SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

                                    Depositor



                            LITTON LOAN SERVICING LP

                                    Servicer



                         U. S. BANK NATIONAL ASSOCIATION

                                     Trustee

                                       and



                                 CITIBANK, N.A.

                               Trust Administrator



                         POOLING AND SERVICING AGREEMENT
                           Dated as of January 1, 2002



                Salomon Home Equity Loan Trust, Series 2002-WMC1
                     Asset Backed Pass-Through Certificates

                                Series 2002-WMC1





<PAGE>

<TABLE>
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                                                  TABLE OF CONTENTS

                                                     ARTICLE I

                                                    DEFINITIONS
<S>                        <C>                                                                                   <C>
         SECTION 1.01.     Defined Terms......................................................................... 1
         SECTION 1.02.     Allocation of Certain Interest Shortfalls............................................ 38

                                                     ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;
                                         ORIGINAL ISSUANCE OF CERTIFICATES
         SECTION 2.01.     Conveyance of the Mortgage Loans..................................................... 39
         SECTION 2.02.     Acceptance of REMIC I by Trustee..................................................... 41
         SECTION 2.03.     Repurchase or Substitution of Mortgage Loans by
                                    the Originator.............................................................. 42
         SECTION 2.04.     Reserved............................................................................. 45
         SECTION 2.05.     Representations, Warranties and Covenants of the Servicer............................ 45
         SECTION 2.06.     Issuance of the REMIC I Regular Interests and the
                                    Class R I Interest.......................................................... 47
         SECTION 2.07.     Conveyance of the REMIC I Regular Interests;
                                    Acceptance of REMIC II by the Trustee....................................... 47
         SECTION 2.08.     Issuance of Class R Certificates..................................................... 47

                                                    ARTICLE III

                                            ADMINISTRATION AND SERVICING
                                               OF THE MORTGAGE LOANS
         SECTION 3.01.     Servicer to Act as Servicer.......................................................... 48
         SECTION 3.02.     Sub Servicing Agreements Between Servicer and
                                    Sub Servicers............................................................... 50
         SECTION 3.03.     Successor Sub Servicers.............................................................. 51
         SECTION 3.04.     No Contractual Relationship Between Sub Servicer,
                                    Trust Administrator, Trustee or the Certificateholders...................... 51
         SECTION 3.05.     Assumption or Termination of Sub Servicing Agreement by
                                    Trust Administrator......................................................... 51
         SECTION 3.06.     [Reserved]........................................................................... 51
         SECTION 3.07.     Collection of Certain Mortgage Loan Payments......................................... 51
         SECTION 3.08.     [Reserved]........................................................................... 52
         SECTION 3.09.     Collection of Taxes, Assessments and Similar Items;
                                    Servicing Accounts.......................................................... 52
         SECTION 3.10.     Collection Account, Distribution Account and Initial
                                    Deposit Accounts............................................................ 53
         SECTION 3.11.     Withdrawals from the Collection Account and Distribution
                                    Account..................................................................... 55
         SECTION 3.12.     Investment of Funds in the Investment Accounts....................................... 57


                                                        -ii-

<PAGE>



         SECTION 3.13.     [Reserved]........................................................................... 58
         SECTION 3.14.     Maintenance of Hazard Insurance and Errors and Omissions
                                    and Fidelity Coverage....................................................... 58
         SECTION 3.15.     Enforcement of Due on Sale Clauses; Assumption
                                    Agreements.................................................................. 59
         SECTION 3.16.     Realization Upon Defaulted Mortgage Loans............................................ 60
         SECTION 3.17.     Trustee to Cooperate; Release of Mortgage Files...................................... 62
         SECTION 3.18.     Servicing Compensation............................................................... 63
         SECTION 3.19.     Reports to the Trust Administrator and the Trustee;
                                    Collection Account Statements............................................... 63
         SECTION 3.20.     Statement as to Compliance........................................................... 64
         SECTION 3.21.     Independent Public Accountants' Servicing Report..................................... 64
         SECTION 3.22.     Access to Certain Documentation...................................................... 64
         SECTION 3.23.     Title, Management and Disposition of REO Property.................................... 65
         SECTION 3.24.     Obligations of the Servicer in Respect of Prepayment
                                    Interest Shortfalls......................................................... 68
         SECTION 3.25.     [Reserved]........................................................................... 68
         SECTION 3.26.     Obligations of the Servicer in Respect of Mortgage
                                    Rates and  Monthly Payments................................................. 68
         SECTION 3.27.     Reserve Fund......................................................................... 68
         SECTION 3.28.     Advance Facility..................................................................... 70

                                                     ARTICLE IV

                                           PAYMENTS TO CERTIFICATEHOLDERS
         SECTION 4.01.     Distributions........................................................................ 71
         SECTION 4.02.     Statements to Certificateholders..................................................... 77
         SECTION 4.03.     Remittance Reports; Advances......................................................... 80
         SECTION 4.04.     Allocation of Realized Losses........................................................ 81
         SECTION 4.05.     Compliance with Withholding Requirements............................................. 83

                                                     ARTICLE V

                                                  THE CERTIFICATES
         SECTION 5.01.     The Certificate...................................................................... 84
         SECTION 5.02.     Registration of Transfer and Exchange of Certificates................................ 86
         SECTION 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates.................................... 90
         SECTION 5.04.     Persons Deemed Owners................................................................ 91
         SECTION 5.05.     Certain Available Information........................................................ 91

                                                     ARTICLE VI

                                           THE DEPOSITOR AND THE SERVICER
         SECTION 6.01.     Liability of the Depositor and the Servicer.......................................... 92
         SECTION 6.02.     Merger or Consolidation of the Depositor or the Servicer............................. 92
         SECTION 6.03.     Limitation on Liability of the Depositor, the Servicer and


                                                       -iii-

<PAGE>



                           Others............................................................................... 92
         SECTION 6.04.     Limitation on Resignation of the Servicer............................................ 93
         SECTION 6.05.     Rights of the Depositor in Respect of the Servicer................................... 94

                                                    ARTICLE VII

                                                      DEFAULT
         SECTION 7.01.     Servicer Events of Default........................................................... 95
         SECTION 7.02.     Trust Administrator or Trustee to Act; Appointment of
                                    Successor................................................................... 97
         SECTION 7.03.     Notification to Certificateholders................................................... 98
         SECTION 7.04.     Waiver of Servicer Events of Default................................................. 99

                                                    ARTICLE VIII

                                 CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
         SECTION 8.01.     Duties of Trustee and Trust Administrator........................................... 100
         SECTION 8.02.     Certain Matters Affecting the Trustee and the Trust
                                    Administrator.............................................................. 101
         SECTION 8.04.     Trustee and Trust Administrator May Own Certificates................................ 102
         SECTION 8.05.     Trustee's and Trust Administrator's Fees and Expenses. ............................. 103
         SECTION 8.06.     Eligibility Requirements for Trustee and Trust
                                    Administrator. ............................................................ 103
         SECTION 8.07.     Resignation and Removal of the Trustee and the Trust
                                    Administrator ............................................................. 104
         SECTION 8.08.     Successor Trustee or Trust Administrator............................................ 105
         SECTION 8.09.     Merger or Consolidation of Trustee.................................................. 106
         SECTION 8.10.     Appointment of Co Trustee or Separate Trustee....................................... 106
         SECTION 8.11.     Appointment of Office or Agency..................................................... 107
         SECTION 8.12.     Representations and Warranties...................................................... 107

                                                     ARTICLE IX

                                                    TERMINATION
         SECTION 9.01      Termination Upon Repurchase or Liquidation of All
                                    Mortgage Loans............................................................. 109
         SECTION 9.02      Additional Termination Requirements................................................. 111

                                                     ARTICLE X

                                                  REMIC PROVISIONS
         SECTION 10.01.             REMIC Administration....................................................... 112
         SECTION 10.02.             Prohibited Transactions and Activities..................................... 114
         SECTION 10.03.             Servicer and Trustee and Trust Administrator
                                    Indemnification............................................................ 115



                                                        -iv-

<PAGE>



                                                     ARTICLE XI

                                              MISCELLANEOUS PROVISIONS
         SECTION 11.01.             Amendment.................................................................. 116
         SECTION 11.02.             Recordation of Agreement; Counterparts..................................... 117
         SECTION 11.03.             Limitation on Rights of Certificateholders................................. 117
         SECTION 11.04.             Governing Law.............................................................. 118
         SECTION 11.05.             Notices.................................................................... 118
         SECTION 11.06.             Severability of Provisions................................................. 119
         SECTION 11.07.             Notice to Rating Agencies.................................................. 119
         SECTION 11.08.             Article and Section References............................................. 120
         SECTION 11.09.             Grant of Security Interest................................................. 120


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                                                        -v-

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<TABLE>
<CAPTION>



EXHIBITS

<S>               <C>
Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Form of Class M-1 Certificate
Exhibit A-3       Form of Class M-2 Certificate
Exhibit A-4       Form of Class M-3 Certificate
Exhibit A-5       Form of Class M-4 Certificate
Exhibit A-6       Form of Class CE Certificate
Exhibit A-7       Form of Class P Certificate
Exhibit A-8       Form of Class R Certificate
Exhibit B         [Reserved]
Exhibit C-1       Form of Trustee's Initial Certification
Exhibit C-2       Form of Trustee's Final Certification
Exhibit D         Form of Mortgage Loan Purchase Agreement
Exhibit E-1       Request for Release
Exhibit E-2       Request for Release Mortgage Loans paid in full
Exhibit F-1       Form of Transferor Representation Letter and Form of Transferee Representation
                  Letter in Connection with Transfer of the Private Certificates Pursuant to Rule 144A
                  Under the 1933 Act
Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in
                  Connection with Transfer of Class R Certificates
Exhibit G         Form of Certification with respect to ERISA and the Code
Exhibit H         Form of Report Pursuant to Section 4.06
Exhibit I         [Reserved]
Exhibit J         Form of Officer's Certificate with respect to Prepayments
Exhibit K         Form of Lost Note Affidavit
Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule
</TABLE>






                                      -vi-

<PAGE>



                  This Pooling and Servicing Agreement, is dated and effective
as of January 1, 2002, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. as
Depositor, LITTON LOAN SERVICING LP as Servicer, U. S. BANK NATIONAL ASSOCIATION
as Trustee and CITIBANK N.A. as Trust Administrator.

                             PRELIMINARY STATEMENT:

                  The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprised
of the Mortgage Loans and certain other related assets subject to this
Agreement.

                                     REMIC I

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Servicer Prepayment Charge Payment Amount)
subject to this Agreement as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." The Class R-I
Interest will be the sole class of "residual interests" in REMIC I for purposes
of the REMIC Provisions (as defined herein). The following table irrevocably
sets forth the designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance and, solely for purposes of satisfying Treasury
regulation section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                               REMIC I                           Initial                       Latest Possible
         Designation                       Remittance Rate                Uncertificated Balance               Maturity Date(1)
----------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                        <C>                          <C>                            <C>
            I-LTAA                      Variable(2)                  $242,598,108.17                January 25, 2032
            I-LTA                       Variable(2)                  $  2,029,900.00                January 25, 2032
            I-LTM1                      Variable(2)                  $    167,090.00                January 25, 2032
            I-LTM2                      Variable(2)                  $    136,160.00                January 25, 2032
            I-LTM3                      Variable(2)                  $     80,450.00                January 25, 2032
            I-LTM4                      Variable(2)                  $     24,750.00                January 25, 2032
            I-LTZZ                      Variable(2)                  $  2,512,631.80                January 25, 2032
            I-LTP                       Variable(2)                  $        100.00                January 25, 2032
</TABLE>
---------------
(1)       Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
          regulations, the Distribution Date immediately following the maturity
          date for the Mortgage Loan with the latest maturity date has been
          designated as the "latest possible maturity date" for each REMIC I
          Regular Interest.
(2)       Calculated in accordance with the definition of "REMIC I Remittance
          Rate" herein.


                                      -vii-

<PAGE>



                                    REMIC II

               As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate, the initial aggregate Certificate Principal
Balance and, solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for the indicated
Classes of Certificates.


<TABLE>
<CAPTION>

                                                                    Initial Aggregate
                                                                  Certificate Principal             Latest Possible
       Designation                   Pass-Through Rate                   Balance                   Maturity Date(1)
--------------------------  --------------------------------  ------------------------------  -----------------------------

<S>                                  <C>                     <C>                                   <C> <C>
           Class A                      Variable(2)                  $202,990,000.00               January 25, 2032
          Class M-1                     Variable(2)                  $ 16,709,000.00               January 25, 2032
          Class M-2                     Variable(2)                  $ 13,616,000.00               January 25, 2032
          Class M-3                     Variable(2)                  $  8,045,000.00               January 25, 2032
          Class M-4                     Variable(2)                  $  2,475,000.00               January 25, 2032
           Class CE                     Variable(3)                  $  3,714,089.97               January 25, 2032
           Class P                        N/A(4)                     $        100.00               January 25, 2032
</TABLE>
---------------
(1)       Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
          regulations, the Distribution Date immediately following the maturity
          date for the Mortgage Loans with the latest maturity date has been
          designated as the "latest possible maturity date" for each Class of
          Certificates.
(2)       Calculated in accordance with the definition of "Pass-Through Rate"
          herein.
(3)       The Class CE Certificates will accrue interest at their variable
          Pass-Through Rate on the Notional Amount of the Class CE Certificates
          outstanding from time to time which shall equal the Uncertificated
          Balance of the REMIC I Regular Interests. The Class CE Certificates
          will not accrue interest on their Certificate Principal Balance.
(4)       The Class P Certificates will not accrue interest.

               As of the Cut-off Date, the Mortgage Loans had an aggregate
principal balance equal to $247,549,189.97.

               In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Trustee and the Trust Administrator agree as
follows:



                                     -viii-

<PAGE>



                                    ARTICLE I

                                   DEFINITIONS

               SECTION 1.01.          Defined Terms.

               Whenever used in this Agreement, including, without limitation,
in the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.

               "Accepted Servicing Practices": The servicing standards set forth
in Section 3.01.

               "Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate or Class CE Certificate and each Distribution
Date, interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Certificate for such Distribution Date on the
Certificate Principal Balance, in the case of the Class A Certificates and the
Mezzanine Certificates, or on the Notional Amount, in the case of the Class CE
Certificates, of such Certificate immediately prior to such Distribution Date.
The Class P Certificates are not entitled to distributions in respect of
interest and, accordingly, will not accrue interest. All distributions of
interest on the Class A Certificates and the Mezzanine Certificates will be
calculated on the basis of a 360-day year and the actual number of days in the
applicable Interest Accrual Period. All distributions of interest on the Class
CE Certificates will be based on a 360-day year consisting of twelve 30-day
months. Accrued Certificate Interest with respect to each Distribution Date, as
to any Class A Certificate, Mezzanine Certificate or Class CE Certificate, shall
be reduced by an amount equal to the portion allocable to such Certificate
pursuant to Section 1.02 hereof of the sum of (a) the aggregate Prepayment
Interest Shortfall, if any, for such Distribution Date to the extent not covered
by payments pursuant to Section 3.24 and (b) the aggregate amount of any Relief
Act Interest Shortfall, if any, for such Distribution Date. In addition, Accrued
Certificate Interest with respect to each Distribution Date, as to any Class CE
Certificate, shall be reduced by an amount equal to the portion allocable to
such Class CE Certificate, as applicable, of Realized Losses, if any, pursuant
to Section 4.04 hereof.

               "Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified on the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.

               "Adjustment Date": With respect to each Adjustable-Rate Mortgage
Loan, the first day of the month in which the Mortgage Rate of such Mortgage
Loan changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth
in the Mortgage Loan Schedule.

               "Administration Fee": The amount payable to the Trust
Administrator on each Distribution Date pursuant to Section 8.05 as compensation
for all services rendered by it or the Trustee in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties of the Trust Administrator and the Trustee hereunder, which amount shall
equal the product of (i) the Administration Fee Rate, multiplied by (ii) the
aggregate Stated Principal


                                       -1-

<PAGE>



Balance of the Mortgage Loans and any REO Properties. The fee payable to the
Trustee for all services rendered by it in the execution of the trust hereby
created and the exercise and performance of any of the powers and duties of the
Trustee hereunder will be paid by the Trust Administrator out of the Trust
Administrator's own funds or out of the Administration Fee received by the Trust
Administrator.

               "Administration Fee Rate":  0.0175% per annum.

               "Advance": As to any Mortgage Loan, any advance made by the
Servicer in respect of any Distribution Date pursuant to Section 4.03.

               "Advancing Person": As defined in Section 3.28 hereof.

               "Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person 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.

               "Aggregate Loss Severity 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 on any Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the aggregate principal balance of such Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.

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

               "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

               "Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account attributable to the
Mortgage Loans as of the close of business on the related Determination Date,
(b) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Distribution Account for
such Distribution Date pursuant to Section 3.23, (c) the aggregate of any
amounts deposited in the Distribution Account by the Servicer in respect of
Prepayment Interest Shortfalls attributable to the Mortgage Loans for such
Distribution Date pursuant to Section 3.24, (d) the aggregate of any Advances
attributable to the Mortgage Loans made by the Servicer for such Distribution
Date pursuant to


                                       -2-

<PAGE>



Section 4.03 and (e) the aggregate of any advances attributable to the Mortgage
Loans made by the Trust Administrator or the Trustee, as applicable, for such
Distribution Date pursuant to Section 7.02(b), reduced (to not less than zero),
by (2) the sum of (x) the portion of the amount described in clause (1)(a) above
that represents (i) Monthly Payments on the Mortgage Loans received from a
Mortgagor on or prior to the Determination Date but due during any Due Period
subsequent to the related Due Period, (ii) Principal Prepayments on the Mortgage
Loans received after the related Prepayment Period (together with any interest
payments received with such Principal Prepayments to the extent they represent
the payment of interest accrued on the Mortgage Loans during a period subsequent
to the related Prepayment Period), (iii) Liquidation Proceeds and Insurance
Proceeds received in respect of the Mortgage Loans after the related Prepayment
Period, (iv) amounts reimbursable or payable to the Depositor, the Servicer, the
Trustee, the Trust Administrator, the Seller or any Sub-Servicer pursuant to
Section 3.11 or Section 3.12 or otherwise payable in respect of Extraordinary
Trust Fund Expenses attributable to the Mortgage Loans, (v) Stayed Funds, (vi)
the Administration Fee attributable to the Mortgage Loans payable from the
Distribution Account pursuant to Section 8.05, (vii) amounts deposited in the
Collection Account or the Distribution Account in error and (viii) the amount of
any Prepayment Charges collected by the Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans or any Servicer Prepayment
Charge Payment Amount with respect to the Mortgage Loans, and (y) amounts
reimbursable to the Trustee or the Trust Administrator, as applicable, for an
advance made pursuant to Section 7.02(b) which advance the Trustee or Trust
Administrator, as applicable, has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made.

               "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.

               "Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation or Debt Service Reduction.

               "Book-Entry Certificate": The Class A Certificates and the
Mezzanine Certificates for so long as the Certificates of such Class shall be
registered in the name of the Depository or its nominee.

               "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

               "Business Day": Any day other than a Saturday, a Sunday or a day
on which banking or savings and loan institutions in the State of New York or in
the city in which the Corporate Trust Office of the Trust Administrator or the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.

               "Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds
of which are more than a nominal amount in excess of the principal balance of
any existing first mortgage or subordinate mortgage on the related Mortgaged
Property and related closing costs.

               "Certificate": Any one of the Asset Backed Pass-Through
Certificates, Series 2002- WMC1, Class A, Class M-1, Class M-2, Class M-3, Class
M-4, Class CE, Class P and Class R issued under this Agreement.


                                       -3-

<PAGE>



               "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class CE
Certificates) of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal and in the case of the Mezzanine
Certificates and the Class CE Certificates, the allocations of Realized Losses
in reduction of the Certificate Principal Balance (or the Notional Amount, in
the case of the Class CE Certificates) of such Class of Certificates to be made
on such Distribution Date, and the denominator of which is the initial aggregate
Certificate Principal Balance (or the Notional Amount, in the case of the Class
CE Certificates) of such Class of Certificates as of the Closing Date.

               "Certificate Margin": With respect to the Class A Certificates
and, for purposes of the definition of Marker Rate, REMIC I Regular Interest
I-LTA, 0.34% in the case of each Distribution Date through and including the
Distribution Date on which the aggregate principal balance of the Mortgage Loans
(and properties acquired in respect thereof) remaining in the Trust Fund is
reduced to less than 10% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date and 0.68% in the case of each Distribution Date
thereafter.

               With respect to the Class M-1 Certificates and, for purposes of
the definition of Marker Rate, REMIC I Regular Interest I-LTM1, 0.90% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date and 1.35% in the case of each Distribution Date thereafter.

               With respect to the Class M-2 Certificates and, for purposes of
the definition of Marker Rate, REMIC I Regular Interest I-LTM2, 1.55% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date and 2.325% in the case of each Distribution Date thereafter.

               With respect to the Class M-3 Certificates and, for purposes of
the definition of Marker Rate, REMIC I Regular Interest I-LTM3, 2.10% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date and 3.15% in the case of each Distribution Date thereafter.

               With respect to the Class M-4 Certificates and, for purposes of
the definition of Marker Rate, REMIC I Regular Interest I-LTM4, 2.45% in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date and 3.675% in the case of each Distribution Date thereafter.



                                       -4-

<PAGE>



               "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Class R Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Servicer or any Affiliate thereof shall be deemed
not to be outstanding and the Voting Rights to which it is entitled shall not be
taken into account in determining whether the requisite percentage of Voting
Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee and the Trust Administrator may
conclusively rely upon a certificate of the Depositor or the Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

               "Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.

               "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto on such immediately prior Distribution Date (or, in the case of any date
of determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC I Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates then outstanding.

               "Certificate Register": The register maintained pursuant to
Section 5.02.

               "Class": Collectively, all of the Certificates bearing the same
class designation.

               "Class A Certificate": Any one of the Class A Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 64.00% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period


                                       -5-

<PAGE>



minus $1,237,745.95.

               "Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-6 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
77.50% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$1,237,745.95.

               "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 88.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus $1,237,745.95.

               "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-4 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the


                                       -6-

<PAGE>



Certificate Principal Balance of the Class M-2 Certificates (after taking into
account the payment of the Class M-2 Principal Distribution Amount on such
Distribution Date) and (iv) the Certificate Principal Balance of the Class M-3
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 95.00% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus $1,237,745.95.

               "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class M-4 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the payment of
the Class M-3 Principal Distribution Amount on such Distribution Date) and (v)
the Certificate Principal Balance of the Class M-4 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
97.00% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$1,237,745.95.

               "Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-7 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

               "Class R Certificate": Any one of the Class R Certificates
executed, authenticated and delivered by the Trustee or the Trust Administrator,
substantially in the form annexed hereto as Exhibit A-8 and evidencing the
ownership of the Class R-I Interest and the Class R-II Interest.

               "Class R-I Interest": The uncertificated Residual Interest in
REMIC I.

               "Class R-II Interest": The uncertificated Residual Interest in
REMIC II.

               "Closing Date": January 25, 2002.

               "Code": The Internal Revenue Code of 1986.

               "Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Servicer pursuant to
Section 3.10(a), which shall be entitled "Litton Loan Servicing LP, as Servicer
for U. S. Bank National Association, as Trustee, in trust for the registered
holders of Salomon Brothers Mortgage Securities VII, Inc., Salomon Home Equity


                                       -7-

<PAGE>



Loan Trust, Series 2002-WMC1, Asset Backed Pass-Through Certificates." The
Collection Account must be an Eligible Account.

               "Commission": The Securities and Exchange Commission.

               "Corporate Trust Office": The principal corporate trust office of
the Trust Administrator or the Trustee, as the case may be, at which at any
particular time its corporate trust business in connection with this Agreement
shall be administered, which office, with respect to the Trust Administrator, at
the date of the execution of this instrument is located at 111 Wall Street, 14th
Floor, New York New York 10005, or such other address as the Trust Administrator
may designate from time to time by notice to the Certificateholders, the
Depositor, the Servicer and the Trustee and, with respect to the Trustee, at the
date of the execution of this instrument is located at 180 East Fifth Street,
St. Paul, Minnesota 55101, or such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor, the
Servicer and the Trust Administrator.

               "Corresponding Certificate": With respect to (i) REMIC I Regular
Interest I-LTA, (ii) REMIC I Regular Interest I-LTM1, (iii) REMIC I Regular
Interest I-LTM2, (iv) REMIC I Regular Interest I-LTM3, (v) REMIC I Regular
Interest I-LTM4 and (vi) REMIC I Regular Interest I-LTP, (i) the Class A
Certificates, (ii) the Class M-1 Certificates, (iii) the Class M-2 Certificates,
(iv) the Class M-3 Certificates, (v) the Class M-4 Certificates and (vi) the
Class P Certificates, respectively.

               "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate Certificate Principal Balances of the Mezzanine Certificates and the
Class CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account
payments of principal on the Mortgage Loans and distribution of the Principal
Distribution Amount to the Certificates then entitled to distributions of
principal on such Distribution Date.

               "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 preceding calendar month and the denominator of which is the sum of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.

               "Cut-off Date": With respect to each Original Mortgage Loan,
January 1, 2002. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

               "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

               "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


                                       -8-

<PAGE>



the Bankruptcy Code.

               "Definitive Certificates": As defined in Section 5.01(b).

               "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.

               "Delinquency Percentage": As of the last day of any Due Period,
the percentage equivalent of a fraction, the numerator of which is the aggregate
Stated Principal Balance of the Mortgage Loans that, as of the last day of the
previous calendar month, are 60 or more days delinquent, are in foreclosure,
have been converted to REO Properties or have been discharged by reason of
bankruptcy, and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties as of the last day of such
calendar month; provided, however, that any Mortgage Loan purchased by the
Servicer pursuant to Section 3.16(c) shall not be included in either the
numerator or the denominator for purposes of calculating the Delinquency
Percentage.

               "Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.

               "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

               "Depository Institution": Any depository institution or trust
company, including the Trustee and the Trust Administrator, 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 (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other short-term unsecured debt
obligations) that are rated F-1 by Fitch and A-1+ by S&P (or comparable ratings
if Fitch and S&P are not the Rating Agencies).

               "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 Distribution Date, the
15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.

               "Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work


                                       -9-

<PAGE>



thereon or any use of such REO Property in a trade or business conducted by
REMIC I other than through an Independent Contractor; provided, however, that
the Trustee (or the Servicer on behalf of the Trustee) shall not be considered
to Directly Operate an REO Property solely because the Trustee (or the Servicer
on behalf of the Trustee) establishes rental terms, chooses tenants, enters into
or renews leases, deals with taxes and insurance, or makes decisions as to
repairs or capital expenditures with respect to such REO Property.

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

               "Distribution Account": The trust account or accounts created and
maintained by the Trust Administrator pursuant to Section 3.10(b), which shall
be entitled "Citibank, N.A., as Trust Administrator for U.S. Bank National
Association, as Trustee, in trust for the registered holders of Salomon Brothers
Mortgage Securities VII, Inc., Salomon Home Equity Loan Trust, Series 2002-
WMC1, Asset Backed Pass-Through Certificates." The Distribution Account must be
an Eligible Account.

               "Distribution Date": The 25th day of any month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in February 2002.

               "Due Date": With respect to each Mortgage Loan and any
Distribution Date, the first day of the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan was
due (or, in the case of any Mortgage Loan under terms of which the Monthly
Payment for such Mortgage Loan was due on a day other than the first day of the
calendar month in which such Distribution Date occurs, the day during the
related Due Period on which such Monthly Payment was due), in each case
exclusive of any days of grace.

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



                                      -10-

<PAGE>



               "Eligible Account": Any of (i) an account or accounts maintained
with a Depository Institution, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.

