Trustee, the Servicer or the Trust Fund, addressed to the
Trustee, to the effect that the purchase or holding of such Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
expressly undertaken in this Agreement or to any liability.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *




                                      D-4
<PAGE>


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

Dated:

                                          DEUTSCHE BANK NATIONAL TRUST
                                           COMPANY,
                                           not in its individual capacity, but
                                           solely as Trustee



                                     By:
                                         --------------------------------------


Countersigned:


By:
     ----------------------------
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity, but solely as Trustee




                                      D-5
<PAGE>

                        MORGAN STANLEY ABS CAPITAL I INC.
                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
                       Mortgage Pass-Through Certificates

                  This Certificate is one of a duly authorized issue of
Certificates designated as Morgan Stanley ABS Capital I Inc. Trust 2003-NC8
Mortgage Pass-Through Certificates, of the Series specified on the face hereof
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust Fund created by the Agreement.

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

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

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, the Responsible Party and
the Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing the requisite Percentage Interest, as provided in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.



                                      D-6
<PAGE>

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

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

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Responsible Party and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Trustee, nor any such agent shall be affected by
any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Principal Balance, the Servicer will have the option to repurchase,
in whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.




                                      D-7
<PAGE>



                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

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

Dated:


                                     __________________________________________
                                     Signature by or on behalf of assignor





                                      D-8
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________ ,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.

                  This information is provided by _____________________________,
the assignee named above, or __________________________________________________,
as its agent.




                                      D-9
<PAGE>


                                    EXHIBIT E

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                     [date]

Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, NY 10036

The Provident Bank
4221 International Parkway
Atlanta, GA 30354

NC Capital Corporation
18400 Von Karman, Suite 1000
Irvine, CA 92612

              Re:  Pooling and Servicing Agreement, dated as of September 1,
                   2003, by and among Morgan Stanley ABS Capital I Inc., as
                   Depositor, The Provident Bank, as Servicer, NC Capital
                   Corporation, as Responsible Party, and Deutsche Bank National
                   Trust Company, as Trustee, Morgan Stanley ABS Capital I Inc.
                   Trust 2003-NC8 Mortgage Pass-Through Certificates, Series
                   2003-NC8

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), for each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
listed in the attached schedule), it has received:

                  (i) the original Mortgage Note, endorsed as provided in the
         following form: "Pay to the order of ________, without recourse"; and

                  (ii) a duly executed assignment of the Mortgage (which may be
         included in a blanket assignment or assignments).

                  Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related to
such Mortgage Loan.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.



                                      E-1
<PAGE>


                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                               DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                    as Trustee


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




                                      E-2
<PAGE>



                                    EXHIBIT F

                         FORM OF DOCUMENT CERTIFICATION
                         AND EXCEPTION REPORT OF TRUSTEE

                                     [date]

Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, NY 10036

The Provident Bank
4221 International Parkway
Atlanta, GA 30354

NC Capital Corporation
18400 Von Karman, Suite 1000
Irvine, CA 92612

                  Re:  Pooling and Servicing Agreement, dated as of September 1,
                       2003, among Morgan Stanley ABS Capital I Inc., as
                       Depositor, The Provident Bank, as Servicer, NC Capital
                       Corporation, as Responsible Party, and Deutsche Bank
                       National Trust Company, as Trustee, Morgan Stanley ABS
                       Capital I Inc. Trust 2003-NC8 Mortgage Pass-Through
                       Certificates, Series 2003-NC8

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), the
undersigned, as Trustee, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attached Document Exception Report) it has received:

                  (i) The original Mortgage Note, endorsed in the form provided
         in Section 2.01 of the Pooling and Servicing Agreement, with all
         intervening endorsements showing a complete chain of endorsement from
         the originator to the last endorsee.

                  (ii) The original recorded Mortgage.

                  (iii) A duly executed assignment of the Mortgage in the form
         provided in Section 2.01 of the Pooling and Servicing Agreement; or, if
         the Responsible Party has certified or the Trustee otherwise knows that
         the related Mortgage has not been returned from the applicable
         recording office, a copy of the assignment of the Mortgage (excluding
         information to be provided by the recording office).

                  (iv) The original or duplicate original recorded assignment or
         assignments of the Mortgage showing a complete chain of assignment from
         the originator to the last endorsee.