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

               "Estate in Real Property": A fee simple estate in a parcel of
land.

               "Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date
over (ii) the Required Overcollateralized Amount for such Distribution Date.

               "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan (or the related REO Property), as of any date of determination, a per annum
rate of interest equal to the applicable Mortgage Rate thereon as of the first
day of the related Due Period minus the sum of (i) the Administration Fee Rate
and (ii) the Servicing Fee Rate.

               "Expense Adjusted Maximum Mortgage Rate": With respect to any
Mortgage Loan (or the related REO Property), as of any date of determination, a
per annum rate of interest equal to the applicable Maximum Mortgage Rate (or the
applicable Mortgage Rate in the case of any Fixed- Rate Mortgage Loan) thereon
as of the first day of the related Due Period minus the sum of (i) the
Administration Fee Rate and (ii) the Servicing Fee Rate.

               "Extraordinary Trust Fund Expense": Any amounts reimbursable to
the Trustee or the Trust Administrator, or any director, officer, employee or
agent of the Trustee or the Trust Administrator from the Trust Fund pursuant to
Section 8.05 or Section 10.01(c) and any amounts payable from the Distribution
Account in respect of taxes pursuant to Section 10.01(g)(iii).

               "Fannie Mae": Fannie Mae, formally known as the Federal National
Mortgage Association, or any successor thereto.

               "FDIC": 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 Originator, the Depositor or the Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a determination
made by the Servicer that all Insurance 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.

               "Fixed-Rate Mortgage Loan": Each of the Mortgage Loans identified
on the Mortgage Loan Schedule as having a fixed Mortgage Rate.


                                      -11-

<PAGE>



               "Formula Rate": For any Distribution Date and the Class A
Certificates, the Mezzanine Certificates and the REMIC I Regular Interests
(other than REMIC I Regular Interest I- LTAA, REMIC I Regular Interest I-LTZZ
and REMIC I Regular Interest I-LTP) the lesser of (i) One- Month LIBOR plus the
related Certificate Margin and (ii) the Maximum Cap Rate.

               "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

               "Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Adjustable-Rate
Mortgage Loan.

               "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Servicer,
the Seller and their respective Affiliates, (b) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor, the Servicer, the Seller or any Affiliate thereof, and (c) is not
connected with the Depositor, the Servicer, the Seller or any Affiliate thereof
as an officer, employee, promoter, underwriter, trustee, trust administrator,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Depositor, the Servicer,
the Seller or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor, the
Servicer, the Seller or any Affiliate thereof, as the case may be.

               "Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Servicer) if the Trustee and the Trust Administrator have
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.

               "Index": With respect to each Adjustable-Rate Mortgage Loan and
each related Adjustment Date, the index specified in the related Mortgage Note.

               "Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans held for its own account, subject to
the


                                      -12-

<PAGE>



terms and conditions of the related Mortgage Note and Mortgage.

               "Interest Accrual Period": With respect to any Distribution Date
and the Class A Certificates and the Mezzanine Certificates, the period
commencing on the Distribution Date of the month immediately preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class CE Certificates and the REMIC I Regular Interests, the one-month period
ending on the last day of the calendar month preceding the month in which such
Distribution Date occurs.

               "Interest Carry Forward Amount": With respect to any Distribution
Date and the Class A Certificates or the Mezzanine Certificates, the sum of (i)
the amount, if any, by which (a) the Interest Distribution Amount for such Class
of Certificates as of the immediately preceding Distribution Date exceeded (b)
the actual amount distributed on such Class of Certificates in respect of
interest on such immediately preceding Distribution Date, (ii) the amount of any
Interest Carry Forward Amount for such Class of Certificates remaining unpaid
from the previous Distribution Date and (iii) accrued interest on the sum of (i)
and (ii) above calculated at the related Pass-Through Rate for the most recently
ended Interest Accrual Period.

               "Interest Determination Date": With respect to the Class A
Certificates and the Mezzanine Certificates, and, for purposes of the definition
of the Marker Rate and REMIC I Regular Interest I-LTA, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular I-LTM3 and REMIC I
Regular I-LTM4, and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.

               "Interest Distribution Amount": With respect to any Distribution
Date and any Class A Certificates, any Mezzanine Certificates and any Class CE
Certificates, the aggregate Accrued Certificate Interest on the Certificates of
such Class for such Distribution Date.

               "Interest Remittance Amount ": For any Distribution Date, that
portion of the Available Distribution Amount for such Distribution Date that
represents interest received or advanced on the Mortgage Loans.

               "Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period, whether as late payments of Monthly Payments or as
Insurance 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.

               "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I, by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC


                                      -13-

<PAGE>



I by reason of its being purchased pursuant to Section 9.01.

               "Liquidation Proceeds": The amount (other than Insurance Proceeds
or amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the taking of all
or a part of a Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale or otherwise, or (iii) the repurchase,
substitution or sale of a Mortgage Loan or an REO Property pursuant to or as
contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section 9.01.

               "Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.

               "London Business Day": Any day on which banks in the City of
London are open and conducting transactions in United States dollars.

               "Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
amount of Realized Losses incurred on a Mortgage Loan and the denominator of
which is the principal balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.

               "Marker Rate": With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the REMIC I Remittance Rate for each of the REMIC I Regular Interests (other
than REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTP), with
the rate on each such REMIC I Regular Interest subject to a cap equal to the
related Formula Rate for the purpose of this calculation for such Distribution
Date and with the rate on REMIC I Regular Interest I-LTZZ subject to a cap of
zero for the purpose of this calculation; provided however, each cap and the
REMIC I Remittance Rate shall be multiplied by a fraction, the numerator of
which is the actual number days in the related Interest Accrual Period and the
denominator of which is 30.

               "Maximum Cap Rate": For any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, a per annum rate equal to the
product of (x) the weighted average of the Expense Adjusted Maximum Mortgage
Rates of the Mortgage Loans, weighted based on their Principal Balances as of
the first day of the related Due Period and (y) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days elapsed in
the related Interest Accrual Period.

               "Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on the REMIC
I Regular Interests (other than REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTZZ and REMIC I Regular Interest I-LTP) for such Distribution Date,
with the rate on each REMIC I Regular


                                      -14-

<PAGE>



Interest subject to a cap equal to the related Formula Rate for the purpose of
this calculation for such Distribution Date; provided however, each cap and the
REMIC I Remittance Rate shall be multiplied by a fraction, the numerator of
which is the actual number days in the related Interest Accrual Period and the
denominator of which is 30.

               "Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.

               "Mezzanine Certificates": The Class M-1 Certificates, the Class
M-2 Certificates, the Class M-3 Certificates and the Class M-4 Certificates.

               "Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.

               "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Servicer pursuant to Section 3.07 and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.

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

               "Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority interest in, a Mortgaged Property
securing a Mortgage Note.

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

               "Mortgage Loan": Each mortgage loan transferred, assigned and
delivered to the Trustee pursuant to Section 2.01 or Section 2.03(b) of this
Agreement, as held from time to time as a part of the Trust Fund, the Mortgage
Loans so held being identified on the Mortgage Loan Schedule.

               "Mortgage Loan Purchase Agreement": The agreement among the
Originator, the Seller and the Depositor, regarding the sale of the Mortgage
Loans by the Seller to the Depositor, substantially in the form of Exhibit D
annexed hereto.

               "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:

               (i)     the Mortgage Loan identifying number;


                                      -15-

<PAGE>




               (ii)    the Mortgagor's name;

               (iii)   the street address of the Mortgaged Property including
        the state and zip code;

               (iv)    a code indicating whether the Mortgaged Property is
        owner-occupied;

               (v)     the type of Residential Dwelling constituting the
        Mortgaged Property;

               (vi)    the original months to maturity;

               (vii)   the stated remaining months to maturity from the Cut-off
        Date based on the original amortization schedule;

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

               (ix)    the Mortgage Rate in effect immediately following the
        Cut-off Date;

               (x) (A) the date on which the first Monthly Payment was due on
        the Mortgage Loan and (B) if such date is not consistent with the Due
        Date currently in effect, such Due Date;

               (xi)    the stated maturity date;

               (xii)   the amount of the Monthly Payment at origination;

               (xiii)  the amount of the Monthly Payment due on the first Due
        Date after the Cut-off Date;

               (xiv)   the last Due Date on which a Monthly Payment was actually
        applied to the unpaid Stated Principal Balance;

               (xv)    the original principal amount of the Mortgage Loan;

               (xvi)   the principal balance of the Mortgage Loan as of the
        close of business on the Cut-off Date;

               (xvii)  a code indicating the purpose of the Mortgage Loan
        (i. e., purchase financing, Rate/Term Refinancing, Cash-Out
        Refinancing);

               (xviii) with respect to each Adjustable-Rate Mortgage Loan, the
        Adjustment Dates, the Gross Margin, the Maximum Mortgage Rate, the
        Minimum Mortgage Rate, the Periodic Rate Cap, the maximum first
        Adjustment Date Mortgage Rate adjustment and the first Adjustment Date
        immediately following the Cut-off Date;

               (xix)   the Mortgage Rate at origination;


                                      -16-

<PAGE>



               (xx)    a code indicating the documentation program (i.e., Full
         Documentation, Full- Alternative Documentation, Lite Documentation,
         Stated Documentation, No Income-No Asset, or NINA, Disclosure
         Documentation and Express Documentation);

               (xxi)   the risk grade;

               (xxii)  the Value of the Mortgaged Property;

               (xxiii) the sale price of the Mortgaged Property, if applicable;

               (xxiv)  the actual unpaid principal balance of the Mortgage Loan
        as of the Cut-off Date;

               (xxv)   the type and term of the related Prepayment Charge;

               (xxvi)  with respect to each Adjustable-Rate Mortgage Loan, the
        rounding code (i.e., nearest 0.125%, next highest 0.125%);

               (xxvii)  the program code; and

               (xxviii) whether such Mortgage Loan is an Adjustable-Rate
        Mortgage Loan or a Fixed-Rate Mortgage Loan.

               The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current 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. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off Date shall refer to the related Cut-off
Date for such Mortgage Loan, determined in accordance with the definition of
Cut-off Date herein.

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

               "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 and existing from time to time thereafter, and any REO Properties
acquired in respect thereof.

               "Mortgage Rate": With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate with
respect to the Adjustable-Rate Mortgage Loans, (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded as provided in the Mortgage Note, of
the Index, as most recently available as of a date prior to the Adjustment Date
as set forth in the related


                                      -17-

<PAGE>



Mortgage Note, plus the related Gross Margin; provided that the Mortgage Rate on
such Adjustable- Rate Mortgage Loan on any Adjustment Date shall never be more
than the lesser of (i) the sum of the Mortgage Rate in effect immediately prior
to the Adjustment Date plus the related Periodic Rate Cap, if any, and (ii) the
related Maximum Mortgage Rate, and shall never be less than the greater of (i)
the Mortgage Rate in effect immediately prior to the Adjustment Date less the
Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

               "Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.

               "Mortgagor": The obligor on a Mortgage Note.

               "Net Monthly Excess Cashflow": With respect to any Distribution
Date, the sum of (i) any Overcollateralization Reduction Amount for such
Distribution Date and (ii) the excess of (x) the Available Distribution Amount
for such Distribution Date over (y) the sum for such Distribution Date of (A)
the Senior Interest Distribution Amount payable to the holders of the Class A
Certificates and the Interest Distribution Amount payable to the holders of the
Mezzanine Certificates and (B) the sum of the amounts described in clauses (i)
through (iii) of the definition of Principal Distribution Amount.

               "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.

               "Net WAC Pass-Through Rate": With respect to each REMIC I Regular
Interest, the Class A Certificates and the Mezzanine Certificates and any
Distribution Date, a rate per annum equal to the product of (x) the weighted
average of the Expense Adjusted Mortgage Rates of the Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the related Due
Period and (y) a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Interest Accrual
Period.

               "Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the sum
of (A) the positive excess of (i) the amount of interest payable to such Class
of Certificates on such Distribution Date calculated at the related Pass-Through
Rate for such Distribution Date over (ii) the amount of interest payable on such
Class of Certificates at the Net WAC Rate for such Distribution Date and (B) the
related Net WAC Rate Carryover Amount for the previous Distribution Date not
previously paid, together with interest thereon at a rate equal to the related
Pass-Through Rate for such Class of Certificates for such Distribution Date.

               "New Lease": Any lease of REO Property entered into on behalf of
REMIC I, including any lease renewed or extended on behalf of REMIC I, if REMIC
I has the right to renegotiate the terms of such lease.


                                      -18-

<PAGE>



               "Nonrecoverable Advance": Any 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
Advance, would not be ultimately recoverable from related Late Collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property
as provided herein.

               "Nonrecoverable Servicing Advance": Any Servicing 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 Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.

               "Non-United States Person": Any Person other than a United States
Person.

               "Officers' Certificate": A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.

               "One-Month LIBOR": With respect to the Class A Certificates, the
Mezzanine Certificates, and for purposes of the definition of Market Rate, REMIC
I Regular Interest I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest
I-LTM4 and any Interest Accrual Period therefor, the rate determined by the
Trust Administrator on the related Interest 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 Interest Determination
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 offered rates of the
Reference Banks for one-month U. S. dollar deposits, as of 11: 00 a. m. (London
time) on such Interest Determination Date. In such event, the Trust
Administrator will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If on such Interest Determination
Date, two or more Reference Banks provide such offered quotations, One-Month
LIBOR for the related Interest Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the nearest whole
multiple of 1/16%). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trust Administrator shall select an alternative comparable index (over
which the Trust Administrator has no control), used for determining one-month
Eurodollar lending rates that is calculated and published (or otherwise made
available) by an independent party.

               "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Servicer,
acceptable to the Trustee, if such opinion is delivered to the Trustee, or
acceptable to the Trust Administrator, if such opinion is delivered to the Trust
Administrator, except that any opinion of counsel relating to (a) the
qualification of any Trust


                                      -19-

<PAGE>



REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion
of Independent counsel.

               "Original Mortgage Loan": Any of the Mortgage Loans included in
REMIC I as of the Closing Date.

               "Originator": WMC Mortgage Corp. or its successor in interest, in
its capacity as originator under the Mortgage Loan Purchase Agreement.

               "Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates and the Class P Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).

               "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount for such Certificates applicable to such Distribution Date over (b) the
Overcollateralized Amount for such Certificates applicable to such Distribution
Date prior to taking into account the payment of any Overcollateralization
Increase Amount for such Certificates on such Distribution Date.

               "Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued Certificate Interest for the Class CE Certificates for such Distribution
Date as reduced by Realized Losses allocated thereto with respect to such
Distribution Date pursuant to Section 4.04.

               "Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (i) through (iii) of the definition of
Principal Distribution Amount.

               "Ownership Interest": As to any Certificate, any ownership or
security 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, as owner or as pledgee.

               "Pass-Through Rate": With respect to the Class A Certificates and
the Mezzanine Certificates and any Distribution Date, a rate per annum equal to
the lesser of (i) the related Formula Rate for such Distribution Date and (ii)
the Net WAC Pass-Through Rate for such Distribution Date. With respect to the
Class CE Certificates and any Distribution Date, a rate per annum equal to the
percentage equivalent of a fraction, the numerator of which is the sum of the
amounts calculated pursuant to clauses (A) through (G) below, and the
denominator of which is the Uncertificated Balance of the REMIC I Regular
Interests. For purposes of calculating the Pass-Through Rate for the Class CE
Certificates, the numerator is equal to the sum of the following components:


                                      -20-

<PAGE>




               (A) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTAA minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTAA;

               (B) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTA minus the Marker Rate, applied to an amount equal
        to the Uncertificated Principal Balance of REMIC I Regular Interest
        I-LTA;

               (C) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTM1 minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTM1;

               (D) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTM2 minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTM2;

               (E) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTM3 minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTM3;

               (F) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTM4 minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTM4;

               (G) the Uncertificated REMIC I Pass-Through Rate for REMIC I
        Regular Interest I-LTZZ minus the Marker Rate, applied to an amount
        equal to the Uncertificated Principal Balance of REMIC I Regular
        Interest I-LTZZ; and

               (H) 100% of the interest on REMIC I Regular Interest I-LTP.

               "Percentage Interest": With respect to any Class of Certificates
(other than the Class R Certificates), the undivided percentage ownership in
such Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance or Notional
Amount represented by such Certificate and the denominator of which is the
aggregate initial Certificate Principal Balance or initial Notional Amount of
all of the Certificates of such Class. The Class A Certificates and the
Mezzanine Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $100,000 and
integral multiples of $1.00 in excess thereof. The Class P Certificates are
issuable only in Percentage Interests corresponding to initial Certificate
Principal Balances of $20 and integral multiples thereof. The Class CE
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $100,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance or Notional Amount of such Class or to an otherwise authorized
denomination for such Class plus such remainder. With respect to any Class R
Certificate,


                                      -21-

<PAGE>



the undivided percentage ownership in such Class evidenced by such Certificate,
as set forth on the face of such Certificate. The Class R Certificates are
issuable in Percentage Interests of 20% and multiples thereof.

               "Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.

               "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 Depositor, the Servicer, the Trustee, the
Trust Administrator 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 issued by, any Depository Institution;

               (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 that have been rated "AAA" by
        Fitch (if rated by Fitch) and "AAAm" or "AAAm-G" by S&P or "Aaa" by
        Moody's Investors Service, Inc.; and

               (viii) if previously confirmed in writing to the Trustee and the
        Trust Administrator, 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
        securities having ratings equivalent to its highest initial rating of
        the Class A Certificates;



                                      -22-

<PAGE>



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.

               "Permitted Transferee": Any Transferee of a Class R Certificate
other than a Disqualified Organization or Non-United States Person.

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

               "Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.

               "Prepayment Assumption": A prepayment rate for the Mortgage Loans
of 28% CPR. The Prepayment Assumption is used solely for determining the accrual
of original issue discount on the Certificates for federal income tax purposes.
A CPR (or Constant Prepayment Rate) represents an annualized constant assumed
rate of prepayment each month of a pool of mortgage loans relative to its
outstanding principal balance for the life of such pool.

               "Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Servicer Prepayment Charge Payment Amount).

               "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on such date,
attached hereto as Schedule 2 (including the Prepayment Charge Summary attached
thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each related Mortgage Loan:

               (i)     the Mortgage Loan identifying number;

               (ii)    a code indicating the type of Prepayment Charge;

               (iii)   the state of origination of the related Mortgage Loan;

               (iv)    the date on which the first monthly payment was due on
                       the related Mortgage Loan;

               (v)     the term of the related Mortgage Loan; and



                                      -23-

<PAGE>



               (vi)    the principal balance of the related Mortgage Loan as of
                       the Cut-off Date.

               The Prepayment Charge Schedule shall be amended from time to time
by the Depositor in accordance with the provisions of this Agreement.

               "Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part that was applied by the
Servicer to reduce the outstanding principal balance of such loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Servicer in respect of any Prepayment Interest Shortfall are
set forth in Section 3.24.

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

               "Principal Balance": As to any Mortgage Loan other than a
Liquidated Mortgage Loan, and any day, the related Stated Principal Balance as
of the Cut-off Date, MINUS all collections credited against the Principal
Balance of any such Mortgage Loan. For purposes of this definition, a Liquidated
Mortgage Loan shall be deemed to have a Principal Balance equal to the Principal
Balance of the related Mortgage Loan as of the final recovery of related
Liquidation Proceeds and a Principal Balance of zero thereafter. As to any REO
Property and any day, the Principal Balance of the related Mortgage Loan
immediately prior to such Mortgage Loan becoming REO Property minus any REO
Principal Amortization received with respect thereto on or prior to such day.

               "Principal Distribution Amount ": With respect to any
Distribution Date, the sum of:

               (i) the principal portion of each Monthly Payment on the Mortgage
        Loans due during the related Due Period, whether or not received on or
        prior to the related Determination Date;

               (ii) the Stated Principal Balance of any Mortgage Loan that was
        purchased during the related Prepayment Period pursuant to or as
        contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and the
        amount of any shortfall deposited in the Collection Account in
        connection with the substitution of a Deleted Mortgage Loan pursuant to
        Section 2.03 during the related Prepayment Period;

               (iii) the principal portion of all other unscheduled collections
        (including, without limitation, Principal Prepayments, Insurance
        Proceeds, Liquidation Proceeds and REO Principal Amortization) received
        with respect to the Mortgage Loans during the related Prepayment Period;

               (iv) the principal portion of any Realized Losses incurred on any
        of the Mortgage Loans in the calendar month preceding such Distribution
        Date; and



                                      -24-

<PAGE>



               (v)     the amount of any Overcollateralization Increase Amount
        for such Distribution Date;

               minus:

               (vi)    the amount of any Overcollateralization Reduction Amount
        for such Distribution Date.

               "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

               "Private Certificates":  As defined in Section 5.02(b).

               "PTCE": A Prohibited Transaction Class Exemption issued by the
United States Department of Labor which provides that exemptive relief is
available to any party to any transaction which satisfies the conditions of the
exemption.

               "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by a certification from a Servicing
Officer to the Trustee and the Trust Administrator, an amount equal to the sum
of (i) 100% of the Stated Principal Balance thereof as of the date of purchase
(or such other price as provided in Section 9.01), (ii) in the case of (x) a
Mortgage Loan, accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an Advance by
the Servicer, which payment or Advance had as of the date of purchase been
distributed pursuant to Section 4.01, through the end of the calendar month in
which the purchase is to be effected and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or an Advance by the Servicer through the
end of the calendar month immediately preceding the calendar month in which such
REO Property was acquired, plus (2) REO Imputed Interest for such REO Property
for each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 4.01,
(iii) any unreimbursed Servicing Advances and Advances (including Nonrecoverable
Advances and Nonrecoverable Servicing Advances) and any unpaid Servicing Fees
allocable to such Mortgage Loan or REO Property, (iv) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Section 3.11(a)(ix) and Section 3.16(b), and (v) in the
case of a Mortgage Loan required to be purchased pursuant to Section 2.03,
expenses reasonably incurred or to be incurred by the Servicer, the Trustee or
the Trust Administrator in respect of the breach or defect giving rise to the
purchase obligation.

               "Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted


                                      -25-

<PAGE>



Mortgage Loan pursuant to the terms of this Agreement which must, on the date of
such substitution, (i) have an outstanding principal balance, after application
of all scheduled payments of principal and interest due during or prior to the
month of substitution, not in excess of the Stated Principal Balance of the
Deleted Mortgage Loan as of the Due Date in the calendar month during which the
substitution occurs, (ii) have a Mortgage Rate not less than (and not more than
one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage
Loan, (iii) with respect to any Adjustable- Rate Mortgage Loan, have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage
Loan, (iv) with respect to any Adjustable-Rate Mortgage Loan, have a Minimum
Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) with respect to any Adjustable-Rate Mortgage Loan, have a Gross Margin
equal to the Gross Margin of the Deleted Mortgage Loan, (vi) with respect to any
Adjustable-Rate Mortgage Loan, have a next Adjustment Date not more than two
months later than the next Adjustment Date on the Deleted Mortgage Loan, (vii)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Deleted Mortgage Loan, (viii) have the same Due Date as
the Due Date on the Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of
the date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (x) have a risk grading determined by the
originator of the Mortgage Loan at least equal to the risk grading assigned on
the Deleted Mortgage Loan and (xi) conform to each representation and warranty
set forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the
Deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Rates described in clause (ii) hereof shall be determined
on the basis of weighted average Mortgage Rates, the terms described in clause
(vii) hereof shall be determined on the basis of weighted average remaining term
to maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be
satisfied as to each such mortgage loan, the risk gradings described in clause
(x) hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (xi) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.

               "Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds
of which are not more than a nominal amount in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

               "Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee, the Trust Administrator and the
Servicer.

               "Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero) equal
to (i) the unpaid principal balance of such Mortgage Loan as of the commencement
of the calendar month in which the Final Recovery Determination was made, plus
(ii) accrued interest from the Due Date as to which interest


                                      -26-

<PAGE>



was last paid by the Mortgagor through the end of the calendar month in which
such Final Recovery Determination was made, calculated in the case of each
calendar month during such period (A) at an annual rate equal to the annual rate
at which interest was then accruing on such Mortgage Loan and (B) on a principal
amount equal to the Stated Principal Balance of such Mortgage Loan as of the
close of business on the Distribution Date during such calendar month, plus
(iii) any amounts previously withdrawn from the Collection Account in respect of
such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(iv) the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Servicer with respect to such Mortgage
Loan pursuant to Section 3.11(a)(iii).

               With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the Servicer in respect of such REO Property or the related
Mortgage Loan for which the Servicer has been or, in connection with such Final
Recovery Determination, will be reimbursed pursuant to Section 3.23 out of
rental income, Insurance Proceeds and Liquidation Proceeds received in respect
of such REO Property, minus (vi) the total of all net rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property that
has been, or in connection with such Final Recovery Determination, will be
transferred to the Distribution Account pursuant to Section 3.23.

               With respect to each Mortgage Loan which has become the subject
of a Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

               With respect to each Mortgage Loan which has become the subject
of a Debt Service Reduction, the portion, if any, of the reduction in each
affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

               "Record Date": With respect to each Distribution Date and any
Book-Entry


                                      -27-

<PAGE>



Certificate, the Business Day immediately preceding such Distribution Date. With
respect to each Distribution Date and any other Certificates, including any
Definitive Certificates, the last Business Day of the month immediately
preceding the month in which such Distribution Date occurs except that the
Record Date for the first Distribution Date shall be the Closing Date.

               "Reference Banks": Bankers Trust Company, Barclays' Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in
interest; provided, however, that if any of the foregoing banks are not suitable
to serve as a Reference Bank, then any leading banks selected by the Trust
Administrator which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Depositor or any Affiliate thereof and (iii) which have been designated as
such by the Trust Administrator.

               "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.

               "Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.

               "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

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

               "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 calendar month as a result of
the application of the Relief Act.

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

               "REMIC I": The segregated pool of assets subject hereto,
constituting one of the primary trusts created hereby and to be administered
hereunder, with respect to which a REMIC election is to be made, consisting of:
(i) such Mortgage Loans and Prepayment Charges related thereto as from time to
time are subject to this Agreement, together with the Mortgage Files relating
thereto, and together with all collections thereon and proceeds thereof; (ii)
any REO Property, together with all collections thereon and proceeds thereof;
(iii) the Trustee's rights with respect to the Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof; (iv) the Depositor's rights under the Mortgage Loan Purchase
Agreement (including any security interest created thereby); (v) the Collection
Account (other than any amounts representing any Servicer Prepayment Charge
Payment Amount), the Distribution Account (other than any amounts representing
any Servicer Prepayment Charge Payment Amount) and any REO Account, and such
assets that are deposited therein from time to time and any investments thereof,
together with any and all income, proceeds and payments with respect thereto.
Notwithstanding the foregoing, however, REMIC I specifically excludes all
payments and other collections of principal and interest due on the Mortgage
Loans on or before the Cut-off Date and


                                      -28-

<PAGE>



all Prepayment Charges payable in connection with Principal Prepayments on the
Mortgage Loans made before the Cut-off Date.

               "REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount (subject to adjustment based on the actual number
of days elapsed in the respective Interest Accrual Periods for the indicated
Regular Interests for such Distribution Date) equal to (a) the product of (i)
the aggregate Stated Principal Balance of the Mortgage Loans and REO Properties
then outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTAA minus the Marker Rate, divided by (b) 12.

               "REMIC I Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of the
REMIC I Regular Interests, in each case as of such date of determination.

               "REMIC I Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Balances of the REMIC I Regular Interests (other than REMIC I
Regular Interest I-LTZZ and REMIC I Regular Interest I-LTP) and the denominator
of which is the aggregate of the Uncertificated Balances of the REMIC I Regular
Interests (other than REMIC I Regular Interest I-LTAA and REMIC I Regular
Interest I-LTP).