                                      F-1

<PAGE>

                  (v) The original or duplicate original lender's title policy
         and all riders thereto or, any one of an original title binder, an
         original preliminary title report or an original title commitment, or a
         copy thereof certified by the title company.

                  Based on its review and examination and only as to the
foregoing documents, (a) such documents appear regular on their face and related
to such Mortgage Loan, and (b) the information set forth in items (1), (2), (7)
and (9) of the Mortgage Loan Schedule and items (1), (9) and (17) of the Data
Tape Information accurately reflects information set forth in the Custodial
File.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review of the Custodial
File specifically required in the Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan. Notwithstanding anything herein to the contrary, the Trustee has
made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and transfer to the assignee thereof, under the Mortgage to which the
assignment relates.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                     as Trustee


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




                                      F-2

<PAGE>


                                    EXHIBIT G

                           RESIDUAL TRANSFER AFFIDAVIT

                Morgan Stanley ABS Capital I Inc. Trust 2003-NC8,
                       Mortgage Pass-Through Certificates,
                                 Series 2003-NC8

STATE OF          )
                  ) ss.:
COUNTY OF         )

                  The undersigned, being first duly sworn, deposes and says as
follows:

                  1. The undersigned is an officer of ___________________, the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement (the
"Agreement"), relating to the above-referenced Series, by and among Morgan
Stanley ABS Capital I Inc., as depositor (the "Depositor"), The Provident Bank,
as Servicer, NC Capital Corporation, as Responsible Party, and Deutsche Bank
National Trust Company, as Trustee. Capitalized terms used, but not defined
herein, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee for the benefit of the Depositor and the Trustee.

                  2. The Transferee is, as of the date hereof, and will be, as
of the date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate for its own account. The Transferee
has no knowledge that any such affidavit is false.

                  3. The Transferee has been advised of, and understands that
(i) a tax will be imposed on Transfers of the Certificate to Persons that are
Non-Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is a Non-Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.

                  4. The Transferee has been advised of, and understands that a
tax will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is a
Non-Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)



                                      G-1

<PAGE>

                  5. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement and understands the legal consequences of the
acquisition of an Ownership Interest in the Certificate including, without
limitation, the restrictions on subsequent Transfers and the provisions
regarding voiding the Transfer and mandatory sales. The Transferee expressly
agrees to be bound by and to abide by the provisions of Section 5.02(c) of the
Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the Transfer to the Transferee contemplated hereby
null and void.

                  6. The Transferee agrees to require a Transfer Affidavit from
any Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is a Non-Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to the
effect that, among other things, such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is a Non-Permitted Transferee.

                  7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate. The Transferee has historically paid its debts as they have
come due and intends to pay its debts as they come due in the future. The
Transferee intends to pay all taxes due with respect to the Certificate as they
become due.

                  8. The Transferee's taxpayer identification number is
__________.

                  9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

                  10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.

                  11. The Transferee will not cause income from the Residual
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of the Transferee
or any other U.S. Person.

                  12. Check the applicable paragraph:

                  ___ The present value of the anticipated tax liabilities
associated with holding the Certificate, as applicable, does not exceed the sum
of:

                           (i)      the present value of any consideration given
                                    to the Transferee to acquire such
                                    Certificate;



                                      G-2


<PAGE>


                           (ii)     the present value of the expected future
                                    distributions on such Certificate; and

                           (iii)    the present value of the anticipated tax
                                    savings associated with holding such
                                    Certificate as the related REMIC generates
                                    losses.

                  For purposes of this calculation, (i) the Transferee is
assumed to pay tax at the highest rate currently specified in Section 11(b) of
the Code (but the tax rate in Section 55(b)(1)(B) of the Code may be used in
lieu of the highest rate specified in Section 11(b) of the Code if the
Transferee has been subject to the alternative minimum tax under Section 55 of
the Code in the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate) and (ii) present
values are computed using a discount rate equal to the short-term Federal rate
prescribed by Section 1274(d) of the Code for the month of the transfer and the
compounding period used by the Transferee.

                  ___ The transfer of the Certificate complies with U.S.
Treasury Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly,

                           (i)      the Transferee is an "eligible corporation,"
                                    as defined in U.S. Treasury Regulations
                                    Section 1.860E-1(c)(6)(i), as to which
                                    income from the Certificate will only be
                                    taxed in the United States;

                           (ii)     at the time of the transfer, and at the
                                    close of the Transferee's two fiscal years
                                    preceding the year of the transfer, the
                                    Transferee had gross assets for financial
                                    reporting purposes (excluding any obligation
                                    of a person related to the Transferee within
                                    the meaning of U.S. Treasury Regulations
                                    Section 1.860E-1(c)(6)(ii)) in excess of
                                    $100 million and net assets in excess of $10
                                    million;

                           (iii)    the Transferee will transfer the Certificate
                                    only to another "eligible corporation," as
                                    defined in U.S. Treasury Regulations Section
                                    1.860E-1(c)(6)(i), in a transaction that
                                    satisfies the requirements of Sections
                                    1.860E-1(c)(4)(i), (ii) and (iii) and
                                    Section 1.860E-1(c)(5) of the U.S. Treasury
                                    Regulations; and

                           (iv)     the Transferee determined the consideration
                                    paid to it to acquire the Certificate based
                                    on reasonable market assumptions (including,
                                    but not limited to, borrowing and investment
                                    rates, prepayment and loss assumptions,
                                    expense and reinvestment assumptions, tax
                                    rates and other factors specific to the
                                    Transferee) that it has determined in good
                                    faith.

                  ___      None of the above.



                                      G-3

<PAGE>

                  13. The Transferee is not an "employee benefit plan" as
defined in Section 3(3) of ERISA that is subject to Title I of ERISA, or a plan
that is subject to Section 4975 of the Code, or a plan subject to any Federal,
state or local law that is substantially similar to Title I of ERISA or Section
4975 of the Code, and the Transferee is not acting on behalf of or investing
plan assets of such a plan.

                                      * * *





                                      G-4

<PAGE>



                  IN WITNESS WHEREOF, the Transferee has caused this instrument
to be executed on its behalf, pursuant to authority of its Board of Directors,
by its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of ______, 20__.



                                        ---------------------------------------
                                        Print Name of Transferee



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


[Corporate Seal]

ATTEST:


_____________________________
[Assistant] Secretary

                  Personally appeared before me the above-named __________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ___________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.

                  Subscribed and sworn before me this ____ day of ________ ,
20__.



                                              _________________________________
                                              NOTARY PUBLIC


                                              My Commission expires the __ day
                                              of _________, 20__



                                      G-5

<PAGE>



                                    EXHIBIT H

                         FORM OF TRANSFEROR CERTIFICATE

                                                               __________, 20__

Morgan Stanley ABS Capital I Inc.
1221 Avenue of the Americas
New York, New York  10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California  92705

                  Re:  Morgan Stanley ABS Capital I Inc. Trust, Series 2003-NC8,
                       Mortgage Pass-Through Certificates, Series 2003-NC8,
                       Class [___]

Ladies and Gentlemen:

                  In connection with our disposition of the above Certificates
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Residual Certificate, (i) we have no
knowledge the Transferee is a Non-Permitted Transferee and (ii) after conducting
a reasonable investigation of the financial condition of the Transferee, we have
no knowledge and no reason to believe that the Transferee will not pay all taxes
with respect to the Residual Certificates as they become due and (iii) we have
no reason to believe that the statements made in paragraphs 7, 10 and 11 of the
Transferee's Residual Transfer Affidavit are false.

                                     Very truly yours,


                                     __________________________________________
                                     Print Name of Transferor



                                     By:  _____________________________________
                                          Authorized Officer




                                      H-1


<PAGE>


                                    EXHIBIT I

                            FORM OF RULE 144A LETTER

                                                             ____________, 20__

Morgan Stanley ABS Capital I Inc.
1221 Avenue of the Americas
New York, New York 10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California  92705

               Re:   Morgan Stanley ABS Capital I Inc. Trust 2003-NC8,
                     Mortgage Pass-Through Certificates, Series 2003-NC8,
                     Class [  ]

Ladies and Gentlemen:

In connection with our acquisition of the above Certificates we certify that (a)
we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either we are purchasing a Class A-1 Certificate,
Class A-2 Certificate, Class M-1 Certificate, Class M-2 Certificate, Class M-3
Certificate, Class B-1 Certificate, Class B-2 Certificate or Class B-3
Certificate or we are not an "employee benefit plan" that is subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA), or
a plan or arrangement that is subject to Section 4975 of the Internal Revenue
Code of 1986, as amended, nor are we acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect such
acquisition or, with respect to a Class X Certificate, the purchaser is an
insurance company that is purchasing this certificate with funds contained in an
"insurance company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60, (f) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, and (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.