               "REMIC I Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time or
shall otherwise be entitled to interest as set forth herein, and shall be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance as
set forth in the Preliminary Statement hereto. The designations for the
respective REMIC I Regular Interests are set forth in the Preliminary Statement
hereto.

               "REMIC I Regular Interest I-LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAA
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTA": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.



                                      -29-

<PAGE>



               "REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall be entitled to any Prepayment Charges collected by the Servicer with
respect to the Mortgage Loans and to a distribution of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTZZ
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Remittance Rate": With respect to the REMIC I Regular
Interests and any Distribution Date, the related Net WAC Pass-Through Rate.

               "REMIC I Required Overcollateralized Amount":  1% of the Required


                                      -30-

<PAGE>



Overcollateralization Amount.

               "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of the REMIC II Certificates, pursuant to Section 2.09, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

               "REMIC II Certificate": Any Regular Certificate or Class R
Certificate.

               "REMIC II Certificateholder": The Holder of any REMIC II
Certificate.

               "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.

               "Remittance Report": A report in form and substance acceptable to
the Trust Administrator on an electronic data file or tape prepared by the
Servicer pursuant to Section 4.03 with such additions, deletions and
modifications as agreed to by the Trust Administrator and the Servicer.

               "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

               "REO Account": The account or accounts maintained, or caused to
be maintained, by the Servicer in respect of an REO Property pursuant to Section
3.23.

               "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.

               "REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of REMIC I, one
month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.

               "REO Principal Amortization": With respect to any REO Property,
for any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether in
the form of rental income, sale proceeds (including, without limitation, that
portion of the Termination Price paid in connection with a purchase of all of
the Mortgage Loans and REO Properties pursuant to Section 9.01 that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.23(c) in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or reimbursable
to the Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in respect
of the related Mortgage Loan and unreimbursed Servicing Advances and Advances in
respect


                                      -31-

<PAGE>



of such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.

               "REO Property": A Mortgaged Property acquired by the Servicer on
behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.

               "Request for Release": A release signed by a Servicing Officer,
in the form of Exhibit E-1 or Exhibit E-2 attached hereto.

               "Required Overcollateralized Amount": With respect to any
Distribution Date, (i) prior to the Stepdown Date, $3,714,089.97, (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (x) 3.00% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (y) $1,237,745.95, and (iii) on or
after the Stepdown Date if a Trigger Event is in effect, the Required
Overcollateralized Amount for the immediately preceding Distribution Date.

               "Reserve Fund": As defined in Section 3.27.

               "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16%) of the one-month U. S. dollar lending rates
which New York City banks selected by the Trust Administrator are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Trust
Administrator can determine no such arithmetic mean, the lowest one-month U. S.
dollar lending rate which New York City banks selected by the Trust
Administrator are quoting on such Interest Determination Date to leading
European banks.

               "Residential Dwelling": Any one of the following: (i) an
attached, detached or semi- detached one-family dwelling, (ii) an attached,
detached or semi-detached two-to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none of which is a co-operative, mobile or manufactured home (as defined in 42
United States Code, Section 5402(6)).

               "Residual Interest": The sole class of "residual interests" in a
REMIC within the meaning of Section 860G(a)(2) of the Code.

               "Responsible Officer": When used with respect to the Trustee or
the Trust Administrator, the Chairman or Vice Chairman of the Board of Directors
or Trustees, the Chairman or Vice Chairman of the Executive or Standing
Committee of the Board of Directors or Trustees, the President, the Chairman of
the Committee on Trust Matters, any vice president, any assistant vice
president, the Secretary, any assistant secretary, the Treasurer, any assistant
treasurer, the Cashier, any assistant cashier, any trust officer or assistant
trust officer, the Controller and any assistant controller or any other officer
of the Trustee or the Trust Administrator, as the case may be, customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, to whom such matter is
referred because of such officer's


                                      -32-

<PAGE>



knowledge of and familiarity with the particular subject.

               "S&P": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., or its successor in interest.

               "Seller": Salomon Brothers Realty Corp. or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.

               "Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and (ii) the
Interest Carry Forward Amount, if any, for such Distribution Date for the Class
A Certificates.

               "Servicer": Litton Loan Servicing LP or any successor servicer
appointed as herein provided, in its capacity as Servicer hereunder.

               "Servicer Event of Default": One or more of the events described
in Section 7.01.

               "Servicer Prepayment Charge Payment Amount": The amounts payable
by the Servicer in respect of any waived Prepayment Charges pursuant to Section
3.01.

               "Servicer Remittance Date": With respect to any Distribution
Date, by 3:00 p.m. New York time on the Business Day preceding the related
Distribution Date.

               "Servicer Termination Trigger": Either (i) the Delinquency
Percentage (excluding for purposes of this test, any Mortgage Loans that are
current and under a forbearance plan) equals or exceeds 20% with respect to such
Distribution Date or (ii) the Cumulative Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period exceeds the
applicable percentages set forth below with respect to such Distribution Date:



   DISTRIBUTION DATE OCCURRING IN                        PERCENTAGE
--------------------------------------------------------------------------------
February 2002 through January 2006                          3.00%
February 2006 through January 2007                          3.75%
February 2007 through January 2008                          4.25%
February 2008 and thereafter                                4.75%

               "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

               "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Servicer in connection with a default, delinquency or
other unanticipated event by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including but not limited to foreclosures, 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 Section 3.01, Section 3.09, Section 3.14,


                                      -33-

<PAGE>



Section 3.16 and Section 3.23. 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 the Servicing Fee Rate accrued for one month
(or in the event of any payment of interest which accompanies a Principal
Prepayment in full or in part made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month, calculated on the basis of a 360-day year consisting of twelve
30-day months. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

               "Servicing Fee Rate": 0.50% per annum.

               "Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of Servicing Officers furnished by the
Servicer to the Trust Administrator, the Trustee and the Depositor on the
Closing Date, as such list may from time to time be amended.

               "Servicing Rights Pledgee": One or more lenders, selected by the
Servicer, to which the Servicer will pledge and assign all of its right, title
and interest in, to and under this Agreement, including First Union National
Bank, as the representative of certain lenders.

               "Single Certificate": With respect to any Class of Certificates
(other than the Class P Certificates and the Class R Certificates), a
hypothetical Certificate of such Class evidencing a Percentage Interest for such
Class corresponding to an initial Certificate Principal Balance of $1,000. With
respect to the Class P Certificates and the Class R Certificates, a hypothetical
Certificate of such Class evidencing a 100% Percentage Interest in such Class.

               "Special Servicing Fee": With respect to each Mortgage Loan that
is delinquent 90 or more days, $150 per month payable until the earlier of (i)
18 consecutive months and (ii) the delinquency status of such Mortgage Loan has
been reduced to less than 90 days.

               'Startup Day": With respect to each of REMIC I and REMIC II, the
day designated as such pursuant to Section 10.01(b) hereof.

               "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Principal Balance of such Mortgage Loan
as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut- off Date, to the extent received from the Mortgagor and distributed
pursuant to Section 4.01 on or before such date of determination, (ii) all
Principal Prepayments received after the Cut-off Date, to the extent distributed
pursuant to Section 4.01 on or before such date of determination, (iii) all
Liquidation Proceeds and Insurance Proceeds applied by the Servicer as
recoveries of principal in accordance with the provisions of Section 3.16, to
the extent distributed pursuant to Section 4.01 on or before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as a


                                      -34-

<PAGE>



result of a Deficient Valuation made during or prior to the Prepayment Period
for the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
and (ii) the aggregate amount of REO Principal Amortization in respect of such
REO Property for all previously ended calendar months, to the extent distributed
pursuant to Section 4.01 on or before such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, zero.

               "Stayed Funds": If the Servicer is the subject of a proceeding
under the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of the Servicer, a trustee in bankruptcy or a
federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.

               "Stepdown Date": The earlier to occur of (i) the Distribution
Date on which the Certificate Principal Balance of the Class A Certificates has
been reduced to zero and (ii) the later to occur of (a) the Distribution Date
occurring in February 2005 and (ii) the first Distribution Date on which the
Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 36.00%.

               "Sub-Servicer": Any Person with which the Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

               "Sub-Servicing Agreement": The written contract between the
Servicer and a Sub- Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.

               "Substitution Shortfall Amount": As defined in Section 2.03(b).

               "Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U. S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to the classification of portions
thereof as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed


                                      -35-

<PAGE>



with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.

               "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).

               "Termination Price": As defined in Section 9.01.

               "Terminator": As defined in Section 9.01.

               "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

               "Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.

               "Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.

               "Trigger Event": A Trigger Event is in effect if:

               (a) the percentage obtained by dividing the principal amount of
(A)(i) Mortgage Loans delinquent 60 days or more, (ii) Mortgage Loans in
foreclosure, (iii) REO Properties and (iv) Mortgage Loans discharged due to
bankruptcy by the aggregate Principal Balance of the Mortgage Loans, in each
case, as of the last day of the previous calendar month, exceeds (B)(i) 50% of
the then current Credit Enhancement Percentage, multiplied by a fraction, the
numerator of which is the aggregate Principal Balance of the Fixed-Rate Mortgage
Loans as of the last day of the related Due Period and the denominator of which
is the aggregate Principal Balance of all of the Mortgage Loans as of the last
day of the related Due Period, plus (ii) 40% of the then current Credit
Enhancement Percentage, multiplied by a fraction, the numerator of which is the
aggregate Principal Balance of the Adjustable-Rate Mortgage Loans as of the last
day of the related Due Period and the denominator of which is the aggregate
Principal Balance of all of the Mortgage Loans as of the last day of the related
Due Period; or

               (b) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period divided by aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:



 DISTRIBUTION DATE OCCURRING IN                        PERCENTAGE
-----------------------------------------------------------------------------
February 2005 through January 2006                        3.50%
February 2006 through January 2007                        5.00%
February 2007 through January 2008                        6.25%



                                      -36-

<PAGE>




February 2008 through January 2009                        7.00%
February 2009 and thereafter                              7.50%

               "Trust Administrator": Citibank, N.A., a national banking
association, or its successor in interest, or any successor trust administrator
appointed as herein provided.

               "Trust Fund": Collectively, all of the assets of REMIC I and
REMIC II, and the other assets conveyed by the Depositor to the Trustee pursuant
to Section 2.01.

               "Trust REMIC": Either REMIC I or REMIC II.

               "Trustee": U. S. Bank National Association, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.

               "Uncertificated Balance": The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I Regular Interest shall be reduced by all distributions of principal
made on such REMIC I Regular Interest, as applicable, on such Distribution Date
pursuant to Section 4.01 and, if and to the extent necessary and appropriate,
shall be further reduced on such Distribution Date by Realized Losses as
provided in Section 4.04. The Uncertificated Balances of REMIC I Regular
Interest I-LTZZ shall be increased by interest deferrals as provided in Section
4.01(a)(1)(A)(I)(i). The Uncertificated Balance of each REMIC I Regular Interest
shall never be less than zero.

               "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. Uncertificated Interest in respect of any REMIC
I Regular Interest shall accrue on the basis of a 360-day year consisting of
twelve 30-day months. Uncertificated Interest with respect to each Distribution
Date, as to any REMIC I Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest pursuant to Section
1.02. In addition, Uncertificated Interest with respect to each Distribution
Date, as to any REMIC I Regular Interest shall be reduced by Realized Losses, if
any, allocated to such REMIC I Regular Interest pursuant to Section 1.02 and
Section 4.04.

               "Underwriters' Exemption": An individual exemption issued by the
United States Department of Labor, Prohibited Transaction Exemption 91-23 (56
Fed. Reg. 15936, April 19, 1991), as amended, to Salomon Smith Barney Inc.
(formerly known as Smith Barney Inc.), for specific offerings in which Salomon
Smith Barney Inc. or any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Salomon
Smith Barney Inc. is an underwriter, placement agent or a manager or co-manager
of the underwriting syndicate or selling group where the trust and the offered
certificates meet specified conditions. The


                                      -37-

<PAGE>



Underwriters' Exemption, as amended, provides a partial exemption for
transactions involving certificates representing a beneficial interest in a
trust and entitling the holder to pass-through payments of principal, interest
and/or other payments with respect to the trust's assets.

               "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

               "United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or, District of Columbia
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of Class
R Certificates, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required by the applicable operative agreement
to be United States Persons or an estate whose income is subject to United
States federal income tax regardless of its source, or a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996 (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States person on
August 20, 1996 may elect to continue to be treated as a United States person
notwithstanding the previous sentence. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.

               "Value": With respect to any Mortgaged Property, the value
thereof as determined by an independent appraisal made at the time of the
origination of the related Mortgage Loan or the sale price, if the appraisal is
not available; except that, with respect to any Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the value thereof as determined by an
independent appraisal made at the time of the origination of such Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged Property.

               "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date of
determination, 98% of all Voting Rights will be allocated among the holders of
the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class P Certificates and 1% of all Voting Rights
will be allocated among the holders of the Class R Certificates. The Voting
Rights allocated to each Class of Certificate shall be allocated among Holders
of each such Class in accordance with their respective Percentage Interests as
of the most recent Record Date.

               SECTION 1.02.          Allocation of Certain Interest Shortfalls.

               For purposes of calculating the amount of Accrued Certificate
Interest and the amount


                                      -38-

<PAGE>



of the Interest Distribution Amount for the Class A Certificates, the Mezzanine
Certificates and the Class CE Certificates for any Distribution Date, (1) the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicer pursuant to Section 3.24) and any Relief Act
Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, among the Class CE Certificates on a
PRO RATA basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Notional Amount of
each such Certificate and, thereafter, among the Class A Certificates and the
Mezzanine Certificates on a PRO RATA basis based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance of each such Certificate and (2) the
aggregate amount of any Realized Losses incurred for any Distribution Date shall
be allocated among the Class CE Certificates on a PRO RATA basis based on, and
to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate.

               For purposes of calculating the amount of Uncertificated Interest
for the REMIC I Regular Interests for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Servicer pursuant to Section 3.24) and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to Uncertificated Interest payable to REMIC I Regular
Interest I-LTAA and REMIC I Regular Interest I-LTZZ up to an aggregate amount
equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%, respectively,
and thereafter among REMIC I Regular Interest I- LTAA, REMIC I Regular Interest
I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and REMIC I Regular
Interest I-LTZZ PRO RATA based on, and to the extent of, one month's interest at
the then applicable respective Pass-Through Rate on the respective
Uncertificated Balance of each such REMIC I Regular Interest.

                                   ARTICLE II

                                  CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

               SECTION 2.01.          Conveyance of the Mortgage Loans.

               The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders, all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or the Servicer on or with respect to the Mortgage
Loans (other than payments of principal and interest due on such Mortgage Loans
on or before the Cut-off Date). The Depositor herewith delivers to the Trustee
an executed copy of the Mortgage Loan Purchase Agreement.

               In connection with such transfer and assignment, the Depositor
does hereby deliver


                                      -39-

<PAGE>



to, and deposit with, the Trustee, the following documents or instruments with
respect to each Mortgage Loan so transferred and assigned (a "Mortgage File"):

               (i)     the original Mortgage Note, endorsed in blank or in the
        following form: "Pay to the order of U. S. Bank National Association,
        as Trustee under the applicable agreement, without recourse," with all
        prior and intervening endorsements showing a complete chain of
        endorsement from the originator to the Person so endorsing to the
        Trustee;

               (ii) the original Mortgage with evidence of recording thereon,
        and the original recorded power of attorney, if the Mortgage was
        executed pursuant to a power of attorney, with evidence of recording
        thereon;

               (iii)   an original Assignment in blank;

               (iv) the original recorded Assignment or Assignments showing a
        complete chain of assignment from the originator to the Person assigning
        the Mortgage to the Trustee as contemplated by the immediately preceding
        clause (iii);

               (v)     the original or copies of each assumption, modification,
        written assurance or substitution agreement, if any; and

               (vi) the original lender's title insurance policy, together with
        all endorsements or riders that were issued with or subsequent to the
        issuance of such policy, insuring the priority of the Mortgage as a
        first lien on the Mortgaged Property represented therein as a fee
        interest vested in the Mortgagor, or in the event such original title
        policy is unavailable, a written commitment or uniform binder or
        preliminary report of title issued by the title insurance or escrow
        company.

               The Trustee, at the expense of the Originator, shall promptly
(within sixty Business Days following the later of the Closing Date and the date
of receipt by the Trustee of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Trust Fund, the Trustee, the Trust
Administrator, the Servicer or the Depositor, in the appropriate public office
for real property records, each Assignment referred to in Sections 2.01(iii) and
(iv) above and the Depositor shall execute each original Assignment in the
following form: "U. S. Bank National Association, as Trustee under the
applicable agreement." In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Originator shall promptly prepare or
cause to be prepared a substitute Assignment or cure or cause to be cured such
defect, as the case may be, and thereafter cause each such Assignment to be duly
recorded. If the Originator is unable to pay the cost of recording the
Assignments, such expense will be paid by the Trust Administrator and shall be
reimbursable to the Trust Administrator as an Extraordinary Trust Fund Expense.

               With respect to a maximum of approximately 2.0% of the Original
Mortgage Loans, by outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, if any original Mortgage Note referred to in Section
2.01(i) above cannot be located, the obligations of the Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to the Trustee of


                                      -40-

<PAGE>



a photocopy of such Mortgage Note, if available, with a lost note affidavit
substantially in the form of Exhibit K attached hereto. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Trustee is
subsequently located, such original Mortgage Note shall be delivered to the
Trustee within three Business Days.

               If any of the documents referred to in Sections 2.01(ii), (iii)
or (iv) above has, as of the Closing Date, been submitted for recording but
either (x) has not been returned from the applicable public recording office or
(y) has been lost or such public recording office has retained the original of
such document, the obligations of the Depositor to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Trustee of a copy of each
such document certified by the Originator in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Originator, delivery to the Trustee promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee, the Trust Administrator and
the Rating Agencies by the Seller if delivery pursuant to clause (2) above will
be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee, promptly after
receipt thereof, the original lender's title insurance policy. The Depositor
shall deliver or cause to be delivered to the Trustee promptly upon receipt
thereof any other original documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.

               All original documents relating to the Mortgage Loans that are
not delivered to the Trustee are and shall be held by the Seller, the Depositor
or the Servicer, as the case may be, in trust for the benefit of the Trustee on
behalf of the Certificateholders. In the event that any such original document
is required pursuant to the terms of this Section to be a part of a Mortgage
File, such document shall be delivered promptly to the Trustee. Any such
original document delivered to or held by the Depositor that is not required
pursuant to the terms of this Section to be a part of a Mortgage File, shall be
delivered promptly to the Servicer.

               The Depositor herewith delivers to the Trustee and the Trust
Administrator an executed copy of the Mortgage Loan Purchase Agreement.

               SECTION 2.02.          Acceptance of REMIC I by Trustee.

               The Trustee, acknowledges receipt, subject to the provisions of
Section 2.01 and subject to any exceptions noted on the exception report
described in the next paragraph below, the documents referred to in Section 2.01
(other than such documents described in Section 2.01(v)) above and all other
assets included in the definition of "REMIC I" under clauses (i), (iii), (iv)
and (v) (to the extent of amounts attributable thereto deposited into the
Distribution Account) and declares that it holds and will hold such documents
and the other documents delivered to it constituting a Mortgage File, and that
it holds or will hold all such assets and such other assets included in the
definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.


                                      -41-

<PAGE>




               The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File on or before the Closing Date and to certify in
substantially the form attached hereto as Exhibit C-1 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 the exception report
annexed thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(v)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(x)(A), (xi), (xii), (xv), (xvii), (xviii), (xx) through (xxiii) and (xxv) of
the definition of "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. It is herein acknowledged that, in conducting such
review, the Trustee was under no duty or obligation (i) to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine whether they are genuine, enforceable, or appropriate for the
represented purpose or whether they have actually been recorded or that they are
other than what they purport to be on their face or (ii) to determine whether
any Mortgage File should include any of the documents specified in clause (v) of
Section 2.01.

               Prior to the first anniversary date of this Agreement, the
Trustee shall deliver to the Depositor, the Servicer and the Trust Administrator
a final certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon, and the Servicer shall forward a copy thereof to any Sub-Servicer.

               If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Depositor, the Servicer and the Trust
Administrator. In addition, upon the discovery by the Depositor, the Servicer,
the Trust Administrator or the Trustee of a breach of any of the representations
and warranties made by the Originator in the Mortgage Loan Purchase Agreement in
respect of any Mortgage Loan which materially adversely affects such Mortgage
Loan or the interests of the Certificateholders in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties.

               The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report to such Certificateholder of all
Mortgage Files released to the Servicer for servicing purposes.

               SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
                             Originator.

               (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Originator of any representation, warranty or covenant under
the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that
materially adversely affects the value of such Mortgage Loan or the interest


                                      -42-

<PAGE>



therein of the Certificateholders, the Trustee shall promptly notify the Seller,
the Originator, the Servicer and the Trust Administrator of such defect, missing
document or breach and request that the Originator deliver such missing document
or cure such defect or breach within 60 days from the date the Originator was
notified of such missing document, defect or breach, and if the Originator does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Servicer, in accordance with Section 3.02(b),
shall enforce the obligations of the Originator under the Mortgage Loan Purchase
Agreement to repurchase such Mortgage Loan from REMIC I at the Purchase Price
within 90 days after the date on which the Originator was notified (subject to
Section 2.03(c)) of such missing document, defect or breach, if and to the
extent that the Originator is obligated to do so under the Mortgage Loan
Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be deposited in the Collection Account and the Trustee, upon receipt of written
certification from the Servicer of such deposit, shall release to the Originator
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Originator shall furnish to it and as shall be necessary to vest in the
Originator any Mortgage Loan released pursuant hereto. Neither the Trustee nor
the Trust Administrator shall have any further responsibility with regard to
such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the Originator
may cause such Mortgage Loan to be removed from REMIC I (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in Section
2.03(b). It is understood and agreed that the obligation of the Originator to
cure or to repurchase (or to substitute for) any Mortgage Loan as to which a
document is missing, a material defect in a constituent document exists or as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such omission, defect or breach available to the Trustee and
the Certificateholders.

               (b) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the date which is two years after the Startup Day for REMIC I.

               As to any Deleted Mortgage Loan for which the Originator
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Originator delivering to the Trustee, for such
Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage,
the Assignment to the Trustee, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.01, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Trustee shall acknowledge receipt for such Qualified Substitute Mortgage Loan or
Loans and, within ten Business Days thereafter, review such documents as
specified in Section 2.02 and deliver to the Depositor, the Servicer and the
Trust Administrator, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit C-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor, the Servicer and the
Trust Administrator a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of


                                      -43-

<PAGE>



substitution are not part of REMIC I and will be retained by the Originator. For
the month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Originator shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee and the Trust Administrator. Upon such substitution,
such Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including, all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement.

               For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Stated Principal Balance thereof as of the date of substitution, together
with one month's interest on such Stated Principal Balance at the applicable Net
Mortgage Rate, plus all outstanding Advances and Servicing Advances (including
Nonrecoverable Advances and Nonrecoverable Servicing Advances) related thereto.
On the date of such substitution, the Originator will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount equal
to the Substitution Shortfall Amount, if any, and the Trustee, upon receipt of
the related Qualified Substitute Mortgage Loan or Loans and certification by the
Servicer of such deposit, shall release to the Originator the related Mortgage
File or Files and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, the Originator shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.

               In addition, the Originator shall obtain at its own expense and
deliver to the Trust Administrator and the Trustee an Opinion of Counsel to the
effect that such substitution will not cause (a) any federal tax to be imposed
on any Trust REMIC, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificate is outstanding.

               (c) Upon discovery by the Depositor, the Seller, the Servicer,
the Trustee or the Trust Administrator that any Mortgage Loan does not
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the party discovering such fact shall within two Business Days give
written notice thereof to the other parties. In connection therewith, the
Originator shall repurchase or, subject to the limitations set forth in Section
2.03(b), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt of
such notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee and the Trust Administrator shall reconvey to the Originator the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a


                                      -44-

<PAGE>



Mortgage Loan repurchased for breach of a representation or warranty.

               SECTION 2.04.          Reserved.

               SECTION 2.05.          Representations, Warranties and Covenants
                                      of the Servicer.

               The Servicer hereby represents, warrants and covenants to the
Trust Administrator and the Trustee, for the benefit of each of the Trustee, the
Trust Administrator, the Certificateholders and to the Depositor that as of the
Closing Date or as of such date specifically provided herein:

               (i) The Servicer is a limited partnership duly formed, validly
        existing and in good standing as a limited partnership under the laws of
        the State of Delaware and is duly authorized and qualified to transact
        any and all business contemplated by this Agreement to be conducted by
        the Servicer in any state in which a Mortgaged Property is located or is
        otherwise not required under applicable law to effect such qualification
        and, in any event, is in compliance with the doing business laws of any
        such State, to the extent necessary to ensure its ability to enforce
        each Mortgage Loan and to service the Mortgage Loans in accordance with
        the terms of this Agreement;

               (ii) The Servicer has the full power and authority to conduct its
        business as presently conducted by it and to execute, deliver and
        perform, and to enter into and consummate, all transactions contemplated
        by this Agreement. The Servicer has duly authorized the execution,
        delivery and performance of this Agreement, has duly executed and
        delivered this Agreement, and this Agreement, assuming due
        authorization, execution and delivery by the Depositor, the Trust
        Administrator and the Trustee, constitutes a legal, valid and binding
        obligation of the Servicer, enforceable against it in accordance with
        its terms except as the enforceability thereof may be limited by
        bankruptcy, insolvency, reorganization or similar laws affecting the
        enforcement of creditors' rights generally and by general principles of
        equity;

               (iii) The execution and delivery of this 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 limited partnership
        agreement 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 statute, order or regulation
        applicable to the Servicer 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 statute, order or regulation of any court, regulatory
        body, administrative agency or governmental body having jurisdiction
        over it, which materially and adversely affects or, to the Servicer's
        knowledge, would in the future materially and adversely affect, (x) the
        ability of the Servicer to perform its obligations under this Agreement,
        (y) the business, operations, financial condition, properties or assets
        of the Servicer taken as a whole or (z) the legality, validity or


                                      -45-

<PAGE>



        enforceability of this Agreement;

               (iv) The Servicer is a HUD approved mortgagee pursuant to Section
        203 and Section 211 of the National Housing Act. No event has occurred,
        including but not limited to a change in insurance coverage, that would
        make the Servicer unable to comply with HUD eligibility requirements or
        that would require notification to HUD;

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

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

               (vii) There are no actions or proceedings against, or
        investigations known to it of, the Servicer before any court,
        administrative or other tribunal (A) that might prohibit its entering
        into this Agreement, (B) seeking to prevent the consummation of the
        transactions contemplated by this Agreement or (C) that might prohibit
        or materially and adversely affect the performance by the Servicer of
        its obligations under, or the validity or enforceability of, this
        Agreement;

               (viii) 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 Agreement or the consummation by it of the transactions
        contemplated by this Agreement, except for such consents, approvals,
        authorizations or orders, if any, that have been obtained prior to the
        Closing Date; and

               (ix) The Servicer does and will continue to accurately report its
        borrower credit files for each Mortgage Loan to the three major credit
        bureaus in existence as of the Closing Date in a timely manner.

               It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the Trust
Administrator, the Trustee, the Depositor and the Certificateholders. Upon
discovery by any of the Depositor, the Servicer, the Trust Administrator or the
Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan,
Prepayment Charge or the interests therein of the Certificateholders, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the Trust Administrator and
the Trustee. Subject to Section 7.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of the Servicer set forth in
Section 2.03(c) to cure breaches shall constitute the sole remedy against the
Servicer available to the Certificateholders, the Depositor or the Trust
Administrator and the Trustee on behalf of the Certificateholders respecting a
breach of the representations, warranties and covenants contained in this
Section 2.05. The foregoing shall not, however, limit any remedies available to
the Certificateholders, the Depositor, the Trust


                                      -46-

<PAGE>



Administrator or the Trustee on behalf of the Certificateholders, pursuant to
the Mortgage Loan Purchase Agreement, respecting a breach of the
representations, warranties and covenants of the Originator contained in the
Mortgage Loan Purchase Agreement.