                                      I-1

<PAGE>


                                                           ANNEX 1 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]


         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because (i) the Buyer owned and/or
invested on a discretionary basis $_________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

         ____     Corporation, etc. The Buyer is a corporation (other than a
                  bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or
                  charitable organization described in Section 501(c)(3) of the
                  Internal Revenue Code of 1986, as amended.

         ____     Bank. The Buyer (a) is a national bank or banking institution
                  organized under the laws of any State, territory or the
                  District of Columbia, the business of which is substantially
                  confined to banking and is supervised by the State or
                  territorial banking commission or similar official or is a
                  foreign bank or equivalent institution, and (b) has an audited
                  net worth of at least $25,000,000 as demonstrated in its
                  latest annual financial statements, a copy of which is
                  attached hereto.

         ____     Savings and Loan. The Buyer (a) is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar institution, which is
                  supervised and examined by a State or Federal authority having
                  supervision over any such institutions or is a foreign savings
                  and loan association or equivalent institution and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.



--------
(1)      Buyer must own and/or invest on a discretionary basis at least
         $100,000,000 in securities unless Buyer is a dealer, and, in that case,
         Buyer must own and/or invest on a discretionary basis at least
         $10,000,000 in securities.




                                      I-2


<PAGE>


         ____     Broker-dealer. The Buyer is a dealer registered pursuant to
                  Section 15 of the Securities Exchange Act of 1934.

         ____     Insurance Company. The Buyer is an insurance company whose
                  primary and predominant business activity is the writing of
                  insurance or the reinsuring of risks underwritten by insurance
                  companies and which is subject to supervision by the insurance
                  commissioner or a similar official or agency of a State,
                  territory or the District of Columbia.

         ____     State or Local Plan. The Buyer is a plan established and
                  maintained by a State, its political subdivisions, or any
                  agency or instrumentality of the State or its political
                  subdivisions, for the benefit of its employees.

         ____     ERISA Plan. The Buyer is an employee benefit plan within the
                  meaning of Title I of the Employee Retirement Income Security
                  Act of 1974.

         ____     Investment Advisor. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940.

         ____     Small Business Investment Company. Buyer is a small business
                  investment company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small
                  Business Investment Act of 1958.

         ____     Business Development Company. Buyer is a business development
                  company as defined in Section 202(a)(22) of the Investment
                  Advisors Act of 1940.

         3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.



                                      I-3


<PAGE>

         5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

         6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.


                                  ____________________________________________
                                  Print Name of Transferor



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


                                  Date:
                                       --------------------------------------



                                      I-4


<PAGE>


                                                           ANNEX 2 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That Are Registered Investment Companies]


         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

         2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

         ____     The Buyer owned $ in securities (other than the excluded
                  securities referred to below) as of the end of the Buyer's
                  most recent fiscal year (such amount being calculated in
                  accordance with Rule 144A).

         ____     The Buyer is part of a Family of Investment Companies which
                  owned in the aggregate $ in securities (other than the
                  excluded securities referred to below) as of the end of the
                  Buyer's most recent fiscal year (such amount being calculated
                  in accordance with Rule 144A).

         3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

         4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.



                                      I-5


<PAGE>

         5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

         6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.


                                -----------------------------------------------
                                Print Name of Transferor



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




                                IF AN ADVISER:


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

                                Print Name of Buyer

                                Date:
                                     ------------------------------------------




                                      I-6


<PAGE>


                                    EXHIBIT J

                           FORM OF REQUEST FOR RELEASE
                                  (for Trustee)

To:      [Trustee]

         Re:

         In connection with the administration of the Mortgage Loans held by you
as the [Trustee] on behalf of the Certificateholders, we request the release,
and acknowledge receipt, of the (Custodial File/[specify documents]) for the
Mortgage Loan described below, for the reason indicated.



Mortgagor's Name, Address & Zip Code:


Mortgage Loan Number:


Send Custodial File to:


Reason for Requesting Documents (check one)

____1.   Mortgage Loan Paid in Full. (The Company hereby certifies that all
         amounts received in connection therewith have been credited to the
         Collection Account as provided in the Pooling and Servicing Agreement.)

____2.   Mortgage Loan Repurchase Pursuant to Section 2.03 of the Pooling and
         Servicing Agreement. (The Company hereby certifies that the repurchase
         price has been credited to the Collection Account as provided in the
         Pooling and Servicing Agreement.)

____3.   Mortgage Loan Liquidated by _________________. (The Company hereby
         certifies that all proceeds of foreclosure, insurance, condemnation or
         other liquidation have been finally received and credited to the
         Collection Account pursuant to the Pooling and Servicing Agreement.)

____4.   Mortgage Loan in Foreclosure.

____5.   Other (explain).

         If box 1, 2 or 3 above is checked, and if all or part of the Custodial
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.




                                      J-1


<PAGE>


         If box 4 or 5 above is checked, upon our return of all of the above
documents to you as the Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form if requested by us.

                                        THE PROVIDENT BANK



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


ACKNOWLEDGED:

DEUTSCHE BANK NATIONAL TRUST
         COMPANY, as Trustee


By: _______________________________
     Name:
     Title:
     Date:





                                      J-2


<PAGE>


                                    EXHIBIT K

                         CONTENTS OF EACH MORTGAGE FILE

         With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Servicer or delivered to and
retained by the Trustee, as applicable:

         (a)      The original Mortgage Note bearing all intervening
                  endorsements, showing a complete chain of endorsement from the
                  originator to the last endorsee endorsed "Pay to the order of
                  _________________without recourse" and signed (which may be by
                  facsimile signature) in the name of the last endorsee by an
                  authorized officer. To the extent that there is no room on the
                  face of the Mortgage Notes for endorsements, the endorsement
                  may be contained on an allonge, if state law so allows and the
                  Trustee is so advised by the Responsible Party that state law
                  so allows.

         (b)      The original of any guaranty executed in connection with the
                  Mortgage Note.

         (c)      The original Mortgage, with evidence of recording thereon or a
                  certified true copy of such Mortgage submitted for recording.
                  If in connection with any Mortgage Loan, the Responsible Party
                  cannot deliver or cause to be delivered the original Mortgage
                  with evidence of recording thereon on or prior to the Closing
                  Date because of a delay caused by the public recording office
                  where such Mortgage has been delivered for recordation or
                  because such Mortgage has been lost or because such public
                  recording office retains the original recorded Mortgage, the
                  Responsible Party shall deliver or cause to be delivered to
                  the Trustee, a photocopy of such Mortgage, together with (i)
                  in the case of a delay caused by the public recording office,
                  an Officer's Certificate of the Responsible Party or a
                  certificate from an escrow company, a title company or closing
                  attorney stating that such Mortgage has been dispatched to the
                  appropriate public recording office for recordation and that
                  the original recorded Mortgage or a copy of such Mortgage
                  certified by such public recording office to be a true and
                  complete copy of the original recorded Mortgage will be
                  promptly delivered to the Trustee upon receipt thereof by the
                  Responsible Party; or (ii) in the case of a Mortgage where a
                  public recording office retains the original recorded Mortgage
                  or in the case where a Mortgage is lost after recordation in a
                  public recording office, a copy of such Mortgage certified by
                  such public recording office to be a true and complete copy of
                  the original recorded Mortgage.

         (d)      The originals of all assumption, modification, consolidation
                  or extension agreements, with evidence of recording thereon or
                  a certified true copy of such agreement submitted for
                  recording.



                                      K-1



<PAGE>

         (e)      The original Assignment of Mortgage for each Mortgage Loan
                  endorsed in blank.