               SECTION 2.06.          Issuance of the REMIC I Regular Interests
                                      and the Class R-I Interest.

               The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the Mortgage Files, subject to the provisions of
Section 2.01 and Section 2.02, together with the assignment to it of all other
assets included in REMIC I, the receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trust Administrator, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the order of the Depositor, the Class R Certificates (in respect of the
Class R-I Interest) in authorized denominations. The interests evidenced by the
Class R-I Interest, together with the REMIC I Regular Interests, constitute the
entire beneficial ownership interest in REMIC I. The rights of the Class R-I
Interest and REMIC II (as holder of the REMIC I Regular Interest) to receive
distributions from the proceeds of REMIC I in respect of the Class R-I Interest
and the REMIC I Regular Interests, and all ownership interests evidenced or
constituted by the Class R-I Interest and the REMIC I Regular Interests, shall
be as set forth in this Agreement.

               SECTION 2.07. Conveyance of the REMIC I Regular
                             Interests; Acceptance of REMIC II by the
                             Trustee.

               The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Class R-II Interest and REMIC II (as holder of the REMIC I Regular
Interests). The rights of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC
II in respect of the Class R-II Interest and REMIC II Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-II Interest and the REMIC II Regular Interests, shall be as set forth in this
Agreement.

               SECTION 2.08.          Issuance of Class R Certificates.

               The Trustee acknowledges the assignment to it of the REMIC
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trust Administrator has executed, authenticated and delivered to or upon the
order of the Depositor, the Class R Certificates in authorized denominations.



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<PAGE>



                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

               SECTION 3.01.          Servicer to Act as Servicer.

               The Servicer shall service and administer the Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) 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 prudent
mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

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

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

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

               (iv) the Servicer'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
also 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, 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 is hereby authorized and empowered by the Trustee
when the Servicer believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Trust, the Certificateholders and the Trustee or any
of them, and upon notice to the Trustee and the Trust Administrator, 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, for the benefit of the Trust Fund and the Certificateholders.
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 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 3.17, the
Trustee shall execute, at the written request of the Servicer, and furnish to
the Servicer any special or limited powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and


                                      -48-

<PAGE>



administrative duties hereunder and the Trustee shall not be liable for the
actions of the Servicer under such powers of attorney.

               In accordance with the standards of the preceding paragraph, the
Servicer shall make or cause to be made Servicing Advances as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which Servicing Advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11; provided, however, the Servicer shall only
make such Servicing Advance if the Mortgagor has made such payment as set forth
in Section 3.09 or if the Mortgagor has not made such payment, if the failure to
make such Servicing Advance would affect the lien position of the Mortgage Loan.
Any cost incurred by the Servicer in effecting the payment of taxes and
assessments on a Mortgaged Property shall not, for the purpose of calculating
the Stated Principal Balance of a Mortgage Loan or distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.

               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 4.03) and the Servicer shall not 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 (unless, as provided in Section 3.07, the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or 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
any Trust REMIC created hereunder to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions
after the startup date" under the REMIC Provisions.

               Notwithstanding anything in this Agreement to the contrary, in
the event of a Principal Prepayment in full of a Mortgage Loan, the Servicer may
not waive any Prepayment Charge or portion thereof required by the terms of the
related Mortgage Note unless (i) the Servicer determines that such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage Loan, taking into
account the value of such Prepayment Charge, or (ii)(A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law.

               In the event of a Principal Prepayment in full with respect to
any Mortgage Loan, the Servicer shall deliver to the Trust Administrator a
certification of a Servicing Officer substantially in the form of Exhibit J no
later than the third Business Day following the immediately succeeding
Determination Date with a copy to the Class CE Certificateholder.

               Promptly upon the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of the covenant of the Servicer set
forth above which materially and adversely affects the interests of the Holders
of the Class P Certificates in any Prepayment Charge, the Servicer


                                      -49-

<PAGE>



shall promptly pay the amount of such waived Prepayment Charge (or such portion
thereof as had been waived), for the benefit of the holders of the Class P
Certificates by depositing such amount into the Collection Account for
distribution in accordance with the terms of this Agreement. The foregoing shall
not, however, limit any remedies available to the Certificateholders, the
Depositor or the Trust Administrator on behalf of the Trust Fund and for the
benefit of the Certificateholders, pursuant to the Mortgage Loan Purchase
Agreement, respecting a breach of the representations, warranties and covenants
of the Originator contained in the Mortgage Loan Purchase Agreement.

               With respect to each Mortgage Loan which is the subject of a
Principal Prepayment in full, which prepayment is not accompanied by the payment
of a Prepayment Charge, the Trust Administrator shall verify that such Mortgage
Loan was identified on the Mortgage Loan Schedule as not being subject to a
Prepayment Charge.

               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.

               As part of its servicing activities hereunder, the Servicer, for
the benefit of the Trustee, the Trust Administrator and the Certificateholders,
shall enforce the obligations of the Originator under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation of the Originator to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a).

               SECTION 3.02. Sub-Servicing Agreements Between Servicer and
                             Sub-Servicers.

               The Servicer may arrange for the subservicing of any Mortgage
Loan by a Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that
such sub-servicing arrangement and the terms of the related Sub-Servicing
Agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer or a Sub-Servicer or reference to actions taken through a Servicer or
otherwise, the Servicer shall remain obligated and liable to the Depositor, the
Trust, the Trustee, the Trust Administrator and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every Sub-Servicing 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. All actions of
each Sub-Servicer performed pursuant to the related Sub-Servicing Agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer.

               For purposes of this Agreement, the Servicer shall be deemed to
have received any


                                      -50-

<PAGE>



collections, recoveries or payments with respect to the Mortgage Loans that are
received by a Sub- Servicer regardless of whether such payments are remitted by
the Sub-Servicer to the Servicer.

               SECTION 3.03.          Successor Sub-Servicers.

               The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and to either itself directly service the related Mortgage Loans or
enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 3.02. Any Sub-Servicing Agreement shall include the
provision that such agreement may be immediately terminated by the Trust
Administrator or the Trustee (if the Trust Administrator or the Trustee is
acting as Servicer) without fee, in accordance with the terms of this Agreement,
in the event that the Servicer (or the Trust Administrator or the Trustee, if it
is then acting as Servicer) shall, for any reason, no longer be the Servicer
(including termination due to a Servicer Event of Default).

               SECTION 3.04.          No Contractual Relationship Between
                                      Sub-Servicer, Trust Administrator, Trustee
                                      or the Certificateholders.

               Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the Sub-Servicer and the Servicer alone and the Trust
Administrator, the Trustee and the Certificateholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer except as set forth in Section
3.05.

               SECTION 3.05.          Assumption or Termination of Sub-Servicing
                                      Agreement by Trust Administrator.

               In connection with the assumption of the responsibilities, duties
and liabilities and of the authority, power and rights of the Servicer hereunder
by the Trust Administrator pursuant to Section 7.02 or another successor
Servicer, it is understood and agreed that the Servicer's rights and obligations
under any Sub-Servicing Agreement then in force between the Servicer and a
Sub-Servicer shall be assumed simultaneously by the Trust Administrator or
another successor Servicer without act or deed on the part of the Trust
Administrator; provided, however, that the Trust Administrator or any other
successor Servicer may terminate the Sub-Servicer.

               The Servicer shall, upon the reasonable request of the Trust
Administrator, but at the expense of the Servicer, deliver to the assuming party
documents and records relating to each Sub-Servicing Agreement and an accounting
of amounts collected and held by it and otherwise use its best reasonable
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.

               SECTION 3.06.       [Reserved].

               SECTION 3.07.       Collection of Certain Mortgage Loan Payments.

               The Servicer shall make reasonable efforts to collect all
payments called for under


                                      -51-

<PAGE>



the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any late payment charge or, if
applicable, penalty interest or (ii) extend the due dates for the Monthly
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided that any extension pursuant to this clause shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder. Notwithstanding the foregoing, in the event that any Mortgage Loan is
in default or, in the judgment of the Servicer, such default is reasonably
foreseeable, the Servicer, consistent with the standards set forth in Section
3.01 may waive, modify or vary any term of such Mortgage Loan (including
modifications that change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan (such payment, a "Short
Pay-off"), or consent to the postponement of strict compliance with any such
term or otherwise grant indulgence to any Mortgagor if in the Servicer's
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders (taking into
account any estimated Realized Loss that might result absent such action).

               SECTION 3.08.   [Reserved].

               SECTION 3.09.   Collection of Taxes, Assessments and Similar
                               Items; Servicing Accounts.

               The Servicer shall establish and maintain one or more accounts
(the "Servicing Accounts"), into which all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
fire, flood, and hazard insurance premiums, and comparable items for the account
of the Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the Servicing
Accounts on a daily basis and in no event later than the second Business Day
after receipt, and retain therein, all Escrow Payments collected on account of
the Mortgage Loans, for the purpose of effecting the timely payment of any such
items as required under the terms of this Agreement. Withdrawals of amounts from
a Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, fire, flood, and hazard insurance premiums, and comparable items;
(ii) reimburse the Servicer out of related collections for any advances made
pursuant to Section 3.01 (with respect to taxes and assessments) and Section
3.14 (with respect to fire, flood and 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 Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX. As part of its servicing
duties, the Servicer shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor. Notwithstanding the
foregoing, the Servicer shall not be obligated to collect Escrow Payments if the
related Mortgage Loan does not require such payments but the Servicer shall
nevertheless be obligated to make Servicing Advances as provided in Section
3.01. In the event the


                                      -52-

<PAGE>



Servicer shall deposit in the Servicing Accounts any amount not required to be
deposited therein, it may at any time withdraw such amount from the Servicing
Accounts, any provision to the contrary notwithstanding.

               SECTION 3.10.          Collection Account, Distribution Account
                                      and Initial Deposit Accounts.

               (a) On behalf of the Trust Fund, the Servicer shall establish and
maintain one or more accounts (such account or accounts, the "Collection
Account"), held in trust for the benefit of the Trustee, the Trust Administrator
and the Certificateholders. On behalf of the Trust Fund, the Servicer shall
deposit or cause to be deposited in the Collection Account on a daily basis and
in no event later than two Business Days after receipt, as and when received or
as otherwise required hereunder, the following payments and collections received
or made by it on or subsequent to the Cut-off Date:

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

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

               (iii) all Insurance Proceeds and Liquidation Proceeds (other than
        proceeds collected in respect of any particular REO Property and amounts
        paid by the Servicer in connection with a purchase of Mortgage Loans and
        REO Properties pursuant to Section 9.01);

               (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;

               (v)     any amounts required to be deposited by the Servicer
        pursuant to the second paragraph of Section 3.14(a) in respect of any
        blanket policy deductibles;

               (vi) any Purchase Price or Substitution Shortfall Amount
        delivered to the Servicer and all proceeds (net of amounts payable or
        reimbursable to the Servicer) of Mortgage Loans purchased in accordance
        with Section 9.01; and

               (vii) any Prepayment Charges or amounts required to be deposited
        by the Servicer in connection with a breach of its obligations under
        Section 3.01 with respect to the waiver of Prepayment Charges.

               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,
assumption fees or other similar fees need not be deposited by the Servicer in
the Collection Account. 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


                                      -53-

<PAGE>



Collection Account, any provision herein to the contrary notwithstanding.

               (b) On behalf of the Trust Fund, the Trust Administrator, as
agent for the Trustee, shall establish and maintain one or more accounts (such
account or accounts, the "Distribution Account"), held in trust for the benefit
of the Trustee, the Trust Fund and the Certificateholders. On behalf of the
Trust Fund, the Servicer shall deliver to the Trust Administrator in immediately
available funds for deposit in the Distribution Account on or before 3:00 p.m.
New York time (i) on the Servicer Remittance Date, that portion of the Available
Distribution Amount (calculated without regard to the references in clause (2)
of the definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans (including
the amount of any payment by the Servicer in respect of a waived Prepayment
Charge, other than as permitted in Section 3.01) then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advancing
Person pursuant to Section 3.28, and (ii) on each Business Day as of the
commencement of which the balance on deposit in the Collection Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding sentence, the
amount of such excess, but only if the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account." If the balance on deposit in the Collection Account exceeds $75,000 as
of the commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Servicer shall, on or before 5:00 p.m. New York time
on such Business Day, withdraw from the Collection Account any and all amounts
payable or reimbursable to the Depositor, the Servicer, the Trustee, the Trust
Administrator, the Originator or the Seller pursuant to Section 3.11 and shall
pay such amounts to the Persons entitled thereto.

               (c) Funds in the Collection Account and the Distribution 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
Trust Administrator of the location of the Collection Account maintained by it
when established and prior to any change thereof. The Trust Administrator shall
give notice to the Servicer, the Trustee and the Depositor of the location of
the Distribution Account when established and prior to any change thereof.

               (d) Funds held in the Collection Account at any time may be
delivered by the Servicer in immediately available funds to the Trust
Administrator for deposit in the Distribution Account. In the event the Servicer
shall deliver to the Trust Administrator for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that
the Trust Administrator withdraw such amount from the Distribution Account and
remit to it any such amount, any provision herein to the contrary
notwithstanding. In no event shall the Trust Administrator incur liability as a
result of withdrawals from the Distribution Account at the direction of the
Servicer in accordance with the immediately preceding sentence. In addition, the
Servicer shall deliver to the Trust Administrator from time to time for deposit
in the Distribution Account the amounts set forth in clauses (i) through (vi)
below:

               (i)     any Advances, as required pursuant to Section 4.03;



                                      -54-

<PAGE>



               (ii) any amounts required to be deposited pursuant to Section
        3.23(d) or 3.23(f) in connection with any REO Property;

               (iii) any amounts to be paid in connection with a purchase of
        Mortgage Loans and REO Properties pursuant to Section 9.01;

               (iv) any amounts required to be deposited pursuant to Section
        3.24 in connection with any Prepayment Interest Shortfalls; and

               (v) any Stayed Funds, as soon as permitted by the federal
        bankruptcy court having jurisdiction in such matters.

               (e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trust Administrator shall notify the Servicer of such receipt and deposit
such funds in the Distribution Account, subject to withdrawal thereof as
permitted hereunder. In addition, the Servicer shall deliver to the Trust
Administrator for deposit in the Distribution Account any amounts required to be
deposited pursuant to Section 3.12 in connection with losses realized on
Permitted Investments with respect to funds held in the Collection Account.

               SECTION 3.11.          Withdrawals from the Collection Account
                                      and Distribution 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 4.03:

               (i) to remit to the Trust Administrator for deposit in the
        Distribution Account the amounts required to be so remitted pursuant to
        Section 3.10(b) or permitted to be so remitted pursuant to the first
        sentence of Section 3.10(d);

               (ii) subject to Section 3.16(d), to reimburse the Servicer for
        Advances, but only to the extent of amounts received which represent
        Late Collections (net of the related Servicing Fees) of Monthly Payments
        on Mortgage Loans with respect to which such Advances were made in
        accordance with the provisions of Section 4.03;

               (iii) subject to Section 3.16(d), to pay the Servicer any unpaid
        Servicing Fees and reimburse the Servicer any unreimbursed Servicing
        Advances with respect to each Mortgage Loan, but only to the extent of
        any Liquidation Proceeds and Insurance Proceeds received with respect to
        such Mortgage Loan;

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

               (v) to pay to the Servicer or the Originator, as the case may be,
        with respect to each Mortgage Loan that has previously been purchased or
        replaced pursuant to Section 2.03


                                      -55-

<PAGE>



         or Section 3.16(c) all amounts received thereon not included in the
         Purchase Price or the Substitution Shortfall Amount;

               (vi) to reimburse the Servicer for any Advance or Servicing
        Advance previously made which the Servicer has determined to be a
        Nonrecoverable Advance or a Nonrecoverable Servicing Advance in
        accordance with the provisions of Section 4.03;

               (vii) 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;

               (viii) to reimburse the Servicer, the Trust Administrator or the
        Trustee, as the case may be, for expenses reasonably incurred in respect
        of the breach or defect giving rise to the purchase obligation under
        Section 2.03 of this Agreement that were included in the Purchase Price
        of the Mortgage Loan, including any expenses arising out of the
        enforcement of the purchase obligation;

               (ix) to pay, or to reimburse the Servicer for advances in respect
        of, expenses incurred in connection with any Mortgage Loan pursuant to
        Section 3.16(b); and

               (x) to clear and terminate the Collection Account pursuant to
        Section 9.01.

               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 (ii), (iii), (v), (vi), (viii) and (ix) above. The
Servicer shall provide written notification to the Trustee and the Trust
Administrator, on or prior to the next succeeding Servicer Remittance Date, upon
making any withdrawals from the Collection Account pursuant to subclauses (vi)
and (vii) above.

               (b) The Trust Administrator shall, from time to time, make
withdrawals from the Distribution Account, for any of the following purposes,
without priority:

               (i) to make distributions to Certificateholders in accordance
        with Section 4.01;

               (ii) to pay to itself and the Trustee amounts to which it is
        entitled pursuant to Section 8.05;

               (iii) to pay to itself any interest or investment income earned
        on funds deposited in the Distribution Account pursuant to Section
        3.12(b);

               (iv)    to reimburse itself pursuant to Section 7.02;

               (v) to pay to an Advancing Person reimbursements for Advances
        and/or Servicing Advances pursuant to Section 3.28;

               (vi) to pay any amounts in respect of taxes pursuant to Section
        10.01(g)(iii); and



                                      -56-

<PAGE>



               (vii) to clear and terminate the Distribution Account pursuant to
        Section 9.01.

               SECTION 3.12. Investment of Funds in the Investment Accounts.

               (a) The Servicer may direct, by means of written directions
(which may be standing directions), any depository institution maintaining the
Collection Account to invest the funds in the Collection Account and the Trust
Administrator may direct the investment of funds in the Distribution Account
(each, for purposes of this Section 3.12, an "Investment Account") in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) 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 a Person other than the Trust
Administrator is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trust Administrator is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds shall be made in the name of the Trust Administrator (in its capacity
as such) or in the name of a nominee of the Trust Administrator. The Trust
Administrator shall be entitled to sole possession over each such investment
(except with respect to investment direction of funds held in the Collection
Account) and, subject to subsection (b) below, the income thereon, and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Trust Administrator or its agent, together with any
document of transfer necessary to transfer title to such investment to the Trust
Administrator or its nominee. In the event amounts on deposit in the Collection
Account are at any time invested in a Permitted Investment payable on demand,
the Trust Administrator shall at the direction of the Servicer:

               (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 promptly upon
        determination by a Responsible Officer of the Trust Administrator that
        such Permitted Investment would not constitute a Permitted Investment in
        respect of funds thereafter on deposit in the 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 or the
Trustee, shall be for the benefit of the Servicer and shall be subject to its
withdrawal in accordance with Section 3.11. The Servicer shall deposit in the
Collection Account the amount of any loss incurred in respect of any such
Permitted Investment made with funds in such account immediately upon
realization of such loss. All income and gain realized from the investment of
funds deposited in the Distribution Account shall be for the benefit of the
Trust Administrator. The Trust Administrator shall deposit in the Distribution
Account the amount of any loss incurred in respect of any such Permitted
Investment made with funds in such account immediately upon realization of such
loss.

               (c)     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


                                      -57-

<PAGE>



other performance required under any Permitted Investment, the Trust
Administrator may and, subject to Section 8.01 and Section 8.02(v), shall, at
the written direction of the Servicer, take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate proceedings.

               SECTION 3.13. [Reserved].

               SECTION 3.14. Maintenance of Hazard Insurance and Errors and
                             Omission and Fidelity Coverage.

               (a) The terms of each Mortgage Note require the related Mortgagor
to maintain fire, flood and hazard insurance policies. To the extent such
policies are not maintained, the Servicer shall cause to be maintained for each
Mortgaged Property fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is at least equal to the lesser of the current principal balance of such
Mortgage Loan and the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis, 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 and hazard
insurance on each REO Property with extended coverage as is customary in the
area where the Mortgaged Property is located 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. 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, if received in respect of a Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section 3.23, if
received in respect of an REO Property. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, 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, 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).

               In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI or better
in Best's Key Rating Guide insuring against


                                      -58-

<PAGE>



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 3.14, 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 3.14, 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, the Trust Fund and the Certificateholders, 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 its respective 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 each 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 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 and the
Trust Administrator.

               SECTION 3.15. 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 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 then current underwriting criteria of the Servicer for
mortgage loans similar to the Mortgage Loans. In connection with any assumption
or substitution, the Servicer shall apply such underwriting standards and follow
such practices and


                                      -59-

<PAGE>



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. 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 Monthly Payment) may be amended
or modified, except as otherwise required pursuant to the terms thereof. The
Servicer shall notify the Trustee and the Trust Administrator that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee (with a copy to the Trust Administrator) 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.

               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 whatever. For purposes of this Section 3.15, 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 3.16.          Realization Upon Defaulted Mortgage Loans.

               (a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.11 and 3.23.
The foregoing is subject to the provision that, in any case in which a 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 discretion that such restoration will increase
the proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.

               (b) Notwithstanding the foregoing provisions of this Section 3.16
or any other provision of this Agreement, with respect to any Mortgage Loan as
to which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trust Fund, the Trustee, the Trust Administrator or the Certificateholders
would be considered to hold title to, to be a "mortgagee-in-possession" of, or
to be an "owner" or "operator" of such Mortgaged Property within the meaning of
the


                                      -60-

<PAGE>



Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Servicer has also
previously determined, based on its reasonable judgment and a prudent report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:

               (1) such Mortgaged Property is in compliance with applicable
        environmental laws or, if not, that it would be in the best economic
        interest of the Trust Fund to take such actions as are necessary to
        bring the Mortgaged Property into compliance therewith; and

               (2) there are no circumstances present at such Mortgaged Property
        relating to the use, management or disposal of any hazardous substances,
        hazardous materials, hazardous wastes or petroleum-based materials for
        which investigation, testing, monitoring, containment, clean-up or
        remediation could be required under any federal, state or local law or
        regulation, or that if any such materials are present for which such
        action could be required, that it would be in the best economic interest
        of the Trust Fund to take such actions with respect to the affected
        Mortgaged Property.

               The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.

               If the Servicer determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Trust Fund. The cost of any such compliance, containment,
cleanup or remediation shall be advanced by the Servicer, subject to the
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Sections 3.11(a)(iii) or 3.11(a)(ix), such right of reimbursement
being prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.

               (c) The Servicer shall have the right to purchase from REMIC I
any defaulted Mortgage Loan that is 90 days or more delinquent, which the
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trust Administrator and the Trustee, in form and substance satisfactory to the
Servicer, the Trust Administrator and the Trustee prior to purchase), at a price
equal to the Purchase Price. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account, and the Trustee, upon
receipt of written certification from the Servicer of such deposit, shall
release or cause to be released to the Servicer the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Servicer shall furnish and as
shall be necessary to vest in the Servicer title to any Mortgage Loan released
pursuant hereto.


                                      -61-

<PAGE>



               (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and Advances, pursuant
to Section 3.11(a)(ii) or (a)(iii); second, to accrued and unpaid interest on
the Mortgage Loan, to the date of the Final Recovery Determination, or to the
Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and third,
as a recovery of principal of the Mortgage Loan. If the amount of the recovery
so allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer pursuant to Section 3.11(a)(iii). The portion of the recovery allocated
to interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Mortgage Loan shall be applied as follows: first,
to reimburse the Servicer for any related unreimbursed Advances in accordance
with Section 3.11(a)(ii) and any other amounts reimbursable to the Servicer
pursuant to Section 3.11, and second, as part of the amounts to be transferred
to the Distribution Account in accordance with Section 3.10(b).

               SECTION 3.17.   Trustee to Cooperate; Release of Mortgage Files.

               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 notify the Trust
Administrator and the Trustee by a certification in the form of Exhibit E-2
(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 Mortgage File. Upon receipt of such certification and request, the Trustee
shall promptly release the related Mortgage File to the Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.

               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 in
the form of Exhibit E-l, release the related Mortgage File to the Servicer, and
the Trustee or the Servicer as attorney-in-fact of the Trustee shall, at the
direction of the Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
Mortgage 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


                                      -62-

<PAGE>



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.

               Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer, any court pleadings, requests for
trustee's sale or other documents 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. 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. So long as no Servicing Termination Event shall have occurred
and be continuing, the Servicer shall have the right to execute any and all such
court pleadings, requests and other documents as attorney-in-fact for, and on
behalf of the Trustee.

               SECTION 3.18.          Servicing Compensation.

               As compensation for the activities of the Servicer, hereunder,
the Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Insurance Proceeds or
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out of
amounts derived from the operation and sale of an REO Property to the extent
permitted by Section 3.23. Except as set forth in Section 6.04 hereof, 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 to the extent permitted herein. In addition,
the Servicer shall be entitled to the Special Servicing Fee pursuant to Section
4.01(a)(4)(xii), if applicable.

               Additional servicing compensation in the form of assumption fees,
late payment charges and other miscellaneous fees (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 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided
herein.

               SECTION 3.19.   Reports to the Trust Administrator and the
                               Trustee; Collection Account Statements.

               Not later than fifteen days after each Distribution Date, the
Servicer shall forward to the Trust Administrator, the Trustee and the Depositor
a statement prepared by the institution at


                                      -63-

<PAGE>



which the Collection Account is maintained setting forth the status of the
Collection Account as of the close of business on such Distribution Date and
showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.10(a) and each category of withdrawal specified
in Section 3.11. Copies of such statement shall be provided by the Trust
Administrator to any Certificateholder and to any Person identified to the Trust
Administrator as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trust Administrator.

               SECTION 3.20.          Statement as to Compliance.

               The Servicer will deliver to, the Trust Administrator, the
Trustee and the Depositor not later than 120 days following the end of the
fiscal year of the Servicer, which as of the Closing Date ends on the last day
in December, an Officers' Certificate stating, as to each signatory thereof,
that (i) a review of the activities of the Servicer during the preceding year
and of performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officer's 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 officer and the
nature and status thereof. Copies of any such statement shall be provided by the
Trust Administrator to any Certificateholder and to any Person identified to the
Trust Administrator as a prospective transferee of a Certificate, upon request
at the expense of the requesting party, provided such statement is delivered by
the Servicer to the Trust Administrator.

               SECTION 3.21.   Independent Public Accountants' Servicing Report.

               Not later than 120 days following the end of each fiscal year of
the Servicer (which, as of the Closing Date, ends on the last day of December),
the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer 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. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Trust Administrator, the Trustee and each
Rating Agency. Copies of such statement shall be provided by the Trust
Administrator to any Certificateholder upon request at the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trust
Administrator.

               SECTION 3.22.          Access to Certain Documentation.

               The Servicer shall provide to the Office of Thrift Supervision,
the FDIC, and any other federal or state banking or insurance regulatory
authority that may exercise authority over any


                                      -64-

<PAGE>



Certificateholder, access to the documentation regarding the Mortgage Loans
required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Servicer designated by it. In addition, access to
the documentation regarding the Mortgage Loans will be provided to any
Certificateholder, the Trustee, the Trust Administrator and to any Person
identified to the Servicer, as a prospective transferee of a Certificate, upon
reasonable request during normal business hours at the offices of the Servicer
designated by it at the expense of the Person requesting such access.

               SECTION 3.23.  Title, Management and Disposition of REO Property.

               (a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trustee, or its nominee, on behalf of the Trust Fund
and for the benefit of the Certificateholders. The Servicer, on behalf of REMIC
I, shall either sell any REO Property by the close of the third calendar year
following the calendar year in which REMIC I acquires ownership of such REO
Property for purposes of Section 860(a)(8) of the Code or request from the
Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire an extension of the three-year
grace period, unless the Servicer had delivered to the Trust Administrator and
the Trustee an Opinion of Counsel, addressed to the Trust Administrator, the
Trustee and the Depositor, to the effect that the holding by REMIC I of such REO
Property subsequent to three years after its acquisition will not result in the
imposition on any Trust REMIC created hereunder of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any
Trust REMIC hereunder to fail to qualify as a REMIC under Federal law at any
time that any Certificates are outstanding. The Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders 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) of the Code or result in the receipt by any Trust REMIC
created hereunder 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 the REMIC Provisions.

               (b) 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 establish and maintain with
respect to REO Properties an account held in trust for the Trustee, on behalf of
the Trust Fund and for the benefit of the Certificateholders (the "REO
Account"), which shall be an Eligible Account. The Servicer shall be permitted
to allow the Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. The Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in the REO Account.

               (c) The Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited, on a daily
basis in the REO Account all revenues received by it with respect to an REO
Property and shall withdraw therefrom funds necessary for the proper


                                      -65-

<PAGE>



operation, management and maintenance of such REO Property including, without
limitation:

               (i) all insurance premiums due and payable in respect of such REO
        Property;

               (ii) all real estate taxes and assessments in respect of such REO
        Property that may result in the imposition of a lien thereon; and

               (iii) all costs and expenses necessary to maintain such REO
        Property.

               To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts will
be recoverable from the rental or sale of the REO Property.

               Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding the foregoing, the Servicer
shall not:

               (i) permit the Trust Fund to enter into, renew or extend any New
        Lease with respect to any REO Property, if the New Lease by its terms
        will give rise to any income that does not constitute Rents from Real
        Property;

               (ii) permit any amount to be received or accrued under any New
        Lease other than amounts that will constitute Rents from Real Property;

               (iii) authorize or permit any construction on any REO Property,
        other than the completion of a building or other improvement thereon,
        and then only if more than ten percent of the construction of such
        building or other improvement was completed before default on the
        related Mortgage Loan became imminent, all within the meaning of Section
        856(e)(4)(B) of the Code; or

               (iv) allow any Person to Directly Operate any REO Property on any
        date more than 90 days after its date of acquisition by the Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Servicer, the Trust Administrator and the Trustee, to the effect
that such action will not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code at
any time that it is held by REMIC I, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.

               The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:

               (i) the terms and conditions of any such contract shall not be
        inconsistent herewith;


                                      -66-

<PAGE>



               (ii) any such contract shall require, or shall be administered to
        require, that the Independent Contractor pay all costs and expenses
        incurred in connection with the operation and management of such REO
        Property, including those listed above and remit all related revenues
        (net of such costs and expenses) to the Servicer as soon as practicable,
        but in no event later than thirty days following the receipt thereof by
        such Independent Contractor;

               (iii) none of the provisions of this Section 3.23(c) relating to
        any such contract or to actions taken through any such Independent
        Contractor shall be deemed to relieve the Servicer of any of its duties
        and obligations to the Trustee on behalf of the Trust Fund and for the
        benefit of the Certificateholders with respect to the operation and
        management of any such REO Property; and

               (iv) the Servicer shall be obligated with respect thereto to the
        same extent as if it alone were performing all duties and obligations in
        connection with the operation and management of such REO Property.

               The Servicer shall be entitled to enter into any agreement with
any Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees.

               (d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself unpaid Servicing Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and Advances made in respect of such REO
Property or the related Mortgage Loan. On the Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.10(d)(ii), for
distribution on the related Distribution Date in accordance with Section 4.01,
the income from the related REO Property received during the prior calendar
month, net of any withdrawals made pursuant to Section 3.23(c) or this Section
3.23(d).

               (e) Subject to the time constraints set forth in Section 3.23(a),
each REO Disposition shall be carried out by the Servicer at such price and upon
such terms and conditions as the Servicer shall deem necessary or advisable, as
shall be normal and usual in its Accepted Servicing Practices.

               (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer as provided above, shall
be deposited in the Distribution Account in accordance with Section 3.10(d)(ii)
on the Servicer Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).



                                      -67-

<PAGE>



               (g) The Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.

               SECTION 3.24.     Obligations of the Servicer in Respect of
                                 Prepayment Interest Shortfalls.

               The Servicer shall deliver to the Trust Administrator for deposit
into the Distribution Account on or before 5:00 p.m. New York time on the
Servicer Remittance Date from its own funds an amount equal to the lesser of (i)
the aggregate of the Prepayment Interest Shortfalls attributable to prepayments
in full for the related Distribution Date resulting solely from Principal
Prepayments received by the Servicer during the related Prepayment Period and
(ii) 50% of its aggregate Servicing Fee for the most recently ended Prepayment
Period. The Servicer shall not have the right to reimbursement for any amounts
remitted to the Trust Administrator in respect of this Section 3.24. The
Servicer shall not be obligated to pay the amounts set forth in this Section
3.24 with respect to Relief Act Interest Shortfalls.

               SECTION 3.25. [Reserved].

               SECTION 3.26. Obligations of the Servicer in Respect of Mortgage
                             Rates and Monthly Payments.

               In the event that a shortfall in any collection on or liability
with respect to any Mortgage Loan results from or is attributable to adjustments
to Mortgage Rates, Monthly Payments or Stated Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trust Administrator for deposit
in the Distribution Account from its own funds the amount of any such shortfall
and shall indemnify and hold harmless the Trust Fund, the Trust Administrator,
the Trustee, the Depositor and any successor Servicer in respect of any such
liability. Such indemnities shall survive the termination or discharge of this
Agreement.

               SECTION 3.27. Reserve Fund.

               (a) No later than the Closing Date, the Trust Administrator shall
establish and maintain with itself, as agent for the Trustee, a separate,
segregated trust account titled, "Reserve Fund, Citibank, N.A., as agent for
U.S. Bank National Association, as Trustee, in trust for the registered holders
of Salomon Brothers Mortgage Securities VII, Inc., Salomon Home Equity Loan
Trust, Series 2001-WMC1, Asset Backed Pass-Through Certificates." On the Closing
Date, the Depositor will deposit, or cause to be deposited, into the Reserve
Fund, $1,000.

               (b) On each Distribution Date as to which there is a Net WAC Rate
Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trust Administrator


                                      -68-

<PAGE>



has been directed by the Class CE Certificateholders to, and therefore will,
deposit into the Reserve Fund the amounts described in Section 4.01(a)(4)(xiii),
rather than distributing such amounts to the Class CE Certificateholders. On
each such Distribution Date, the Trust Administrator shall hold all such amounts
for the benefit of the Holders of the Class A Certificates and the Mezzanine
Certificates, and will distribute such amounts to the Holders of the Class A
Certificates and the Mezzanine Certificates in the amounts and priorities set
forth in Section 4.01(a). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Trust Administrator shall deposit into the Reserve Fund
on behalf of the Class CE Certificateholders, from amounts otherwise
distributable to the Class CE Certificateholders, an amount such that when added
to other amounts already on deposit in the Reserve Fund, the aggregate amount on
deposit therein is equal to $1,000.

               (c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by REMIC II to the Holders of
the Class CE Certificates. Upon the termination of the Trust Fund, or the
payment in full of the Class A Certificates and the Mezzanine Certificates, all
amounts remaining on deposit in the Reserve Fund will be released by the Trust
Fund and distributed to the Class CE Certificateholders or their designees. The
Reserve Fund will be part of the Trust Fund but not part of any Trust REMIC and
any payments to the Holders of the Class A Certificates or the Mezzanine
Certificates of Net WAC Rate Carryover Amounts will not be payments with respect
to a "regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1).

               (d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees to direct the Trust Administrator, and the Trust
Administrator hereby is directed to deposit into the Reserve Fund the amounts
described above on each Distribution Date as to which there is any Net WAC Rate
Carryover Amount rather than distributing such amounts to the Class CE
Certificateholders. By accepting a Class CE Certificate, each Class CE
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.

               (e) At the direction of the Holders of a majority in Percentage
Interest in the Class CE Certificates, the Trust Administrator shall direct any
depository institution maintaining the Reserve Fund to invest the funds in such
account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) 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 a Person other than
the Trust Administrator or an Affiliate manages or advises such investment, and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Trust Administrator or an
Affiliate manages or advises such investment. If no investment direction of the
Holders of a majority in Percentage Interest in the Class CE Certificates with
respect to the Reserve Fund is received by the Trust Administrator, the Trust
Administrator shall invest the funds in such account in Permitted Investments
managed by the Trust Administrator or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments. All income and gain
earned upon such investment shall be deposited into the Reserve Fund.

               (f) For federal tax return and information reporting, the right
of the Class A


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<PAGE>



Certificateholders and the Mezzanine Certificateholders to receive payments from
the Reserve Fund in respect of any Net Wac Rate Carryover Amount shall be
assigned a value of zero.

               SECTION 3.28.          Advance Facility.

               (a) The Trust Administrator on behalf of the Trust Fund, with the
consent of the Servicer, is hereby authorized to enter into a facility with any
Person which provides that such Person (an "Advancing Person") may make all or a
portion of the Advances and/or Servicing Advances to the Trust Fund under this
Agreement, although no such facility shall reduce or otherwise affect the
Servicer's obligation to fund such Advances and/or Servicing Advances. To the
extent that an Advancing Person makes all or a portion of any Advance or any
Servicing Advance and provides the Trust Administrator and the Trustee with
notice acknowledged by the Servicer that such Advancing Person is entitled to
reimbursement, such Advancing Person shall be entitled to receive reimbursement
pursuant to this Agreement for such amount to the extent provided in Section
3.28(b). Such notice from the Advancing Person must specify the amount of the
reimbursement and must specify which Section of this Agreement permits the
applicable Advance or Servicing Advance to be reimbursed. The Trust
Administrator shall have no duty or liability with respect to any calculation of
any reimbursement to be paid to an Advancing Person and shall be entitled to
rely without independent investigation on the Advancing Person's notice provided
pursuant to this Section 3.28. An Advancing Person whose obligations hereunder
are limited to the funding of Advances and/or Servicing Advances shall not be
required to meet the qualifications of a Sub- Servicer pursuant to Section 3.02
hereof.

               (b) If an Advancing Person is entitled to reimbursement for any
particular Advance or Servicing Advance, then the Servicer shall not be
permitted to reimburse itself therefor under Section 3.11(a)(ii), Section
3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), but instead the
Servicer shall include such amounts in the applicable remittance to the Trust
Administrator made pursuant to Section 3.10(b) to the extent of amounts on
deposit in the Collection Account on the related Servicer Remittance Date. The
Trust Administrator is hereby authorized to pay to an Advancing Person,
reimbursements for Advances and Servicing Advances from the Distribution Account
to the same extent the Servicer would have been permitted to reimburse itself
for such Advances and/or Servicing Advances in accordance with Section
3.11(a)(ii), Section 3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix),
as the case may be, had the Servicer made such Advance or Servicing Advance.
Notwithstanding the foregoing, an Advancing Person is not entitled to be
reimbursed by the Trust Administrator from the Distribution Account for any
unreimbursed Advances from funds held in the Collection Account for future
distribution.


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<PAGE>



                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

               SECTION 4.01.          Distributions.

               (a)(1) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-I Interest, as the case
may be:

                     (i) first, to Holders of the REMIC I Regular Interest
               I-LTA, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
               I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular
               Interest I-LTM4, in an amount equal to (A) the Uncertificated
               Interest for such Distribution Date, plus (B) any amounts in
               respect thereof remaining unpaid from previous Distribution
               Dates. Amounts payable as Uncertificated Interest in respect of
               REMIC I Regular Interest I-LTZZ shall be reduced when the sum of
               the REMIC I Overcollateralization Amount is less than the REMIC I
               Required Overcollateralized Amount, by the lesser of (x) the
               amount of such difference and (y) the Maximum Uncertificated
               Interest Deferral Amount. Amounts payable as Uncertificated
               Interest in respect of REMIC I Regular Interest I-LTZZ shall be
               reduced when the REMIC I Overcollateralized Amount is less than
               the REMIC I Required Overcollateralization Amount, by the lesser
               of (x) the amount of such difference and (y) the Maximum I-LTZZ
               Uncertificated Interest Deferral Amount and such amount will be
               payable to the Holders of REMIC I Regular Interest I-LTA, REMIC I
               Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
               Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 in
               the same proportion as the Overcollateralization Increase Amount
               is allocated to the Corresponding Certificates;

                    (ii) second, to the Holders of REMIC I Regular Interests, in
               an amount equal to the remainder of the Available Distribution
               Amount for such Distribution Date after the distributions made
               pursuant to clause (i) above, allocated as follows:

                       (a) to the Holders of REMIC I Regular Interest I-LTAA,
                       98.000% of such remainder (less the amount payable in
                       clause (d) below), until the Uncertificated Balance of
                       such REMIC I Regular Interest is reduced to zero;

                       (b) to the Holders of REMIC I Regular Interest I-LTA,
                       REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
                       I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I
                       Regular Interest I-LTM4, 1.000% of such remainder (less
                       the amount payable in clause (d) below), in the same
                       proportion as principal payments are allocated to the
                       Corresponding Certificates, until the Uncertificated
                       Balances of such REMIC I Regular Interests are reduced to
                       zero;



                                      -71-

<PAGE>



                       (c) to the Holders of REMIC I Regular Interest I-LTZZ,
                       1.000% of such remainder (less the amount payable in
                       clause (d) below), until the Uncertificated Balance of
                       such REMIC I Regular Interest is reduced to zero; then

                       (d) to the Holders of REMIC I Regular Interest I-LTP, on
                       the Distribution Date immediately following the
                       expiration of the latest Prepayment Charge as identified
                       on the Prepayment Charge Schedule or any Distribution
                       Date thereafter until $100 has been distributed pursuant
                       to this clause; and

                       (e)    any remaining amount to the Holders of the Class R
                       Certificates (as Holder of the Class R-I Interest);

provided, however, that 98.000% and 2.000% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.

               (2) On each Distribution Date, the Trust Administrator shall
withdraw from the Distribution Account an amount equal to the Interest
Remittance Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

               (i) to the Holders of the Class A Certificates, an amount equal
        to the Senior Interest Distribution Amount allocable to the Class A
        Certificates;

               (ii) to the Holders of the Class M-1 Certificates, an amount
        equal to the Interest Distribution Amount allocable to the Class M-1
        Certificates;

               (iii) to the Holders of the Class M-2 Certificates, an amount
        equal to the Interest Distribution Amount allocable to the Class M-2
        Certificates;

               (iv) to the Holders of the Class M-3 Certificates, an amount
        equal to the Interest Distribution Amount allocable to the Class M-3
        Certificates; and

               (v) to the Holders of the Class M-4 Certificates, an amount equal
        to the Interest Distribution Amount allocable to the Class M-4
        Certificates.

               (3) On each Distribution Date, the Trust Administrator shall
withdraw from the Distribution Account an amount equal to the Principal
Distribution Amount and distribute to the Certificateholders the following
amounts, in the following order of priority:

               (i) On each Distribution Date (a) prior to the Stepdown Date or
        (b) on which a Trigger Event is in effect, the Principal Distribution
        Amount shall be distributed in the following order of priority;

                       FIRST, to the Holders of the Class A Certificates, until
        the Certificate Principal Balance of such Class has been reduced to
        zero;


                                      -72-

<PAGE>



                       SECOND, to the Holders of the Class M-1 Certificates,
        until the Certificate Principal Balance of such Class has been reduced
        to zero;

                       THIRD, to the Holders of the Class M-2 Certificates,
        until the Certificate Principal Balance of such Class has been reduced
        to zero;

                       FOURTH, to the Holders of the Class M-3 Certificates,
        until the Certificate Principal Balance of such Class has been reduced
        to zero; and

                       FIFTH, to the Holders of the Class M-4 Certificates,
        until the Certificate Principal Balance of such Class has been reduced
        to zero.

               (ii) On each Distribution Date (a) on or after the Stepdown Date
        and (b) on which a Trigger Event is not in effect, the Principal
        Distribution Amount shall be distributed in the following order of
        priority;

                       FIRST, the Class A Principal Distribution Amount shall be
        distributed to the Holders of the Class A Certificates, until the
        Certificate Principal Balance of such Class has been reduced to zero;

                       SECOND, the Class M-1 Principal Distribution Amount shall
        be distributed to the Holders of the Class M-1 Certificates, until the
        Certificate Principal Balance of such Class has been reduced to zero;

                       THIRD, the Class M-2 Principal Distribution Amount shall
        be distributed to the Holders of the Class M-2 Certificates, until the
        Certificate Principal Balance of such Class has been reduced to zero;

                       FOURTH, the Class M-3 Principal Distribution Amount shall
        be distributed to the Holders of the Class M-3 Certificates, until the
        Certificate Principal Balance of such Class has been reduced to zero;
        and

                       FOURTH, the Class M-4 Principal Distribution Amount shall
        be distributed to the Holders of the Class M-4 Certificates, until the
        Certificate Principal Balance of such Class has been reduced to zero.

               (4) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed by the Trust
Administrator as follows:

                       (i) to the Holders of the Class or Classes of
        Certificates then entitled to receive distributions in respect of
        principal, as part of the Principal Distribution Amount in an amount
        equal to the principal portion of any Realized Losses incurred or deemed
        to have been incurred on the Mortgage Loans, applied to reduce the
        Certificate Principal Balance of such Certificates until the aggregate
        Certificate Principal Balance of such Certificates is reduced to zero;


                                      -73-

<PAGE>



                       (ii) to the Holders of the Class or Classes of
        Certificates then entitled to receive distributions in respect of
        principal, as part of the Principal Distribution Amount in an amount
        equal to the Overcollateralization Increase Amount for the Certificates,
        applied to reduce the Certificate Principal Balance of such Certificates
        until the aggregate Certificate Principal Balance of such Certificates
        is reduced to zero;

                       (iii) to the Holders of the Class M-1 Certificates, in an
        amount equal to the Interest Carry Forward Amount allocable to such
        Class of Certificates;

                       (iv) to the Holders of the Class M-2 Certificates, in an
        amount equal to the Interest Carry Forward Amount allocable to such
        Class of Certificates;

                       (v) to the Holders of the Class M-3 Certificates, in an
        amount equal to the Interest Carry Forward Amount allocable to such
        Class of Certificates;

                       (vi) to the Holders of the Class M-4 Certificates, in an
        amount equal to the Interest Carry Forward Amount allocable to such
        Class of Certificates;

                       (vii) to the Holders of the Class A Certificates, in an
        amount equal to the aggregate of any Prepayment Interest Shortfalls (to
        the extent not covered by payments pursuant to Section 3.24) and any
        Relief Act Interest Shortfall on the Mortgage Loans allocated to such
        Certificates;

                       (viii) to the Holders of the Class M-1 Certificates, in
        an amount equal to the aggregate of any Prepayment Interest Shortfalls
        (to the extent not covered by payments pursuant to Section 3.24) and any
        Relief Act Interest Shortfall on the Mortgage Loans allocated to such
        Certificates;

                       (ix) to the Holders of the Class M-2 Certificates, in an
        amount equal to the aggregate of any Prepayment Interest Shortfalls (to
        the extent not covered by payments pursuant to Section 3.24) and any
        Relief Act Interest Shortfall on the Mortgage Loans allocated to such
        Certificates;

                       (x) to the Holders of the Class M-3 Certificates, in an
        amount equal to the aggregate of any Prepayment Interest Shortfalls (to
        the extent not covered by payments pursuant to Section 3.24) and any
        Relief Act Interest Shortfall on the Mortgage Loans allocated to such
        Certificates;

                       (xi) to the Holders of the Class M-4 Certificates, in an
        amount equal to the aggregate of any Prepayment Interest Shortfalls (to
        the extent not covered by payments pursuant to Section 3.24) and any
        Relief Act Interest Shortfall on the Mortgage Loans allocated to such
        Certificates;

                       (xii) to the Servicer, the Special Servicing Fee with
        respect to the Mortgage Loans;



                                      -74-

<PAGE>



                       (xiii) to the Reserve Fund, the amount required by
        Section 3.28(b);

                       (xiv) to the Holders of the Class CE Certificates the
        Interest Distribution Amount and any remaining Overcollateralization
        Reduction Amount for such Distribution Date; and

                       (xv) to the Holders of the Class R Certificates, any
        remaining amounts; provided that if such Distribution Date is the
        Distribution Date immediately following the expiration of the latest
        Prepayment Charge term on a Mortgage Loan as identified on the Mortgage
        Loan Schedule or any Distribution Date thereafter, then any such
        remaining amounts will be distributed first, to the Holders of the Class
        P Certificates, until the Certificate Principal Balance thereof has been
        reduced to zero; and second, to the Holders of the Class R Certificates.

               On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Trust Administrator will
FIRST, withdraw from the Reserve Fund all income from the investment of funds in
the Reserve Fund and distribute such amount to the Holders of the Class CE
Certificates, and SECOND, withdraw from the Reserve Fund, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount with respect to the Class A Certificates and the Mezzanine Certificates
for such Distribution Date and distribute such amount FIRST, to the Class A
Certificates; SECOND, to the Class M-1 Certificates, THIRD, to the Class M-2
Certificates, FOURTH, to the Class M-3 Certificates and FIFTH, to the Class M-4
Certificates, in each case to the extent such Net WAC Carryover Amount is
allocable to each such Class.

               (b) On each Distribution Date, the Trust Administrator shall
withdraw any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by the Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or any Servicer Prepayment Charge
Payment Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.

               (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trust Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance or Notional Amount that is in
excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the initial
Certificate Principal Balance or Notional Amount of such Class of Certificates,
or otherwise by check mailed by first class mail to the address of such Holder
appearing in the Certificate Register. The final distribution on each


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Certificate will be made in like manner, but only upon presentment and surrender
of such Certificate at the Corporate Trust Office of the Trust Administrator or
such other location specified in the notice to Certificateholders of such final
distribution.

               Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trust Administrator,
the Trustee, the Depositor or the Servicer shall have any responsibility
therefor except as otherwise provided by this Agreement or applicable law.

               (d) The rights of the Certificateholders to receive distributions
in respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Agreement. None of the Holders
of any Class of Certificates, the Trust Administrator, the Trustee or the
Servicer shall in any way be responsible or liable to the Holders of any other
Class of Certificates in respect of amounts properly previously distributed on
the Certificates.

               (e) Except as otherwise provided in Section 9.01, whenever the
Trust Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Trust
Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:

               (i) the Trust Administrator expects that the final distribution
        with respect to such Class of Certificates will be made on such
        Distribution Date but only upon presentation and surrender of such
        Certificates at the office of the Trust Administrator therein specified,
        and

               (ii) no interest shall accrue on such Certificates from and after
        the end of the related Interest Accrual Period.

               Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trust Administrator and credited to the account
of the appropriate non-tendering Holder or Holders. If any Certificates as to
which notice has been given pursuant to this Section 4.01(e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trust Administrator shall mail a second notice to the remaining
non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trust Administrator shall, directly or
through an agent, mail a final notice to the remaining non-tendering
Certificateholders concerning surrender of their Certificates but shall continue
to hold any remaining funds for the benefit of non-tendering Certificateholders.
The costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in


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such trust fund. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Trust Administrator shall
pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trust Administrator as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 4.01(e). Any such amounts held in trust by the Trust
Administrator shall be held in an Eligible Account and the Trust Administrator
may direct any depository institution maintaining such account to invest the
funds in one or more Permitted Investments. All income and gain realized from
the investment of funds deposited in such accounts held in trust by the Trust
Administrator shall be for the benefit of the Trust Administrator; provided,
however, that the Trust Administrator shall deposit in such account the amount
of any loss of principal incurred in respect of any such Permitted Investment
made with funds in such accounts immediately upon the realization of such loss.

               (f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest be reduced more than once
in respect of any particular amount both (a) allocated to such REMIC I Regular
Interest in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed on such REMIC I Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 4.01.

               SECTION 4.02.          Statements to Certificateholders.

               On each Distribution Date, the Trust Administrator shall prepare
and make available on its website at www.sf.citidirect.com for access by each
Holder of the Regular Certificates, a statement as to the distributions made on
such Distribution Date setting forth:

               (i) the amount of the distribution made on such Distribution Date
        to the Holders of the Certificates of each Class allocable to principal,
        and the amount of the distribution made on such Distribution Date to the
        Holders of the Class P Certificates allocable to Prepayment Charges;

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

               (iii) the aggregate Servicing Fee received by the Servicer during
        the related Due Period and such other customary information as the Trust
        Administrator deems necessary or desirable, or which a Certificateholder
        reasonably requests, to enable Certificateholders to prepare their tax
        returns;

               (iv) the aggregate amount of Advances for such Distribution Date;



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               (v) the aggregate Stated Principal Balance of the Mortgage Loans
        and any REO Properties as of the close of business on such Distribution
        Date;

               (vi) the number, aggregate principal balance, weighted average
        remaining term to maturity and weighted average Mortgage Rate of the
        Mortgage Loans as of the related Due Date;

               (vii) the number and aggregate unpaid principal balance of
        Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
        days, (c) delinquent 90 or more days, in each case, as of the last day
        of the preceding calendar month, (d) as to which foreclosure proceedings
        have been commenced and (e) with respect to which the related Mortgagor
        has filed for protection under applicable bankruptcy laws, with respect
        to whom bankruptcy proceedings are pending or with respect to whom
        bankruptcy protection is in force;

               (viii) with respect to any Mortgage Loan that became an REO
        Property during the preceding calendar month, the loan number of such
        Mortgage Loan, the unpaid principal balance and the Stated Principal
        Balance of such Mortgage Loan as of the date it became an REO Property;

               (ix) the book value of any REO Property as of the close of
        business on the last Business Day of the calendar month preceding the
        Distribution Date;

               (x) the aggregate amount of Principal Prepayments made during the
        related Prepayment Period;

               (xi) the aggregate amount of Realized Losses incurred during the
        related Prepayment Period (or, in the case of Bankruptcy Losses
        allocable to interest, during the related Due Period), separately
        identifying whether such Realized Losses constituted Bankruptcy Losses
        and the aggregate amount of Realized Losses incurred since the Closing
        Date;

               (xii) the aggregate amount of Extraordinary Trust Fund Expenses
        withdrawn from the Collection Account or the Distribution Account for
        such Distribution Date;

               (xiii) the aggregate Certificate Principal Balance and Notional
        Amount, as applicable, of each Class of Certificates, after giving
        effect to the distributions, and allocations of Realized Losses, made on
        such Distribution Date, separately identifying any reduction thereof due
        to allocations of Realized Losses;

               (xiv) the Certificate Factor for each such Class of Certificates
        applicable to such Distribution Date;

               (xv) the Interest Distribution Amount in respect of the Class A
        Certificates, the Mezzanine Certificates and the Class CE Certificates
        for such Distribution Date and the Interest Carry Forward Amount, if
        any, with respect to the Class A Certificates and the Mezzanine
        Certificates on such Distribution Date, and in the case of the Class A
        Certificates,


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<PAGE>



        the Mezzanine Certificates and the Class CE Certificates, separately
        identifying any reduction thereof due to allocations of Realized Losses,
        Prepayment Interest Shortfalls and Relief Act Interest Shortfalls;

               (xvi) the aggregate amount of any Prepayment Interest Shortfall
        for such Distribution Date, to the extent not covered by payments by the
        Servicer pursuant to Section 3.24;

               (xvii) the aggregate amount of Relief Act Interest Shortfalls for
        such Distribution Date;

               (xviii) the Required Overcollateralized Amount and the Credit
        Enhancement Percentage for such Distribution Date;

               (xix) the Overcollateralization Increase Amount, if any, for such
        Distribution Date;

               (xx) the Overcollateralization Reduction Amount, if any, for such
        Distribution Date;

               (xxi) the respective Pass-Through Rates applicable to the Class A
        Certificates, the Mezzanine Certificates and the Class CE Certificates
        for such Distribution Date and the Pass-Through Rate applicable to the
        Class A Certificates and the Mezzanine Certificates for the immediately
        succeeding Distribution Date;

               (xxii) the Loss Severity Percentage with respect to each Mortgage
        Loan;
               (xxiii) the Aggregate Loss Severity Percentage;

               (xxiv) the Net WAC Rate Carryover Amount for the Class A
        Certificates and the Mezzanine Certificates, if any, for such
        Distribution Date and the amount remaining unpaid after reimbursements
        therefor on such Distribution Date.