         (f)      Originals of all intervening assignments of mortgage (if any)
                  evidencing a complete chain of assignment from the applicable
                  originator to the last endorsee with evidence of recording
                  thereon or a certified true copy of such intervening
                  assignments of mortgage submitted for recording, or if any
                  such intervening assignment has not been returned from the
                  applicable recording office or has been lost or if such public
                  recording office retains the original recorded assignments of
                  mortgage, the Responsible Party shall deliver or cause to be
                  delivered to the Trustee, a photocopy of such intervening
                  assignment, together with (i) in the case of a delay caused by
                  the public recording office, an Officer's Certificate of the
                  Responsible Party or a certificate from an escrow company, a
                  title company or a closing attorney stating that such
                  intervening assignment of mortgage has been dispatched to the
                  appropriate public recording office for recordation and that
                  such original recorded intervening assignment of mortgage or a
                  copy of such intervening assignment of mortgage certified by
                  the appropriate public recording office to be a true and
                  complete copy of the original recorded intervening assignment
                  of mortgage will be promptly delivered to the Trustee upon
                  receipt thereof by the Responsible Party; or (ii) in the case
                  of an intervening assignment where a public recording office
                  retains the original recorded intervening assignment or in the
                  case where an intervening assignment is lost after recordation
                  in a public recording office, a copy of such intervening
                  assignment certified by such public recording office to be a
                  true and complete copy of the original recorded intervening
                  assignment.

         (g)      The original mortgagee title insurance policy or attorney's
                  opinion of title and abstract of title.

         (h)      The original of any security agreement, chattel mortgage or
                  equivalent document executed in connection with the Mortgage
                  (if provided).

         (i)      Residential loan application.

         (j)      Mortgage Loan closing statement.

         (k)      Verification of employment and income, if applicable.

         (l)      Verification of acceptable evidence of source and amount of
                  down payment.

         (m)      Credit report on Mortgagor.

         (n)      Residential appraisal report.

         (o)      Photograph of the Mortgaged Property.




                                      K-2

<PAGE>


         (p)      Survey of the Mortgaged Property.

         (q)      Copy of each instrument necessary to complete identification
                  of any exception set forth in the exception schedule in the
                  title policy, i.e., map or plat, restrictions, easements,
                  sewer agreements, home association declarations, etc.

         (r)      All required disclosure statements.

         (s)      If required in an appraisal, termite report, structural
                  engineer's report, water potability and septic certification.

         (t)      Sales contract, if applicable.

         Evidence of payment of taxes and insurance, insurance claim files,
correspondence, current and historical computerized data files (which include
records of tax receipts and payment history from the date of origination), and
all other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.




                                      K-3


<PAGE>


                                    EXHIBIT L

                           FORM OF CERTIFICATION TO BE
                             PROVIDED WITH FORM 10-K

                  Re:      Morgan Stanley ABS Capital I Inc. Trust 2003-NC8 (the
                           "Trust"), Mortgage Pass-Through Certificates, Series
                           2003-NC8, issued pursuant to the Pooling and
                           Servicing Agreement, dated as September 1, 2003 (the
                           "Pooling and Servicing Agreement"), by and among
                           Morgan Stanley ABS Capital I Inc., as depositor (the
                           "Depositor"), Deutsche Bank National Trust Company,
                           as trustee (the "Trustee"), The Provident Bank, as
                           servicer (the "Servicer"), and NC Capital
                           Corporation, as responsible party

I, [identify the certifying individual], certify that:

         1.       I have reviewed this annual report on Form 10-K (the "Annual
                  Report"), and all reports on Form 8-K containing distribution
                  reports (collectively with this Annual Report, the "Reports")
                  filed in respect of periods included in the year covered by
                  this Annual Report, of the Trust;

         2.       Based on my knowledge, the information in the Reports, taken
                  as a whole, does not contain any untrue statement of a
                  material fact or omit to state a material fact necessary to
                  make the statements made, in light of the circumstances under
                  which such statements were made, not misleading as of the last
                  day of the period covered by this Annual Report;

         3.       Based on my knowledge, the distribution or servicing
                  information required to be provided to the Trustee by the
                  Servicer under the Pooling and Servicing Agreement, for
                  inclusion in the Reports is included in the Reports;

         4.       Based on my knowledge and upon the annual compliance statement
                  included in this Annual Report and required to be delivered to
                  the Trustee in accordance with the terms of the Pooling and
                  Servicing Agreement, and except as disclosed in the Reports,
                  the Servicer has fulfilled its obligations under the Pooling
                  and Servicing Agreement; and

         5.       The Reports disclose all significant deficiencies relating to
                  the Servicer's compliance with the minimum servicing standards
                  based upon the report provided by an independent public
                  accountant, after conducting a review in compliance with the
                  Uniform Single Attestation Program for Mortgage Bankers or
                  similar procedure, as set forth in the Pooling and Servicing
                  Agreement, that is included in such report.