               In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

               Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to each Person who at any time
during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trust Administrator
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trust Administrator pursuant to
any requirements of the Code as from time to time are in force.

               On each Distribution Date, the Trust Administrator shall make
available on its website at www.sf.citidirect.com for access by the Depositor,
the Trustee, each Holder of a Class R Certificate and to the Servicer, the
reports available to the Regular Certificateholders on such


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<PAGE>



Distribution Date and a statement setting forth the amounts, if any, actually
distributed with respect to the Class R Certificates, respectively, on such
Distribution Date.

               Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to each Person who at any time
during the calendar year was a Holder of a Class R Certificate a statement
setting forth the amount, if any, actually distributed with respect to the Class
R Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.

               The Trust Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trust Administrator's duties are limited to
the extent that the Trust Administrator receives timely reports as required from
the Servicer.

               On each Distribution Date the Trust Administrator shall provide
Bloomberg Financial Markets, L.P. (" Bloomberg") CUSIP level factors for each
class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Trust Administrator and Bloomberg.

               SECTION 4.03.          Remittance Reports; Advances.

               (a) On the Business Day following each Determination Date, the
Servicer shall deliver to the Trust Administrator by telecopy (or by such other
means as the Servicer, the Trust Administrator or the Trustee, as the case may
be, may agree from time to time) a Remittance Report with respect to the related
Distribution Date. On the same date, the Servicer shall forward to the Trust
Administrator by overnight mail a computer readable magnetic tape or
electronically transmit (in a format acceptable to the Trust Administrator) on
the day thereafter, a data file containing the information set forth in such
Remittance Report with respect to the related Distribution Date. Such Remittance
Report will include (i) the amount of Advances to be made by the Servicer in
respect of the related Distribution Date, the aggregate amount of Advances
outstanding after giving effect to such Advances, and the aggregate amount of
Nonrecoverable Advances in respect of such Distribution Date and (ii) such other
information with respect to the Mortgage Loans as the Trust Administrator may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trust Administrator shall
not be responsible (except with regard to any information regarding the
Prepayment Charges to the extent set forth below) to recompute, recalculate or
verify any information provided to it by the Servicer. Notwithstanding the
foregoing, in connection with any Principal Prepayment on any Mortgage Loan
listed on Schedule 2 hereto, the Trust Administrator shall verify that the
related Prepayment Charge was delivered to the Trust Administrator for deposit
in the Distribution Account in the amount set forth on such Schedule 2 or that
such Prepayment Charge was waived in accordance with the terms hereof.



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<PAGE>



               (b) With respect to any Mortgage Loan on which a Monthly Payment
was due during the related Due Period and delinquent on the related
Determination Date, the amount of the Servicer's Advance will be equal to the
amount of the Monthly Payment due for such Due Period, net of the Servicing Fee.
The Servicer shall not be obligated to make any Advance with respect to REO
Properties.

               By 3:00 p.m. New York time on the Servicer Remittance Date, the
Servicer shall remit in immediately available funds to the Trust Administrator
for deposit in the Distribution Account an amount equal to the aggregate amount
of Advances, if any, to be made in respect of the Mortgage Loans for the related
Distribution 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 4.03, used by the Servicer in discharge of any such Advance) or
(iii) in the form of any combination of (i) and (ii) aggregating the total
amount of Advances to be made by the Servicer with respect to the Mortgage
Loans. 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 Servicer Remittance
Date to the extent that the Available Distribution Amount for the related
Distribution Date (determined without regard to Advances to be made on the
Servicer Remittance Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 on
such Distribution Date if such amounts held for future distributions had not
been so used to make Advances. The Trust Administrator will provide notice to
the Trustee and the Servicer by telecopy by the close of business on the
Business Day prior to the Distribution Date in the event that the amount
remitted by the Servicer to the Trust Administrator on such date is less than
the Advances required to be made by the Servicer for the related Distribution
Date.

               (c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of (i) the Mortgaged Property becoming an REO Property and (ii) a Final
Recovery Determination in connection therewith or the removal thereof from the
Trust Fund pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section.

               (d) Notwithstanding anything herein to the contrary, no Advance
or Servicing Advance shall be required to be made hereunder by the Servicer if
such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance or Nonrecoverable Servicing Advance, respectively. The determination by
the Servicer that it has made a Nonrecoverable Advance or a Nonrecoverable
Servicing Advance or that any proposed Advance or Servicing Advance, if made,
would constitute a Nonrecoverable Advance or Nonrecoverable Servicing Advance,
respectively, shall be evidenced by a certification of a Servicing Officer
delivered to the Depositor, the Trust Administrator and the Trustee.

               SECTION 4.04.          Allocation of Realized Losses.

               (a)     Prior to each Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in


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<PAGE>



connection with any Final Recovery Determinations made during the related
Prepayment Period; (ii) whether and the extent to which such Realized Losses
constituted Bankruptcy Losses; and (iii) the respective portions of such
Realized Losses allocable to interest and allocable to principal. Prior to each
Determination Date, the Servicer shall also determine as to each Mortgage Loan:
(i) the total amount of Realized Losses, if any, incurred in connection with any
Deficient Valuations made during the related Prepayment Period; and (ii) the
total amount of Realized Losses, if any, incurred in connection with Debt
Service Reductions in respect of Monthly Payments due during the related Due
Period. The information described in the two preceding sentences that is to be
supplied by the Servicer shall be evidenced by an Officers' Certificate
delivered to the Trust Administrator and the Trustee by the Servicer prior to
the Determination Date immediately following the end of (i) in the case of
Bankruptcy Losses allocable to interest, the Due Period during which any such
Realized Loss was incurred, and (ii) in the case of all other Realized Losses,
the Prepayment Period during which any such Realized Loss was incurred.

               (b) All Realized Losses on the Mortgage Loans shall be allocated
by the Trust Administrator on each Distribution Date as follows: first, to Net
Monthly Excess Cashflow; second, to the Class CE Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-4 Certificates until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; fifth, to the Class M-2
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; and sixth, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.

               All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All references
above to the Certificate Principal Balance of any Class of Certificates shall be
to the Certificate Principal Balance of such Class immediately prior to the
relevant Distribution Date, before reduction thereof by any Realized Losses, in
each case to be allocated to such Class of Certificates, on such Distribution
Date.

               Any allocation of Realized Losses to a Mezzanine Certificate on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated and any allocation of Realized Losses
to a Class CE Certificate shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(a)(4)(xiv). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

               As used herein, an allocation of a Realized Loss on a "PRO RATA
basis" among two or more specified Classes of Certificates means an allocation
on a pro rata basis, among the various Classes so specified, to each such Class
of Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.

               (c)     All Realized Losses on the Mortgage Loans shall be
allocated by the Trust


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<PAGE>



Administrator on each Distribution Date to the following REMIC I Regular
Interests in the specified percentages, as follows: first, to Uncertificated
Interest payable to the REMIC I Regular Interest I-LTAA and REMIC I Regular
Interest I-LTZZ up to an aggregate amount equal to the REMIC I Interest Loss
Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Balances of the REMIC I Regular Interest I-LTAA and REMIC I Regular Interest
I-LTZZ up to an aggregate amount equal to the REMIC I Principal Loss Allocation
Amount, 98% and 2%, respectively; third, to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM4 and REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LTM4 has been reduced to zero; fourth to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM3 and REMIC I Regular Interest I-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM3 has been reduced to zero; fifth to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM2 and REMIC I Regular
Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LTM2 has been reduced to zero; and sixth to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM1 and REMIC I Regular Interest I-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM1 has been reduced to zero.

               SECTION 4.05.          Compliance with Withholding Requirements

               Notwithstanding any other provision of this Agreement, the Trust
Administrator shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trust Administrator reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding. In the
event the Trust Administrator does withhold any amount from interest or original
issue discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trust Administrator shall indicate the
amount withheld to such Certificateholders.

               SECTION 4.06.        Exchange Commission; Additional Information.

               Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. After
December 31, 2002, but prior to January 30, 2003, the Trust Administrator shall
file a Form 15 Suspension Notification with respect to the Trust Fund, if
applicable. After December 31, 2002, but prior to March 30, 2003, the Trust
Administrator shall file a Form 10-K, substantially in the form attached hereto
as Exhibit H, with respect to the Trust Fund. The Depositor hereby grants to the
Trust Administrator a limited power of attorney to execute and file each such
document on behalf of the Depositor. Such power of attorney shall continue until
the earlier of (i) receipt by the Trust Administrator from the Depositor of
written termination of such power of attorney and (ii) the termination of the
Trust Fund. Upon request, the Trust Administrator shall deliver to the Depositor
a copy of any Form 8-K or Form 10-K filed pursuant to this Section 4.06.




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                                    ARTICLE V

                                THE CERTIFICATES

               SECTION 5.01.          The Certificates.

               (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

               The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-7. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

               Upon original issue, the Certificates shall be executed by the
Trustee, or by the Trust Administrator on behalf of the Trustee, and
authenticated and delivered by the Trustee or the Trust Administrator to or upon
the order of the Depositor. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee or the Trust Administrator by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee or the Trust
Administrator shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee or the Trust Administrator
by manual signature, and such certificate of authentication shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.

               (b) The Class A Certificates and the Mezzanine Certificates shall
initially be issued as one or more Certificates held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository and
registered in the name of the Depository or its nominee and, except as provided
below, registration of such Certificates may not be transferred by the Trust
Administrator except to another Depository that agrees to hold such Certificates
for the respective Certificate Owners with Ownership Interests therein. The
Certificate Owners shall hold their respective Ownership Interests in and to
such Certificates through the book-entry facilities of the Depository and,
except as provided below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the 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 the Ownership
Interests in the 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. The Trust Administrator is hereby initially
appointed as the Book-Entry Custodian and hereby agrees to act as such in
accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act


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<PAGE>



as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Servicer, the Trustee and, if the Trust
Administrator is not the Book-Entry Custodian, the Trust Administrator, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trust Administrator resigns or is removed in accordance with
the terms hereof, the Trustee, the successor Trust Administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor's duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.

               The Trust Administrator, the Trustee, the Servicer and the
Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trust Administrator may establish a
reasonable record date in connection with solicitations of consents from or
voting by Certificateholders and shall give notice to the Depository of such
record date.

               If (i)(A) the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trust
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Default, Certificate Owners representing in the aggregate not less than 51% of
the Ownership Interests of the Book-Entry Certificates advise the Trust
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trust Administrator shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trust Administrator of the Book-Entry Certificates
by the Book-Entry Custodian or the Depository, as applicable, accompanied by
registration instructions from the Depository for registration of transfer, the
Trust Administrator shall cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $100,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $100,000 immediately prior to the issuance of
a Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such Book-Entry Certificate. None of the Depositor, the
Servicer, the Trust Administrator or the Trustee shall be liable for any delay
in the delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by


                                      -85-

<PAGE>



the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder.

               SECTION 5.02.       Registration of Transfer and Exchange of
                                   Certificates.

               (a) The Trust Administrator shall cause to be kept at one of the
offices or agencies to be appointed by the Trust Administrator in accordance
with the provisions of Section 8.11, a Certificate Register for the Certificates
in which, subject to such reasonable regulations as it may prescribe, the Trust
Administrator shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.

               (b) No transfer of any Class CE Certificate, Class P Certificate
or Class R Certificate (the "Private Certificates") shall be made unless that
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and effective registration
or qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Private Certificate is to be made without
registration or qualification (other than in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor), the Trust Administrator shall require receipt of: (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee, substantially
in the forms attached hereto as Exhibit F-1; and (ii) in all other cases, an
Opinion of Counsel satisfactory to it that such transfer may be made without
such registration or qualification (which Opinion of Counsel shall not be an
expense of the Trust Fund or of the Depositor, the Trust Administrator, the
Trustee, the Servicer in its capacity as such or any Sub-Servicer), together
with copies of the written certification(s) of the Certificateholder desiring to
effect the transfer and/or such Certificateholder's prospective transferee upon
which such Opinion of Counsel is based, if any. None of the Depositor, the Trust
Administrator or the Trustee is obligated to register or qualify any such
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of any such Certificate shall, and does hereby
agree to, indemnify the Trust Administrator, 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.

               (c) No transfer of a Private Certificate or any interest therein
shall be made to any Plan subject to ERISA or Section 4975 of the Code, any
Person acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C. F. R. ss. 2510.3-101
("Plan Assets") unless the Depositor, the Trust Administrator, the Trustee and
the Servicer are provided with an Opinion of Counsel which establishes to the
satisfaction of the Depositor, the Trust Administrator, the Trustee and the
Servicer that the purchase of such Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Depositor, the Servicer, the
Trust Administrator, the Trustee or the Trust Fund to any obligation or
liability (including obligations or liabilities under


                                      -86-

<PAGE>



ERISA or Section 4975 of the Code) in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Depositor,
the Servicer, the Trust Administrator, the Trustee or the Trust Fund. Any
prospective Transferee of such Certificates not providing the above Opinion of
Counsel must provide a certification in the form of Exhibit G to this Agreement
(or other form acceptable to the Depositor, the Trust Administrator, the Trustee
and the Servicer), which the Trust Administrator may rely upon without further
inquiry or investigation. Neither an Opinion of Counsel nor any certification
will be required in connection with the initial transfer of any such Certificate
by the Depositor to an affiliate of the Depositor (in which case, the Depositor
or any affiliate thereof shall have deemed to have represented that such
affiliate is not a Plan or a Person investing Plan Assets) and the Trust
Administrator shall be entitled to conclusively rely upon a representation
(which, upon the request of the Trust Administrator, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor.

               Each beneficial owner of a Mezzanine Certificates or any interest
therein shall be deemed to have represented, by virtue of its acquisition or
holding of that certificate or interest therein, that either (i) it is not a
Plan investor, (ii) it has acquired and is holding such Mezzanine Certificates
in reliance on the Underwriters' Exemption, and that it understands that there
are certain conditions to the availability of the Underwriters' Exemption,
including that the Mezzanine Certificates must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by Fitch, Inc., S&P or
Moody's or (iii) (1) it is an insurance company, (2) the source of funds used to
acquire or hold the certificate or interest therein is an "insurance company
general account," as such term is defined in PTCE 95-60, and (3) the conditions
in Sections I and III of PTCE 95-60 have been satisfied.

               If any Private Certificate or any interest therein is acquired or
held in violation of the provisions of the preceding paragraph, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate retroactive to the date of transfer to the purported beneficial
owner. Any purported beneficial owner whose acquisition or holding of any such
Certificate or interest therein was effected in violation of the provisions of
the preceding paragraph shall indemnify and hold harmless the Depositor, the
Servicer, the Trust Administrator, the Trustee and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by those
parties as a result of that acquisition or holding.

               (d) (i) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trust Administrator
or its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale under
clause (iii)(B) below and to execute all instruments of Transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Class R Certificate are expressly
subject to the following provisions:

                       (A) Each Person holding or acquiring any Ownership
               Interest in a Class R Certificate shall be a Permitted Transferee
               and shall promptly notify the Trust Administrator of any change
               or impending change in its status as a Permitted Transferee.


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<PAGE>



                       (B) In connection with any proposed Transfer of any
               Ownership Interest in a Class R Certificate, the Trust
               Administrator shall require delivery to it, and shall not
               register the Transfer of any Class R Certificate until its
               receipt of, an affidavit and agreement (a "Transfer Affidavit and
               Agreement," in the form attached hereto as Exhibit F-2) from the
               proposed Transferee, in form and substance satisfactory to the
               Trust Administrator, representing and warranting, among other
               things, that such Transferee is a Permitted Transferee, that it
               is not acquiring its Ownership Interest in the Class R
               Certificate that is the subject of the proposed Transfer as a
               nominee, trustee or agent for any Person that is not a Permitted
               Transferee, that for so long as it retains its Ownership Interest
               in a Class R Certificate, it will endeavor to remain a Permitted
               Transferee, and that it has reviewed the provisions of this
               Section 5.02(d) and agrees to be bound by them.

                       (C) Notwithstanding the delivery of a Transfer Affidavit
               and Agreement by a proposed Transferee under clause (B) above, if
               a Responsible Officer of the Trust Administrator who is assigned
               to this transaction has actual knowledge that the proposed
               Transferee is not a Permitted Transferee, no Transfer of an
               Ownership Interest in a Class R Certificate to such proposed
               Transferee shall be effected.

                       (D) Each Person holding or acquiring any Ownership
               Interest in a Class R Certificate shall agree (x) to require a
               Transfer Affidavit and Agreement in the form attached hereto as
               Exhibit F-2 from any other Person to whom such Person attempts to
               transfer its Ownership Interest in a Class R Certificate and (y)
               not to transfer its Ownership Interest unless it provides a
               Transferor Affidavit (in the form attached hereto as Exhibit F-2)
               to the Trust Administrator stating that, among other things, it
               has no actual knowledge that such other Person is not a Permitted
               Transferee.

                       (E) Each Person holding or acquiring an Ownership
               Interest in a Class R Certificate, by purchasing an Ownership
               Interest in such Certificate, agrees to give the Trust
               Administrator written notice that it is a "pass-through interest
               holder" within the meaning of temporary Treasury regulation
               Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
               Ownership Interest in a Class R Certificate, if it is, or is
               holding an Ownership Interest in a Class R Certificate on behalf
               of, a "pass-through interest holder."

               (ii) The Trust Administrator will register the Transfer of any
        Class R Certificate only if it shall have received the Transfer
        Affidavit and Agreement and all of such other documents as shall have
        been reasonably required by the Trust Administrator as a condition to
        such registration. In addition, no Transfer of a Class R Certificate
        shall be made unless the Trust Administrator shall have received a
        representation letter from the Transferee of such Certificate to the
        effect that such Transferee is a Permitted Transferee.

               (iii) (A) If any purported Transferee shall become a Holder of a
        Class R Certificate in violation of the provisions of this Section
        5.02(d), then the last preceding Permitted Transferee shall be restored,
        to the extent permitted by law, to all rights as holder


                                      -88-

<PAGE>



        thereof retroactive to the date of registration of such Transfer of such
        Class R Certificate. The Trust Administrator shall be under no liability
        to any Person for any registration of Transfer of a Class R Certificate
        that is in fact not permitted by this Section 5.02(d) or for making any
        payments due on such Certificate to the holder thereof or for taking any
        other action with respect to such holder under the provisions of this
        Agreement.

                       (B) If any purported Transferee shall become a holder of
               a Class R Certificate in violation of the restrictions in this
               Section 5.02(d) and to the extent that the retroactive
               restoration of the rights of the holder of such Class R
               Certificate as described in clause (iii)(A) above shall be
               invalid, illegal or unenforceable, then the Trust Administrator
               shall have the right, without notice to the holder or any prior
               holder of such Class R Certificate, to sell such Class R
               Certificate to a purchaser selected by the Trust Administrator on
               such terms as the Trust Administrator may choose. Such purported
               Transferee shall promptly endorse and deliver each Class R
               Certificate in accordance with the instructions of the Trust
               Administrator. Such purchaser may be the Trust Administrator
               itself or any Affiliate of the Trust Administrator. The proceeds
               of such sale, net of the commissions (which may include
               commissions payable to the Trust Administrator or its
               Affiliates), expenses and taxes due, if any, will be remitted by
               the Trust Administrator to such purported Transferee. The terms
               and conditions of any sale under this clause (iii)(B) shall be
               determined in the sole discretion of the Trust Administrator, and
               the Trust Administrator shall not be liable to any Person having
               an Ownership Interest in a Class R Certificate as a result of its
               exercise of such discretion.

               (iv) The Trust Administrator shall make available to the Internal
        Revenue Service and those Persons specified by the REMIC Provisions all
        information necessary to compute any tax imposed (A) as a result of the
        Transfer of an Ownership Interest in a Class R Certificate to any Person
        who is a Disqualified Organization, including the information described
        in Treasury regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with
        respect to the "excess inclusions" of such Class R Certificate and (B)
        as a result of any regulated investment company, real estate investment
        trust, common trust fund, partnership, trust, estate or organization
        described in Section 1381 of the Code that holds an Ownership Interest
        in a Class R Certificate having as among its record holders at any time
        any Person which is a Disqualified Organization. Reasonable compensation
        for providing such information may be accepted by the Trust
        Administrator.

               (v) The provisions of this Section 5.02(d) set forth prior to
        this subsection (v) may be modified, added to or eliminated, provided
        that there shall have been delivered to the Trust Administrator at the
        expense of the party seeking to modify, add to or eliminate any such
        provision the following:

                       (A) written notification from each Rating Agency to the
               effect that the modification, addition to or elimination of such
               provisions will not cause such Rating Agency to downgrade its
               then-current ratings of any Class of Certificates; and

                       (B)    an Opinion of Counsel, in form and substance
               satisfactory to the Trust


                                      -89-

<PAGE>



               Administrator, to the effect that such modification of, addition
               to or elimination of such provisions will not cause any Trust
               REMIC to cease to qualify as a REMIC and will not cause any Trust
               REMIC to be subject to an entity-level tax caused by the Transfer
               of any Class R Certificate to a Person that is not a Permitted
               Transferee or a Person other than the prospective transferee to
               be subject to a REMIC-tax caused by the Transfer of a Class R
               Certificate to a Person that is not a Permitted Transferee.

               (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the Trust
Administrator maintained for such purpose pursuant to Section 8.11, the Trustee,
or the Trust Administrator on behalf of the Trustee shall execute, and the
Trustee or the Trust Administrator shall authenticate and deliver, in the name
of the designated Transferee or Transferees, one or more new Certificates of the
same Class of a like aggregate Percentage Interest.

               (f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Trust Administrator maintained for
such purpose pursuant to Section 8.11. Whenever any Certificates are so
surrendered for exchange, the Trustee, or the Trust Administrator on behalf of
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 transfer or exchange shall (if so required by the
Trust Administrator) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trust Administrator duly
executed by, the Holder thereof or his attorney duly authorized in writing.

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

               (h) All Certificates surrendered for transfer and exchange shall
be canceled and destroyed by the Trust Administrator in accordance with its
customary procedures.

               SECTION 5.03.  Mutilated, Destroyed, Lost or Stolen Certificates.

               If (i) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee and the Trust Administrator such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trust Administrator or the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee, or the Trust
Administrator on behalf of the Trustee shall execute, and the Trustee or the
Trust Administrator shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trust Administrator 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


                                      -90-

<PAGE>



fees and expenses of the Trustee and the Trust Administrator) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
REMIC created hereunder, 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 Depositor, the Servicer, the Trust Administrator, the Trustee
and any agent of any of them may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.01 and for all other purposes whatsoever,
and none of the Depositor, the Servicer, the Trust Administrator, the Trustee or
any agent of any of them shall be affected by notice to the contrary.

               SECTION 5.05.          Certain Available Information.

               On or prior to the date of the first sale of any Private
Certificate to an Independent third party, the Depositor shall provide to the
Trust Administrator ten copies of any private placement memorandum or other
disclosure document used by the Depositor in connection with the offer and sale
of such Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trust Administrator, the Depositor promptly shall
inform the Trust Administrator of such event and shall deliver to the Trust
Administrator ten copies of the private placement memorandum or disclosure
document, as revised, amended or supplemented. The Trust Administrator shall
maintain at its Corporate Trust Office and shall make available free of charge
during normal business hours for review by any Holder of a Certificate or any
Person identified to the Trust Administrator as a prospective transferee of a
Certificate, originals or copies of the following items: (i) in the case of a
Holder or prospective transferee of a Private Certificate, the related private
placement memorandum or other disclosure document relating to such Class of
Certificates, in the form most recently provided to the Trust Administrator; and
(ii) in all cases, (A) this Agreement and any amendments hereof entered into
pursuant to Section 11.01, (B) all monthly statements required to be delivered
to Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 10.01(h), (D) any and all Officers' Certificates
delivered to the Trust Administrator by the Servicer since the Closing Date to
evidence the Servicer's determination that any Advance or Servicing Advance was,
or if made, would be a Nonrecoverable Advance or Nonrecoverable Servicing
Advance, respectively, and (E) any and all Officers' Certificates delivered to
the Trust Administrator by the Servicer since the Closing Date pursuant to
Section 4.04(a). Copies and mailing of any and all of the foregoing items will
be available from the Trust Administrator upon request at the expense of the
Person requesting the same.




                                      -91-

<PAGE>



                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

               SECTION 6.01.       Liability of the Depositor and the Servicer.

               The Depositor and the Servicer each shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement upon them in their respective capacities as Depositor and Servicer and
undertaken hereunder by the Depositor and the Servicer herein.

               SECTION 6.02.       Merger or Consolidation of the Depositor or
                                   the Servicer.

               Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Servicer will keep in full effect its existence, rights and franchises as a
limited partnership under the laws of the jurisdiction of its formation. The
Depositor and the Servicer each will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

               The Depositor or the Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case 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 be qualified to service
mortgage loans on behalf of Fannie Mae or Freddie Mac; and provided further that
the Rating Agencies' ratings of the Class A Certificates and the Mezzanine
Certificates in effect immediately prior to such merger or consolidation will
not be qualified, reduced or withdrawn as a result thereof (as evidenced by a
letter to such effect from the Rating Agencies).

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

               None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or 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 warranties, representations or covenants made herein, or against any
specific liability imposed on the Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Servicer and
any director, officer,


                                      -92-

<PAGE>



employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind which, prima facie, is 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 or the Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
relating 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 any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. Neither the Depositor nor the Servicer shall be under any obligation
to appear in, prosecute or defend any legal action unless such action is related
to its respective duties under this Agreement and, in its good faith reasonable
opinion, does not 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 which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, unless the Depositor or the
Servicer acts without the consent of Holders of Certificates entitled to at
least 51% of the Voting Rights, the legal expenses and costs of such action and
any liability resulting therefrom (except any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder) shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor and the Servicer shall be entitled to be
reimbursed therefor from the Collection Account as and to the extent provided in
Section 3.11, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the Collection Account.

               SECTION 6.04.          Limitation on Resignation of the Servicer.

               The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect obtained at the expense of the Servicer
and delivered to the Trustee and the Trust Administrator. No resignation of the
Servicer shall become effective until the Trust Administrator, the Trustee or a
successor servicer shall have assumed the Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.

               Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit the Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Servicer hereunder; provided, however,
that as provided in Section 3.02 hereof, no Sub-Servicer shall be a third-party
beneficiary hereunder and the parties hereto shall not be required to recognize
any Subservicer as an indemnitee under this Agreement.

               The Trust Administrator, the Trustee and the Depositor hereby
specifically (i) consent


                                      -93-

<PAGE>



to the pledge and assignment by the Servicer of all of the Servicer's right,
title and interest in, to and under this Agreement to the Servicing Rights
Pledgee, for the benefit of certain lenders and (ii) provided that no Servicer
Event of Default exists, agree that upon delivery to the Trust Administrator by
the Servicing Rights Pledgee of a letter signed by the Servicer whereunder the
Servicer shall resign as Servicer under this Agreement, the Trust Administrator
shall appoint the Servicing Rights Pledgee or its designee as successor
Servicer, provided that at the time of such appointment, the Servicing Rights
Pledgee or such designee meets the requirements of a successor Servicer pursuant
to Section 7.02(a) hereof and agrees to be subject to the terms of this
Agreement. If, pursuant to any provision hereof, the duties of the Servicer are
transferred to a successor servicer, the entire amount of the Servicing Fee and
other compensation payable to the Servicer pursuant hereto shall thereafter be
payable to such successor servicer.

               SECTION 6.05. Rights of the Depositor in Respect of the Servicer.

               The Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor, the Trustee and the
Trust Administrator, upon reasonable notice, during normal business hours,
access to all records maintained by the Servicer (and any such Sub-Servicer) in
respect of the Servicer's rights and obligations hereunder and access to
officers of the Servicer (and those of any such Sub-Servicer) responsible for
such obligations. Upon request, the Servicer shall furnish to the Depositor, the
Trustee and the Trust Administrator its (and any such Sub-Servicer's) most
recent financial statements and such other information relating to the
Servicer's capacity to perform its obligations under this Agreement as it
possesses (and that any such Sub- Servicer possesses). To the extent such
information is not otherwise available to the public, the Depositor, the Trustee
and the Trust Administrator shall not disseminate any information obtained
pursuant to the preceding two sentences without the Servicer's written consent,
except as required pursuant to this Agreement or to the extent that it is
appropriate to do so (i) in working with legal counsel, auditors, taxing
authorities or other governmental agencies or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor and the Trustee,
the Trust Administrator or the Trust Fund, and in any case, the Depositor, the
Trustee or the Trust Administrator as the case may be, shall use its best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the obligations
of the Servicer under this Agreement and may, but is not obligated to, perform,
or cause a designee to perform, any defaulted obligation of the Servicer under
this Agreement or exercise the rights of the Servicer under this Agreement;
provided that the Servicer shall not be relieved of any of its obligations under
this Agreement by virtue of such performance by the Depositor or its designee.
The Depositor shall not have any responsibility or liability for any action or
failure to act by the Servicer and is not obligated to supervise the performance
of the Servicer under this Agreement or otherwise.




                                      -94-

<PAGE>



                                   ARTICLE VII

                                     DEFAULT

               SECTION 7.01.          Servicer Events of Default.

               (a) "Servicer Event of Default," wherever used herein, means any
one of the following events:

               (i) any failure by the Servicer to remit to the Trust
        Administrator for distribution to the Certificateholders any payment
        (other than an Advance required to be made from its own funds on any
        Servicer Remittance Date pursuant to Section 4.03) required to be made
        under the terms of the Certificates and 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, the Trustee or the
        Trust Administrator (in which case notice shall be provided by
        telecopy), or to the Servicer, the Depositor, the Trustee and the Trust
        Administrator by the Holders of Certificates entitled to at least 25% of
        the Voting Rights; or

               (ii) any 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 contained in this Agreement, or the breach
        by the Servicer of any representation and warranty contained in Section
        2.05, which continues unremedied for a period of 30 days (or if such
        failure or breach cannot be remedied within 30 days, then such remedy
        shall have been commenced within 30 days and diligently pursued
        thereafter; provided, however, that in no event shall such failure or
        breach be allowed to exist for a period of greater than 90 days) 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, the Trustee, the Trust Administrator or to the
        Servicer, the Depositor, the Trustee and the Trust Administrator by the
        Holders of Certificates entitled to at least 25% of the Voting Rights
        and (ii) actual knowledge of such failure by a Servicing Officer; or

               (iii) a decree or order of a court or agency or supervisory
        authority having jurisdiction in the premises in an involuntary case
        under any present or future federal or state bankruptcy, insolvency or
        similar law or the appointment of a conservator or receiver or
        liquidator in any insolvency, readjustment of debt, marshalling of
        assets and liabilities or similar proceeding, 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 90 days; or

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

               (v) the Servicer shall admit in writing its inability to pay its
        debts generally as


                                      -95-

<PAGE>



        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

               (vi) any failure by the Servicer of the Servicer Termination
        Trigger; or

               (vii) any failure of the Servicer to make any Advance on any
        Servicer Remittance Date required to be made from its own funds pursuant
        to Section 4.03 which continues unremedied until 3:00 p.m. New York time
        on the second Business Day immediately following the Servicer Remittance
        Date.

               If a Servicer Event of Default described in clauses (i) through
(vi) of this Section shall occur, then, and in each and every such case, so long
as such Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor and the Trust Administrator if
given by the Trustee or to the Trustee and the Trust Administrator if given by
the Depositor), terminate all of the rights and obligations of the Servicer in
its capacity as Servicer under this Agreement, to the extent permitted by law,
and in and to the Mortgage Loans and the proceeds thereof. If a Servicer Event
of Default described in clause (vii) hereof shall occur, the Trustee shall, by
notice in writing to the Servicer, the Trust Administrator and the Depositor,
terminate all of the rights and obligations of the Servicer in its capacity as
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Trust Administrator
pursuant to and under this Section, and, without limitation, the Trust
Administrator is hereby authorized and empowered, as attorney-in-fact or
otherwise, to execute and deliver, on behalf of and at the expense of the
Servicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees promptly (and in any event no later than ten Business Days
subsequent to such notice) to provide the Trust Administrator with all documents
and records requested by it to enable it to assume the Servicer's functions
under this Agreement, and to cooperate with the Trust Administrator and the
Trustee in effecting the termination of the Servicer's responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one Business Day to the Trust Administrator for administration by it of all cash
amounts which at the time shall be or should have been credited by the Servicer
to the Collection Account held by or on behalf of the Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of the
Servicer or thereafter be received with respect to the Mortgage Loans or any REO
Property serviced by the Servicer (provided, however, that the Servicer shall
continue to be entitled to receive all amounts accrued or owing to it under this
Agreement on or prior to the date of such termination, whether in respect of
Advances or otherwise, and shall continue to be entitled to the benefits of
Section 6.03, notwithstanding any such termination, with respect to events
occurring prior to such termination). For purposes of this Section 7.01, each of
the Trustee and the Trust Administrator shall not be deemed to have knowledge of
a Servicer Event of Default unless a Responsible Officer of the Trustee or the
Trust Administrator, as


                                      -96-

<PAGE>



applicable, assigned to and working in the Trustee's or the Trust
Administrator's, as the case may be, Corporate Trust Office has actual knowledge
thereof or unless written notice of any event which is in fact such a Servicer
Event of Default is received by the Trustee or the Trust Administrator, as
applicable, and such notice references the Certificates, the Trust Fund or this
Agreement.

               SECTION 7.02. Trust Administrator or Trustee to Act; Appointment
                             of Successor.

               (a)(1) On and after the time the Servicer receives a notice of
termination, the Trust Administrator (and in the event the Trust Administrator
fails in its obligation, the Trustee) shall separately assume and become the
successor in all respects to the Servicer in its capacity as Servicer under this
Agreement and the transactions set forth or provided for herein, and all the
responsibilities, duties and liabilities relating thereto and arising thereafter
shall be assumed by the Trust Administrator or the Trustee, as applicable,
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.05 and the obligation to deposit amounts in respect of losses pursuant to
Section 3.12) by the terms and provisions hereof including, without limitation,
the Servicer's obligations to make Advances pursuant to Section 4.03; provided,
however, that if the Trust Administrator or the Trustee, as applicable, is
prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Trust Administrator or the
Trustee, as applicable, shall not be obligated to make Advances pursuant to
Section 4.03; and provided further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trust
Administrator or the Trustee, as applicable, as successor to the Servicer
hereunder. As compensation therefor, the Trust Administrator or the Trustee, as
applicable, shall be entitled to the Servicing Fee and all funds relating to the
Mortgage Loans to which the Servicer would have been entitled if it had
continued to act hereunder. Notwithstanding the above and subject to Section
7.02(a)(2) below, the Trust Administrator or the Trustee, as applicable, may, if
it shall be unwilling to so act, or shall, if it is unable to so act or if it is
prohibited by law from making advances regarding delinquent mortgage loans or if
the Holders of Certificates entitled to at least 51% of the Voting Rights so
request in writing to the Trust Administrator or Trustee, as applicable,
promptly appoint or petition a court of competent jurisdiction to appoint, an
established mortgage loan servicing institution acceptable to each Rating Agency
without qualification, withdrawal or downgrading of the ratings then assigned to
any of the Certificates and having a net worth of not less than $15,000,000, as
the successor to the Servicer under this Agreement in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer under
this Agreement.

               (2) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Servicer's responsibilities, duties and liabilities hereunder. In connection
with such appointment and assumption described herein, the Trust Administrator
or the Trustee, as applicable, may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
that permitted the Servicer as such hereunder. The Depositor, the Trustee, the
Trust Administrator and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. Pending
appointment of a successor to the Servicer under this Agreement, the Trust
Administrator


                                      -97-

<PAGE>



or the Trustee, as applicable, shall act in such capacity as hereinabove
provided.

               (b) If the Servicer fails to remit to the Trust Administrator for
distribution to the Certificateholders any payment required to be made under the
terms of this Agreement (for purposes of this Section 7.02(b), a "Remittance")
because the Servicer is the subject of a proceeding under the federal Bankruptcy
Code and the making of such Remittance is prohibited by Section 362 of the
federal Bankruptcy Code, the Trust Administrator, upon its appointment as
successor servicer (and in the event the Trust Administrator fails in its
obligation, the Trustee, upon its appointment as successor servicer), or any
other successor servicer appointed pursuant to Section 7.02(a)(1), shall upon
notice of such prohibition, regardless of whether it has received a notice of
termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trust Administrator or the Trustee, as applicable, shall be obligated
to make such advance only if (i) such advance, in the good faith judgment of the
Trust Administrator or the Trustee, as applicable, can reasonably be expected to
be ultimately recoverable from Stayed Funds and (ii) the Trust Administrator or
Trustee, as applicable, is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trust
Administrator or the deposit thereof in the Distribution Account by the
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trust
Administrator or the Trustee, as applicable, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trust
Administrator's or Trustee's, as applicable, rights to recover from the
Servicer's own funds interest on the amount of any such advance. If the Trust
Administrator or the Trustee, as the case may be, at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trust Administrator or the Trustee, as applicable, shall
be entitled to reimburse itself for such advance, without interest, by
withdrawing from the Distribution Account, out of amounts on deposit therein, an
amount equal to the portion of such advance attributable to the Stayed Funds.

               (c) In the event of a Servicer Event of Default, notwithstanding
anything to the contrary above, the Trust Administrator, the Trustee and the
Depositor hereby agree that upon delivery to the Trust Administrator by the
Servicing Rights Pledgee of a letter signed by the Servicer within ten Business
Days of when notification of such event shall have been provided to the Trust
Administrator, whereunder the Servicer shall resign as Servicer under this
Agreement, the Trust Administrator shall appoint the Servicing Rights Pledgee or
its designee as successor Servicer, provided that at the time of such
appointment, the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer set forth above and the Servicing Rights
Pledgee or such designee agrees to be subject to the terms of this Agreement.

               SECTION 7.03.          Notification to Certificateholders.

               (a) Upon any termination of the Servicer pursuant to Section 7.01
above or any appointment of a successor to the Servicer pursuant to Section 7.02
above, the Trust Administrator shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.

               (b) Not later than the later of 60 days after the occurrence of
any event, which


                                      -98-

<PAGE>



constitutes or which, with notice or lapse of time or both, would constitute a
Servicer Event of Default or five days after a Responsible Officer of the
Trustee or the Trust Administrator becomes aware of the occurrence of such an
event, the Trustee or the Trust Administrator shall transmit (or in the case of
the Trustee, the Trustee shall cause the Trust Administrator to transmit) by
mail to all Holders of Certificates notice of each such occurrence, unless such
default or Servicer Event of Default shall have been cured or waived.

               SECTION 7.04.          Waiver of Servicer Events of Default.

               The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause (i)
or (vii) of Section 7.01 may be waived only by all of the Holders of the Regular
Certificates. Upon any such waiver of a default or Servicer Event of Default,
such default or Servicer Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other default or Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.



                                      -99-

<PAGE>



                                  ARTICLE VIII

                        CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

               SECTION 8.01.          Duties of Trustee and Trust Administrator

               Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Servicer Event of Default and after the curing of all Servicer
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. During a
Servicer Event of Default, each of the Trustee and the Trust Administrator shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee or the Trust Administrator
enumerated in this Agreement shall not be construed as a duty.

               Each of the Trustee and the Trust Administrator, upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to it, which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders.

               No provision of this Agreement shall be construed to relieve the
Trustee or the Trust Administrator from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:

               (i) Prior to the occurrence of a Servicer Event of Default, and
        after the curing of all such Servicer Events of Default which may have
        occurred, the duties and obligations of each of the Trustee and the
        Trust Administrator shall be determined solely by the express provisions
        of this Agreement, neither the Trustee nor the Trust Administrator shall
        be liable except for the performance of such duties and obligations as
        are specifically set forth in this Agreement, no implied covenants or
        obligations shall be read into this Agreement against the Trustee or the
        Trust Administrator and, in the absence of bad faith on the part of the
        Trustee or the Trust Administrator, as applicable, the Trustee or the
        Trust Administrator, as the case may be, may conclusively rely, as to
        the truth of the statements and the correctness of the opinions
        expressed therein, upon any certificates or opinions furnished to the
        Trustee or the Trust Administrator, as the case may be, that conform to
        the requirements of this Agreement;

               (ii) Neither the Trustee nor the Trust Administrator shall be
        personally liable for an error of judgment made in good faith by a
        Responsible Officer or Responsible Officers of it unless it shall be
        proved that it was negligent in ascertaining the pertinent facts; and

               (iii) Neither the Trustee nor the Trust Administrator shall be
        personally liable with respect to any action taken, suffered or omitted
        to be taken by it in good faith in accordance


                                      -100-

<PAGE>



        with the direction of the Holders of Certificates entitled to at least
        25% of the Voting Rights relating to the time, method and place of
        conducting any proceeding for any remedy available to it or exercising
        any trust or power conferred upon it under this Agreement.

               SECTION 8.02. Certain Matters Affecting the Trustee and the Trust
                             Administrator.

               (a)     Except as otherwise provided in Section 8.01:

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

                       (ii) Each of the Trustee and the Trust Administrator may
               consult with counsel 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;

                       (iii) Neither the Trustee nor the Trust Administrator
               shall be under any obligation to exercise any of the trusts or
               powers vested in it by this Agreement or to institute, conduct or
               defend any litigation hereunder or in relation hereto at the
               request, order or direction of any of the Certificateholders,
               pursuant to the provisions of this Agreement, unless such
               Certificateholders shall have offered to the Trustee or the Trust
               Administrator, as applicable, reasonable security or indemnity
               against the costs, expenses and liabilities which may be incurred
               therein or thereby; nothing contained herein shall, however,
               relieve the Trustee or the Trust Administrator of the obligation,
               upon the occurrence of a Servicer Event of Default (which has not
               been cured or waived), to exercise such of the rights and powers
               vested in it by this Agreement, and to use the same degree of
               care and skill in their exercise as a prudent person would
               exercise or use under the circumstances in the conduct of such
               person's own affairs;

                       (iv) Neither the Trustee nor the Trust Administrator
               shall be personally liable for any action taken, suffered or
               omitted by it in good faith and believed by it to be authorized
               or within the discretion or rights or powers conferred upon it by
               this Agreement;

                       (v) Prior to the occurrence of a Servicer Event of
               Default hereunder and after the curing of all Servicer Events of
               Default which may have occurred, neither the Trustee nor the
               Trust Administrator shall be bound to make any investigation into
               the facts or matters stated in any resolution, certificate,
               statement, instrument, opinion, report, notice, request, consent,
               order, approval, bond or other paper or document, unless
               requested in writing to do so by the Holders of Certificates
               entitled


                                      -101-

<PAGE>



               to at least 25% of the Voting Rights; provided, however, that if
               the payment within a reasonable time to the Trustee or the Trust
               Administrator, as applicable, of the costs, expenses or
               liabilities likely to be incurred by it in the making of such
               investigation is, in the opinion of the Trustee or the Trust
               Administrator, as applicable, not reasonably assured to the
               Trustee or Trust Administrator, as applicable, by such
               Certificateholders, the Trustee or the Trust Administrator, as
               applicable, may require reasonable indemnity against such
               expense, or liability from such Certificateholders as a condition
               to taking any such action;

                       (vi) Each of the Trustee and the Trust Administrator may
               execute any of the trusts or powers hereunder or perform any
               duties hereunder either directly or by or through agents or
               attorneys; and

                       (vii) Neither the Trustee nor the Trust Administrator
               shall be personally liable for any loss resulting from the
               investment of funds held in the Collection Account at the
               direction of the Servicer pursuant to Section 3.12.

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

               SECTION 8.03. Neither the Trustee nor Trust Administrator Liable
                             for Certificates or Mortgage Loans.

               The recitals contained herein and in the Certificates (other than
the signature of the Trustee or the Trust Administrator, on behalf of the
Trustee, the authentication of the Trustee or the Trust Administrator on the
Certificates, the acknowledgments of the Trustee and the Trust Administrator
contained in Article II and the representations and warranties of the Trustee
and the Trust Administrator in Section 8.12) shall be taken as the statements of
the Depositor and neither the Trustee nor the Trust Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.12) or of the Certificates (other than the signature of the Trustee, or the
Trust Administrator on behalf of the Trustee, and authentication of the Trustee
or the Trust Administrator on the Certificates) or of any Mortgage Loan or
related document. Neither the Trustee nor the Trust Administrator shall be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application 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
Servicer, other than any funds held by or on behalf of the Trustee or the Trust
Administrator in accordance with Section 3.10.

               SECTION 8.04. Trustee and Trust Administrator May Own
                             Certificates.



                                      -102-

<PAGE>



               Each of the Trustee and the Trust Administrator in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee or Trust
Administrator, as applicable.

               SECTION 8.05. Trustee's and Trust Administrator's Fees and
                             Expenses.

               (a) The Trust Administrator shall withdraw from the Distribution
Account on each Distribution Date and pay to itself the related portion of the
Administration Fee and pay to the Trustee the related portion of the
Administration Fee and, to the extent that the funds therein are at anytime
insufficient for such purpose, the Servicer shall pay such fees. Each of the
Trustee and the Trust Administrator and any director, officer, employee or agent
of the Trustee or the Trust Administrator, as applicable, shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense (not
including expenses, disbursements and advances incurred or made by the Trustee
or the Trust Administrator, as applicable, including the compensation and the
expenses and disbursements of its agents and counsel, in the ordinary course of
the Trustee's or Trust Administrator's, as the case may be, performance in
accordance with the provisions of this Agreement) incurred by the Trustee or the
Trust Administrator, as applicable, in connection with any claim or legal action
or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its obligations and duties
under this Agreement, other than any loss, liability or expense (i) resulting
from any breach of the Servicer's obligations in connection with this Agreement
for which the Servicer has performed its obligation to indemnify the Trustee and
the Trust Administrator pursuant to Section 10.03(c) (and in the case of the
Trustee, resulting from any breach of the Trust Administrator's obligations in
connection with this Agreement for which the Trust Administrator has performed
its obligation to indemnify the Trustee pursuant to Section 10.03(b) and in the
case of the Trust Administrator, resulting from any breach of the Trustee's
obligations in connection with this Agreement for which the Trustee has
performed its obligation to indemnify the Trust Administrator pursuant to
Section 10.03(a)), (ii) that constitutes a specific liability of the Trustee or
the Trust Administrator, as applicable, pursuant to Section 10.01(g) or (iii)
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder or in the case of the
Trust Administrator, as a result of a breach of the Trust Administrator's
obligations under Article X hereof. The Servicer agrees to indemnify the Trustee
and the Trust Administrator, from, and hold it harmless against, any loss,
liability or expense arising in respect of any breach by the Servicer of its
obligations in connection with this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee or the Trust Administrator, as the case may be. Any payment hereunder
made by the Servicer to the Trustee or the Trust Administrator shall be from the
Servicer's own funds, without reimbursement from REMIC I therefor.

               (b) The Depositor shall pay any annual rating agency fees of the
Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

               SECTION 8.06. Eligibility Requirements for Trustee and Trust
                             Administrator.

               Each of the Trustee and the Trust Administrator hereunder shall
at all times be a corporation or an association (other than the Depositor, the
Seller, the Servicer or, in the case of the


                                      -103-

<PAGE>



Trustee, any Affiliate of the foregoing) organized and doing business under the
laws of any 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 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 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 conditions so published. In case at any time the Trustee or the
Trust Administrator shall cease to be eligible in accordance with the provisions
of this Section, the Trustee or the Trust Administrator, as the case may be,
shall resign immediately in the manner and with the effect specified in Section
8.07.

               SECTION 8.07. Resignation and Removal of the Trustee and the
                             Trust Administrator

               Either the Trustee or the Trust Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, the Servicer, to the Certificateholders and, if the
Trustee is resigning, to the Trust Administrator, or, if the Trust Administrator
is resigning, to the Trustee. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Trustee or Trust Administrator
(which may be the same Person in the event both the Trustee and the Trust
Administrator resign or are removed) by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee or Trust Administrator
and to the successor Trustee or Trust Administrator, as applicable. A copy of
such instrument shall be delivered to the Certificateholders, the Trustee or
Trust Administrator, as applicable, and the Servicer by the Depositor. If no
successor Trustee or Trust Administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Trust Administrator, as applicable, may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or Trust Administrator, as applicable.

               If at any time the Trustee or the Trust Administrator shall cease
to be eligible in accordance with the provisions of Section 8.06 and shall fail
to resign after written request therefor by the Depositor (or in the case of the
Trust Administrator, the Trustee), or if at any time the Trustee or the Trust
Administrator shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or the Trust Administrator or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or the Trust Administrator of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor (or
in the case of the Trust Administrator, the Trustee) may remove the Trustee or
the Trust Administrator, as applicable, and appoint a successor Trustee or Trust
Administrator (which may be the same Person in the event both the Trustee and
the Trust Administrator resign or are removed) by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or Trust
Administrator, as the case may be, so removed and to the successor Trustee or
Trust Administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee or the Trust Administrator, as applicable, and
the Servicer by the Depositor.



                                      -104-

<PAGE>



               The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Trust Administrator and
appoint a successor Trustee or Trust Administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee or to the Trust Administrator, as the
case may be, so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Servicer by the Depositor. In addition, if the Trustee has knowledge that the
Trust Administrator has breached any of its duties under this Agreement, the
Trustee may remove the Trust Administrator in the same manner as provided in the
prior sentence. For purposes of this Section, the Trustee shall not be deemed to
have knowledge of a breach by the Trust Administrator of any of its duties
hereunder, unless a Responsible Officer of the Trustee, assigned to and working
in the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a breach is received by the
Trustee, and such notice references the Certificates, the Trust Fund or this
Agreement.

               Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor Trustee or Trust Administrator, as
the case may be, pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee or
Trust Administrator as provided in Section 8.08. Notwithstanding the foregoing,
in the event the Trust Administrator advises the Trustee that it is unable to
continue to perform its obligations pursuant to the terms of this Agreement
prior to the appointment of a successor, the Trustee shall be obligated to
perform such obligations until a new Trust Administrator is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trust Administrator's breach of its
obligations hereunder.

               SECTION 8.08.          Successor Trustee or Trust Administrator

               Any successor Trustee or Trust Administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Trustee or the Trust Administrator, as applicable, and its
predecessor Trustee or Trust Administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee or Trust Administrator shall become effective and such
successor Trustee or Trust Administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee or Trust Administrator herein. The predecessor Trustee or Trust
Administrator shall deliver to the successor Trustee or Trust Administrator all
Mortgage Files and related documents and statements to the extent held by it
hereunder, as well as all moneys, held by it hereunder, and the Depositor and
the predecessor Trustee or Trust Administrator shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Trustee or Trust
Administrator all such rights, powers, duties and obligations.

               No successor Trustee or Trust Administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor Trustee or Trust Administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor Trustee or
Trust Administrator shall not result in a downgrading of any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.


                                      -105-

<PAGE>



               Upon acceptance of appointment by a successor Trustee or Trust
Administrator as provided in this Section, the Depositor shall mail notice of
the succession of such Trustee or Trust Administrator hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee or Trust Administrator, the successor
Trustee or Trust Administrator shall cause such notice to be mailed at the
expense of the Depositor.

               SECTION 8.09.          Merger or Consolidation of Trustee.

               Any corporation or association into which either the Trustee or
the Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

               SECTION 8.10.      Appointment of Co-Trustee or Separate Trustee.

               Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of REMIC I or property securing the same may at the time be located, the Trustee
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 REMIC I, and to vest in such Person or Persons, in such capacity,
such title to REMIC I, or any part thereof, and, subject to the other provisions
of this Section 8.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 hereunder and no notice to Holders of Certificates of
the appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.

               In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting 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 REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

               Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the


                                      -106-

<PAGE>



conditions of this Article VIII. Each separate trustee and co-trustee, upon its
acceptance of the trust conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee, or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.

               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 or co-trustee.

               SECTION 8.11.          Appointment of Office or Agency.

               The Trust Administrator hereby appoints its Corporate Trust
Office as the office or agency in the City of New York, New York where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution, and where notices and demands to or upon the
Trust Administrator in respect of the Certificates and this Agreement may be
served.

               SECTION 8.12.          Representations and Warranties.

               Each of the Trustee and the Trust Administrator hereby represents
and warrants to the Servicer, the Depositor and the Trustee or the Trust
Administrator, as applicable, as of the Closing Date, that:

               (i) It is a national banking association duly organized, validly
        existing and in good standing under the laws of the United States of
        America.

               (ii) The execution and delivery of this Agreement by it, and the
        performance and compliance with the terms of this Agreement by it, will
        not violate its articles of association or bylaws or constitute a
        default (or an event which, with notice or lapse of time, or both, would
        constitute a default) under, or result in the breach of, any material
        agreement or other instrument to which it is a party or which is
        applicable to it or any of its assets.

               (iii) It has the full power and authority to enter into and
        consummate all transactions contemplated by this Agreement, has duly
        authorized the execution, delivery and performance of this Agreement,
        and has duly executed and delivered this Agreement.

               (iv) This Agreement, assuming due authorization, execution and
        delivery by the other parties hereto, constitutes a valid, legal and
        binding obligation of it, enforceable against it in accordance with the
        terms hereof, subject to (A) applicable bankruptcy, insolvency,
        receivership, reorganization, moratorium and other laws affecting the
        enforcement of creditors' rights generally, and (B) general principles
        of equity, regardless of whether such


                                      -107-

<PAGE>



        enforcement is considered in a proceeding in equity or at law.

               (v) It is not in violation of, and its execution and delivery of
        this Agreement and its performance and compliance with the terms of this
        Agreement will not constitute a violation of, any law, any order or
        decree of any court or arbiter, or any order, regulation or demand of
        any federal, state or local governmental or regulatory authority, which
        violation, in its good faith and reasonable judgment, is likely to
        affect materially and adversely either the ability of it to perform its
        obligations under this Agreement or its financial condition.

               (vi) No litigation is pending or, to the best of its knowledge,
        threatened against it, which would prohibit it from entering into this
        Agreement or, in its good faith reasonable judgment, is likely to
        materially and adversely affect either the ability of it to perform its
        obligations under this Agreement or its financial condition.


                                      -108-

<PAGE>



                                   ARTICLE IX

                                   TERMINATION

               SECTION 9.01 Termination Upon Repurchase or Liquidation of All
                            Mortgage Loans.