                                      L-1


<PAGE>



In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: the Trustee and the
Servicer.

Date:
     ------------------------------------------------


-----------------------------------------------------
[Signature]
[Title]







                                      L-2

<PAGE>


                                    EXHIBIT M

                      FORM OF TRUSTEE'S CERTIFICATION TO BE
                              PROVIDED TO DEPOSITOR

                  Re:      Morgan Stanley ABS Capital I Inc. Trust 2003-NC8 (the
                           "Trust"), Mortgage Pass-Through Certificates, Series
                           2003-NC8, issued pursuant to the Pooling and
                           Servicing Agreement, dated as September 1, 2003 (the
                           "Pooling and Servicing Agreement"), by and among
                           Morgan Stanley ABS Capital I Inc., as depositor (the
                           "Depositor"), Deutsche Bank National Trust Company,
                           as trustee (the "Trustee"), The Provident Bank, as
                           servicer (the "Servicer"), and NC Capital
                           Corporation, as responsible party

I, [identify the certifying individual], certify to the Depositor and its
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:

         1.       I have reviewed the annual report on Form 10-K for the fiscal
                  year [___], (the "Annual Report"), and all reports on Form 8-K
                  containing distribution reports filed in respect of periods
                  included in the year covered by the Annual Report
                  (collectively with the Annual Report, the "Reports"), of the
                  Trust;]

         2.       To the best of my knowledge, the information in the Reports,
                  taken as a whole, does not contain any untrue statement of a
                  material fact or omit to state a material fact necessary to
                  make the statements made, in light of the circumstances under
                  which such statements were made, not misleading as of the last
                  day of the period covered by the Annual Report; and

         3.       To the best of my knowledge, the distribution or servicing
                  information required to be provided to the Trustee by the
                  Servicer under the Pooling and Servicing Agreement for
                  inclusion in the Reports is included in the Reports.



Date: _________________________


-------------------------------
[Signature]
[Title]




                                      M-1

<PAGE>


                                    EXHIBIT N

                        FORM OF SERVICER'S CERTIFICATION
                           TO BE PROVIDED TO DEPOSITOR

                  Re:      Morgan Stanley ABS Capital I Inc. Trust 2003-NC8 (the
                           "Trust"), Mortgage Pass-Through Certificates, Series
                           2003-NC8, issued pursuant to the Pooling and
                           Servicing Agreement, dated as September 1, 2003 (the
                           "Pooling and Servicing Agreement"), by and among
                           Morgan Stanley ABS Capital I Inc., as depositor (the
                           "Depositor"), Deutsche Bank National Trust Company,
                           as trustee (the "Trustee"), The Provident Bank, as
                           servicer (the "Servicer"), and NC Capital
                           Corporation, as responsible party

I, [identify the certifying individual], certify to the Depositor and the
Trustee, and their officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

         1.       The servicing information required to be provided to the
                  Trustee by the Servicer under the Pooling and Servicing
                  Agreement for the period covered in the annual report on Form
                  10-K for the fiscal year [___] of the Trust, has been so
                  provided;

         2.       I am responsible for reviewing the activities performed by the
                  Servicer under the Pooling and Servicing Agreement and based
                  upon my knowledge and the annual compliance review for the
                  fiscal year [___] required under the Pooling and Servicing
                  Agreement, and except as disclosed in the annual compliance
                  statement for the fiscal year [___] required to be delivered
                  to the Trustee in accordance with the terms of the Pooling and
                  Servicing Agreement (which has been so delivered to the
                  Trustee), the Servicer has fulfilled its obligations under the
                  Pooling and Servicing Agreement; and

         3.       All significant deficiencies relating to the Servicer's
                  compliance with the minimum servicing standards for purposes
                  of the report for the fiscal year [___] provided by an
                  independent public accountant, after conducting a review
                  conducted in compliance with the Uniform Single Attestation
                  Program for Mortgage Bankers or similar procedure, as set
                  forth in the Pooling and Servicing Agreement, have been
                  disclosed to such accountant and are included in such report.

Date: _________________________


-------------------------------
[Signature]
[Title]



                                      N-1