               (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer, the
Trustee and the Trust Administrator (other than the obligations of the Servicer
to the Trustee and the Trust Administrator pursuant to Section 8.05 and of the
Servicer to provide for and the Trust Administrator to make payments in respect
of the REMIC I Regular Interests and the Classes of Certificates as hereinafter
set forth) shall terminate upon payment to the Certificateholders and the
deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Terminator (as defined
below) of all Mortgage Loans and each REO Property remaining in REMIC I and (ii)
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or REO Property remaining in REMIC I; provided, however,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Subject to Section 3.10 hereof, the purchase by the
Terminator of all Mortgage Loans and each REO Property remaining in REMIC I
shall be at a price (the "Termination Price") equal to the greater of (A) the
aggregate Purchase Price of all the Mortgage Loans included in REMIC I, plus the
appraised value of each REO Property, if any, included in REMIC I, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion and (B) the aggregate fair market
value of all of the assets of REMIC I (as determined by the Terminator and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to the related
Certificateholders pursuant to this Section 9.01(c)).

               (b) The Servicer shall have the right (the party exercising such
right, the "Terminator"), to purchase all of the Mortgage Loans and each REO
Property remaining in REMIC I pursuant to clause (i) of the preceding paragraph
no later than the Determination Date in the month immediately preceding the
Distribution Date on which the Certificates will be retired; provided, however,
that the Terminator may elect to purchase all of the Mortgage Loans and each REO
Property remaining in REMIC I pursuant to clause (i) above only if the aggregate
Stated Principal Balance of the Mortgage Loans and each REO Property remaining
in the Trust Fund at the time of such election is reduced to less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date. By acceptance of the Class R Certificates, the Holder of the Class R
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any amounts in excess of par, and to the extent received in respect of
such termination, to pay any such amounts to the Holders of the Class CE
Certificates.

               (c) Notice of the liquidation of the Certificates shall be given
promptly by the Trust Administrator by letter to Certificateholders mailed (a)
in the event such notice is given in connection with the purchase of the
Mortgage Loans and each REO Property by the Terminator, not


                                      -109-

<PAGE>



earlier than the 10th day and not later than the 20th day of the month next
preceding the month of the final distribution on the related Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of the REMIC I Regular Interests, as applicable and the related Certificates
will be made upon presentation and surrender of the related Certificates at the
office of the Trust Administrator therein designated, (ii) the amount of any
such final payment, (iii) that no interest shall accrue in respect of the REMIC
I Regular Interests or the related Certificates from and after the Interest
Accrual Period relating to the final Distribution Date therefor and (iv) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
related Certificates at the office of the Trust Administrator. In the event such
notice is given in connection with the purchase of all of the Mortgage Loans and
each REO Property remaining in REMIC I by the Terminator, the Terminator shall
deliver to the Trust Administrator for deposit in the Distribution Account not
later than the last Business Day of the month next preceding the month of the
final distribution on the related Certificates an amount in immediately
available funds equal to the above-described purchase price. The Trust
Administrator shall remit to the Servicer from such funds deposited in the
Distribution Account (i) any amounts which the Servicer would be permitted to
withdraw and retain from the Collection Account pursuant to Section 3.11 and
(ii) any other amounts otherwise payable by the Trust Administrator to the
Servicer from amounts on deposit in the Distribution Account pursuant to the
terms of this Agreement, in each case prior to making any final distributions
pursuant to Section 10.01(d) below. Upon certification to the Trust
Administrator by a Servicing Officer of the making of such final deposit, the
Trust Administrator shall promptly release to the Terminator the Mortgage Files
for the remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.

               (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trust Administrator shall
distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 9.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Trust Administrator shall mail a
second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trust Administrator shall pay to Salomon
Smith Barney Inc. all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trust Administrator as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with


                                      -110-

<PAGE>



this Section 9.01. Any such amounts held in trust by the Trust Administrator
shall be held in an Eligible Account and the Trust Administrator may direct any
depository institution maintaining such account to invest the funds in one or
more Permitted Investments. All income and gain realized from the investment of
funds deposited in such accounts held in trust by the Trust Administrator shall
be for the benefit of the Trust Administrator; provided, however, that the Trust
Administrator shall deposit in such account the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon the realization of such loss.

               Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.

               SECTION 9.02           Additional Termination Requirements.

               (a) In the event that the Terminator purchases all the Mortgage
Loans and each REO Property or the final payment on or other liquidation of the
last Mortgage Loan or REO Property remaining in REMIC I pursuant to Section
9.01, the Trust Fund (or the applicable Trust REMIC) shall be terminated in
accordance with the following additional requirements:

                       (i) The Trustee shall specify the first day in the 90-day
               liquidation period in a statement attached to each Trust REMIC's
               final Tax Return pursuant to Treasury regulation Section 1.860F-1
               and shall satisfy all requirements of a qualified liquidation
               under Section 860F of the Code and any regulations thereunder, as
               evidenced by an Opinion of Counsel obtained at the expense of the
               Terminator;

                       (ii) During such 90-day liquidation period and, at or
               prior to the time of making of the final payment on the
               Certificates, the Trustee shall sell all of the assets of REMIC I
               to the Terminator for cash; and

                       (iii) At the time of the making of the final payment on
               the Certificates, the Trust Administrator shall distribute or
               credit, or cause to be distributed or credited, to the Holders of
               the Class R Certificates in respect of the Class R-I Interest all
               cash on hand in each Trust REMIC (other than cash retained to
               meet claims), and each Trust REMIC shall terminate at that time.

               (b) At the expense of the requesting Terminator (or, if the Trust
Fund is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 9.01, at the expense of the Trust
Administrator without the right of reimbursement from the Trust Fund), the Trust
Administrator shall prepare or cause to be prepared the documentation required
in connection with the adoption of a plan of liquidation of each Trust REMIC
pursuant to this Section 9.02.

               (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.


                                      -111-

<PAGE>



                                    ARTICLE X

                                REMIC PROVISIONS

               SECTION 10.01.         REMIC Administration.

               (a) The Trust Administrator shall elect to treat each Trust REMIC
as a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made by the Trust Administrator on Form 1066 or other
appropriate federal tax or information return or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interest in REMIC I. The Class A Certificates, the Mezzanine
Certificates, the Class CE Certificates and the Class P Certificates shall be
designated as the Regular Interests in REMIC II and the Class R-II Interest
shall be designated as the Residual Interest in REMIC II. Neither the Trustee
nor the Trust Administrator shall permit the creation of any "interests" in any
Trust REMIC (within the meaning of Section 860G of the Code) other than the
REMIC I Regular Interests and the interests represented by the Certificates.

               (b) The Closing Date is hereby designated as the "Startup Day" of
each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.

               (c) The Trust Administrator shall be reimbursed for any and all
expenses relating to any tax audit of the Trust Fund (including, but not limited
to, any professional fees or any administrative or judicial proceedings with
respect to each Trust REMIC that involve the Internal Revenue Service or state
tax authorities), including the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Trust Administrator, as agent for each
Trust REMIC's tax matters person shall (i) act on behalf of the Trust Fund in
relation to any tax matter or controversy involving any Trust REMIC and (ii)
represent the Trust Fund in any administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority with respect
thereto. The holder of the largest Percentage Interest of Class R Certificates
shall be designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax
matters person of each Trust REMIC created hereunder. By their acceptance
thereof, the holder of the largest Percentage Interest of the Class R
Certificates hereby agrees to irrevocably appoint the Trust Administrator or an
Affiliate as its agent to perform all of the duties of the tax matters person
for the Trust Fund.

               (d) The Trust Administrator shall prepare, the Trustee shall sign
and the Trust Administrator shall file all of the Tax Returns (including Form
8811, which must be filed within 30 days following the Closing Date) in respect
of each Trust REMIC created hereunder. The expenses of preparing and filing such
returns shall be borne by the Trust Administrator without any right of
reimbursement therefor.

               (e) The Trust Administrator shall perform on behalf of each Trust
REMIC all reporting and other tax compliance duties that are the responsibility
of such REMIC under the Code, the REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any


                                      -112-

<PAGE>



state or local taxing authority. Among its other duties, as required by the
Code, the REMIC Provisions or other such compliance guidance, the Trust
Administrator shall provide (i) to any Transferor of a Class R Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Class R Certificate to any Person who is not a Permitted
Transferee, (ii) to the Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of each Trust REMIC. The Depositor shall provide or cause to be
provided to the Trust Administrator, within ten (10) days after the Closing
Date, all information or data that the Trust Administrator reasonably determines
to be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

               (f) The Trustee and the Trust Administrator shall take such
action and shall cause each Trust REMIC created hereunder to take such action as
shall be necessary to create or maintain the status thereof as a REMIC under the
REMIC Provisions. The Trustee and the Trust Administrator shall not take any
action or cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of each Trust REMIC as
a REMIC or (ii) result in the imposition of a tax upon the Trust Fund (including
but not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee and the Trust Administrator have received an Opinion of
Counsel, addressed to the Trustee and the Trust Administrator (at the expense of
the party seeking to take such action but in no event at the expense of the
Trust Administrator or the Trustee) to the effect that the contemplated action
will not, with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall the Servicer take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee or the Trust
Administrator has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action; provided that the Servicer may conclusively rely on such Opinion of
Counsel and shall incur no liability for its action or failure to act in
accordance with such Opinion of Counsel. In addition, prior to taking any action
with respect to any Trust REMIC or the respective assets of each, or causing any
Trust REMIC to take any action, which is not contemplated under the terms of
this Agreement, the Servicer will consult with the Trustee and the Trust
Administrator or its designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to any Trust REMIC and
the Servicer shall not take any such action or cause any Trust REMIC to take any
such action as to which the Trustee or the Trust Administrator has advised it in
writing that an Adverse REMIC Event could occur; provided that the Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trust Administrator and the
Trustee may consult with counsel to make such written advice, and the cost of
same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee or
Trust Administrator, as applicable. At all times as may be required by the Code,
the Trust Administrator will ensure that substantially all of the assets of
REMIC I will consist of "qualified mortgages" as defined in Section 860G(a)(3)
of the Code and "permitted investments" as defined in Section 860G(a)(5) of the
Code,


                                      -113-

<PAGE>



to the extent such obligations are within the Trust Administrator's control and
not otherwise inconsistent with the terms of this Agreement.

               (g) In the event that any tax is imposed on "prohibited
transactions" of any Trust REMIC created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of such
REMIC as defined in Section 860G(c) of the Code, on any contributions to any
such REMIC after the Startup Day therefor pursuant to Section 860G(d) of the
Code, or any other tax is imposed by the Code or any applicable provisions of
state or local tax laws, such tax shall be charged (i) to the Trust
Administrator pursuant to Section 10.03 hereof, if such tax arises out of or
results from a breach by the Trust Administrator of any of its obligations under
this Article X, (ii) to the Trustee pursuant to Section 10.03 hereof, if such
tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (iii) to the Servicer pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Servicer
of any of its obligations under Article III or this Article X, or (iv) against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.

               (h) On or before April 15 of each calendar year, commencing April
15, 2003, the Trust Administrator shall deliver to each Rating Agency an
Officer's Certificate of the Trust Administrator stating the Trust
Administrator's compliance with this Article X.

               (i) The Trust Administrator shall, for federal income tax
purposes, maintain books and records with respect to each Trust REMIC on a
calendar year and on an accrual basis.

               (j) Following the Startup Day, none of the Servicer, the Trustee
or the Trust Administrator shall accept any contributions of assets to any Trust
REMIC other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause any Trust REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject any Trust REMIC to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.

               (k) None of the Trustee, the Trust Administrator or the Servicer
shall enter into any arrangement by which any Trust REMIC will receive a fee or
other compensation for services nor permit any Trust REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.

               SECTION 10.02.         Prohibited Transactions and Activities.

               None of the Depositor, the Servicer, the Trust Administrator or
the Trustee shall sell, dispose of or substitute for any of the Mortgage Loans
(except in connection with (i) the foreclosure of a Mortgage Loan, including but
not limited to, the acquisition or sale of a Mortgaged Property acquired by deed
in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted


                                      -114-

<PAGE>



Mortgage Loan), nor sell or dispose of any investments in the Collection Account
or the Distribution Account for gain, nor accept any contributions to any Trust
REMIC after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03), unless it has received an Opinion of
Counsel, addressed to the Trustee and the Trust Administrator (at the expense of
the party seeking to cause such sale, disposition, substitution, acquisition or
contribution but in no event at the expense of the Trustee or Trust
Administrator) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of any Trust REMIC as a
REMIC or (b) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.

               SECTION 10.03. Servicer and Trustee and Trust Administrator
                              Indemnification.

               (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Servicer and the Trust Administrator for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Servicer, or the Trust
Administrator, as a result of a breach of the Trustee's covenants set forth in
this Article X.

               (b) The Trust Administrator agrees to indemnify the Trust Fund,
the Depositor, the Servicer and the Trustee for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by the
Trust Fund, the Depositor, the Servicer or the Trustee as a result of a breach
of the Trust Administrator's covenants set forth in this Article X

               (c) The Servicer agrees to indemnify the Trust Fund, the
Depositor, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trust Administrator or the
Trustee, as a result of a breach of the Servicer's covenants set forth in
Article III or this Article X.




                                      -115-

<PAGE>



                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

               SECTION 11.01.         Amendment.

               This Agreement may be amended from time to time by the Depositor,
the Servicer, the Trustee and the Trust Administrator without the consent of any
of the Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, provided that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trustee and
the Trust Administrator adversely affect in any material respect the interests
of any Certificateholder. No amendment shall be deemed to adversely affect in
any material respect the interests of any Certificateholder who shall have
consented thereto, and no Opinion of Counsel shall be required to address the
effect of any such amendment on any such consenting Certificateholder.

               This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights 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 received on Mortgage Loans which are 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 (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates.

               Notwithstanding any contrary provision of this Agreement, neither
the Trustee nor the Trust Administrator shall consent to any amendment to this
Agreement unless it shall have first received an Opinion of Counsel to the
effect that such amendment will not result in the imposition of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding.

               Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.

               It shall not be necessary for the consent of Certificateholders
under this Section 11.01 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


                                      -116-

<PAGE>



authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee or the Trust Administrator may
prescribe.

               The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee or
Trust Administrator.

               Each of the Trustee and the Trust Administrator may, but shall
not be obligated to enter into any amendment pursuant to this Section that
affects its rights, duties and immunities under this Agreement or otherwise.

               SECTION 11.02.         Recordation of Agreement; Counterparts.

               To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the 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 expense of the Certificateholders, but only upon
direction of the Trustee or the Trust Administrator accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.

               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 11.03. Limitation on Rights of Certificateholders.

               The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor 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
expressly provided for 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 any 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 person 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 of any
provision 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 and the Trust Administrator a
written notice of default and of the continuance thereof, as hereinbefore
provided,


                                      -117-

<PAGE>



and unless also the Holders of Certificates entitled to at least 25% of the
Voting Rights shall have made written request upon the Trustee and the Trust
Administrator to institute such action, suit or proceeding in its own name as
Trustee or Trust Administrator hereunder and shall have offered to the Trustee
and the Trust Administrator such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee or the Trust Administrator, for 15 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 is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee and the Trust Administrator, that no one or
more Holders of Certificates shall have any right in any manner whatsoever by
virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such 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
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder, the Trustee and the Trust Administrator shall be entitled to
such relief as can be given either at law or in equity.

               SECTION 11.04.         Governing Law.

               This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to the conflicts of laws provisions
thereof, and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws.

               SECTION 11.05.         Notices.

               All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, 390 Greenwich Street, 4th Floor, New York, New York
10013, Attention: Mortgage Finance (telecopy number (212) 723-8604), or such
other address or telecopy number as may hereafter be furnished to the Servicer,
the Trustee and the Trust Administrator in writing by the Depositor, (b) in the
case of the Servicer, 5373 West Alabama, Suite 600, Houston, Texas 77056,
Attention: Janice McClure (telecopy number: (713) 960-0539), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Trust Administrator and the Depositor in writing by the Servicer and (c) in the
case of the Trust Administrator, 111 Wall Street, 14th Floor, New York, New York
10005, Attention: Structured Finance/SBMSVII 2002-WMC1 (telecopy number (212)
657-4009, or such other address or telecopy number as may hereafter be furnished
to the Servicer, the Depositor and the Trustee in writing by the Trust
Administrator and (d) in the case of the Trustee, 180 East Fifth Street, St.
Paul, Minnesota, 55101, Attention: Structured Finance/SBMSVII 2001-1 (telecopy
number (651) 244-0089, or such other address or telecopy number as may hereafter
be furnished to the Servicer, the Trust Administrator and the Depositor in
writing by the Trustee. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the


                                      -118-

<PAGE>



appropriate party in the manner set forth above.

               SECTION 11.06.         Severability of Provisions.

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

               SECTION 11.07.         Notice to Rating Agencies.

               The Trust Administrator shall use its best efforts promptly to
provide notice to the Rating Agencies 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 Servicer Event of Default that has not
        been cured or waived;

               3. The resignation or termination of the Servicer or the Trustee
        or the Trust Administrator;

               4. The repurchase or substitution of Mortgage Loans pursuant to
        or as contemplated by Section 2.03;

               5. The final payment to the Holders of any Class of Certificates;

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

               7. Any event that would result in the inability of the Trust
        Administrator or the Trustee, as applicable, to make advances regarding
        delinquent Mortgage Loans; and

               8. The filing of any claim under any Servicer's blanket bond and
        errors and omissions insurance policy required by Section 3.14 or the
        cancellation or material modification of coverage under any such
        instrument.

               In addition, the Trust Administrator shall promptly furnish to
each Rating Agency copies of each report to Certificateholders described in
Section 4.02 and the Servicer shall promptly furnish to each Rating Agency
copies of the following:

               1. Each annual statement as to compliance described in Section
        3.20; and

               2. Each annual independent public accountants' servicing report
        described in Section 3.21.


                                      -119-

<PAGE>



               Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Moody's Investors Service, Inc., 90 Church Street, New York, New York 10007
and to Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., 55 Water Street, New York, New York 10007 or such other
addresses as the Rating Agencies may designate in writing to the parties hereto.

               SECTION 11.08.         Article and Section References.

               All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

               SECTION 11.09.         Grant of Security Interest.

               It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.




                                      -120-

<PAGE>



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


                                   SALOMON BROTHERS MORTGAGE
                                   SECURITIES VII, INC., as Depositor


                                   By:   /s/ MATTHEW R. BOLLO
                                      -----------------------------------------
                                   Name:          Matthew R. Bollo
                                   Title:  Assistant Vice President


                                   LITTON LOAN SERVICING LP,
                                     as Servicer


                                   By: /s/ JANICE MCCLURE
                                      -----------------------------------------
                                   Name:   Janice McClure
                                   Title:  Senior Vice President


                                   U.S. BANK NATIONAL ASSOCIATION,
                                   as Trustee


                                   By: /s/ SHERYL CHRISTOPHERSON
                                      -----------------------------------------
                                   Name: Sheryl Christopherson
                                   Title: Vice President


                                   CITIBANK, N.A.,
                                     as Trust Administrator


                                   By: /s/ KRISTEN DRISCOLL
                                      -----------------------------------------
                                   Name:   Kristen Driscoll
                                   Title:  Assistant Vice President




<PAGE>



STATE OF _____________        )
                              ) ss.:
COUNTY OF ___________         )

               On the day of January 2002, before me, a notary public in and for
said State, personally appeared ________________, known to me to be an Assistant
Vice President of Salomon Brothers Mortgage Securities VII, Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

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



                                      -----------------------------------------
                                               Notary Public


[Notarial Seal]




<PAGE>



STATE OF ______________               )
                              ) ss.:
COUNTY OF ____________                )

               On the ____ day of January 2002, before me, a notary public in
and for said State, personally appeared _____________________, known to me to be
__________________ of Litton Loan Servicing LP, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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



                                      -----------------------------------------
                                                 Notary Public



[Notarial Seal]




<PAGE>



STATE OF MINNESOTA            )
                              )ss.:
COUNTY OF RAMSEY              )

               On the ____ day of January 2002, before me, a notary public in
and for said State, personally appeared __________________, known to me to be a
_______________ of U.S. Bank National Association, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

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



                                      -----------------------------------------
                                                Notary Public


[Notarial Seal]



<PAGE>


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

               On the ____ day of January 2002, before me, a notary public in
and for said State, personally appeared __________________, known to me to be a
_______________ of Citibank, N.A., one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

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



                                      -----------------------------------------
                                               Notary Public


[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1
                                   -----------

                          FORM OF CLASS A CERTIFICATE

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUST ADMINISTRATOR 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 IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class A Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. 1
                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002

                                                            CUSIP: ___________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.


                                      A-1-1

<PAGE>



                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed-rate, first lien mortgage loans (the "Mortgage Loans") formed
and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class A Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, the Trustee
and the Trust Administrator, a summary of certain of the pertinent provisions of
which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class A Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such


                                      A-1-2

<PAGE>



distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trust Administrator for that purpose as
provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be


                                      A-1-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trust Administrator may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-1-4

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

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


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-1-5

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-1-6

<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-1-7

<PAGE>



                                   EXHIBIT A-2
                                   -----------

                          FORM OF CLASS M-1 CERTIFICATE

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUST ADMINISTRATOR 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 IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES TO THE
         EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
         HEREIN.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class M-1 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. 1
                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002

                                                            CUSIP: ___________
</TABLE>




                                      A-2-1

<PAGE>



         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-1 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to


                                      A-2-2

<PAGE>



such Distribution Date and is the registered owner of Class M-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-1 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.


                                      A-2-3

<PAGE>



                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-2-4

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

         This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-2-5

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-2-6

<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-2-7

<PAGE>



                                   EXHIBIT A-3
                                   -----------

                          FORM OF CLASS M-2 CERTIFICATE

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUST ADMINISTRATOR 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 IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
         CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class M-2 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. 1
                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002

                                                            CUSIP: ___________
</TABLE>




                                      A-3-1

<PAGE>



         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-2 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to


                                      A-3-2

<PAGE>



such Distribution Date and is the registered owner of Class M-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-2 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.


                                      A-3-3

<PAGE>



                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-3-4

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

         This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-3-5

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-3-6

<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-3-7

<PAGE>



                                   EXHIBIT A-4
                                   -----------

                          FORM OF CLASS M-3 CERTIFICATE

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUST ADMINISTRATOR 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 IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED
         IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class M-3 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. 1
                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002

                                                            CUSIP: ___________
</TABLE>



                                      A-4-1

<PAGE>



         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-3 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to


                                      A-4-2

<PAGE>



such Distribution Date and is the registered owner of Class M-3 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-3 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.


                                      A-4-3

<PAGE>



                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-4-4

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

         This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-4-5

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-4-6

<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-4-7

<PAGE>



                                   EXHIBIT A-5
                                   -----------

                          FORM OF CLASS M-4 CERTIFICATE

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUST ADMINISTRATOR 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 IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
         M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3
         CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
         AGREEMENT REFERRED TO HEREIN.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class M-4 Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. 1
                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002

                                                            CUSIP: ___________
</TABLE>



                                      A-5-1

<PAGE>



         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class M-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-4 Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class M-4 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to


                                      A-5-2

<PAGE>



such Distribution Date and is the registered owner of Class M-4 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-4 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) the related Formula Rate for
such Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.


                                      A-5-3

<PAGE>



                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-5-4

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

         This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-5-5

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-5-6

<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-5-7

<PAGE>



                                   EXHIBIT A-6
                                   -----------

                          FORM OF CLASS CE CERTIFICATE

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

         THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE
         CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3
         CERTIFICATES AND THE CLASS M-4 CERTIFICATES TO THE EXTENT DESCRIBED IN
         THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.


                                      A-6-1

<PAGE>




<TABLE>
<CAPTION>
<S>                                                         <C>
Series 20021-WMC1                                           Aggregate Certificate Principal Balance of the
                                                            Class CE Certificates as of the Issue Date:
Pass-Through Rate: Variable                                 $____________

Cut-off Date and date of Pooling and                        Denomination: $______________
Servicing Agreement: January 1, 2002
                                                            Servicer: Litton Loan Servicing LP
First Distribution Date: February 25, 2002
                                                            Trustee: U.S. Bank National Association
No. __
                                                            Trust Administrator: Citibank, N.A.
Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date:                       Issue Date: January __, 2002
$-------

Notional Amount: $_________________
</TABLE>

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class CE Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity


                                      A-6-2

<PAGE>



under the Agreement), the Servicer, the Trustee and the Trust Administrator, a
summary of certain of the pertinent provisions of which is set forth hereafter.
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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class CE Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class CE Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this


                                      A-6-3

<PAGE>



Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Trust Administrator, 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.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator


                                      A-6-4

<PAGE>



may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-6-5

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

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


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-6-6

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-6-7

<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-6-8

<PAGE>



                                   EXHIBIT A-7
                                   -----------

                           FORM OF CLASS P CERTIFICATE

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

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Certificate Principal Balance of the
                                                            Class P Certificates as of the Issue Date:
Cut-off Date and date of Pooling and                        $____________
Servicing Agreement: January 1, 2002
                                                            Denomination: $______________
First Distribution Date: February 25, 2002
                                                            Servicer: Litton Loan Servicing LP
No. __
                                                            Trustee: U.S. Bank National Association

                                                            Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002
</TABLE>






                                      A-7-1

<PAGE>



         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, adjustable-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer, the
Trustee and the Trust Administrator, a summary of certain of the pertinent
provisions of which is set forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to


                                      A-7-2

<PAGE>



such Distribution Date and is the registered owner of Class P Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class P Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee, the Trust Administrator
and the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Trustee and the Trust Administrator with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. 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 herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer


                                      A-7-3

<PAGE>



of this Certificate is to be made without registration or qualification, the
Trustee shall require receipt of (i) if such transfer is purportedly being made
in reliance upon Rule 144A under the 1933 Act, written certifications from the
Holder of the Certificate desiring to effect the transfer, and from such
Holder's prospective transferee, substantially in the forms attached to the
Agreement as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee, the Trust Administrator or the Servicer
in their respective capacities as such), together with copies of the written
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Trust Administrator or the Trustee
is obligated to register or qualify the Class of Certificates specified on the
face hereof under the 1933 Act or any other securities law or to take any action
not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Trust Administrator, 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.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The


                                      A-7-4

<PAGE>



exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Loans at the time of purchase being less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assume no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-7-5

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

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


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-7-6

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-7-7

<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-7-8

<PAGE>



                                   EXHIBIT A-8
                                   -----------

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
         POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
         TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
         POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
         FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
         INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
         THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
         FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
         IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
         ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
         PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR


                                      A-8-1

<PAGE>



         (3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION")
         OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
         SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND
         (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING
         TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING
         THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
         OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
         AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE
         DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
         SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
         HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
         ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
         HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
         PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
         DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Percentage Interest of the Class R
                                                            Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and
Servicing Agreement: January 1, 2002                        Servicer: Litton Loan Servicing LP

First Distribution Date: February 25, 2002                  Trustee: U.S. Bank National Association

No. __                                                      Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002
</TABLE>





                                      A-8-2

<PAGE>



                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (as specified above) in that certain beneficial ownership
interest evidenced by all the Certificates of the Class to which this
Certificate belongs created pursuant to a Pooling and Servicing Agreement, dated
as specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor," which term includes any successor
entity under the Agreement), the Servicer, the Trustee and the Trust
Administrator, a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class R Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class R Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.



                                      A-8-3

<PAGE>



                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Trustee and the Trust Administrator
with the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. 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 herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or


                                      A-8-4

<PAGE>



the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Trust Administrator, 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.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trust Administrator (i) an affidavit to the effect that such transferee is any
Person other than a Disqualified Organization or the agent (including a broker,
nominee or middleman) of a Disqualified Organization, and (ii) a certificate
that acknowledges that (A) the Class R Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,


                                      A-8-5

<PAGE>



the Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assumes no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-8-6

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

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


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-8-7

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-8-8

<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.


                                      A-8-9

<PAGE>



                                   EXHIBIT A-9
                                   -----------

                              CLASS R-3 CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

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

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
         POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
         THE AGREEMENT.

         NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
         RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
         SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
         IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
         TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
         POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
         FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
         INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
         THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
         FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
         IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
         ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
         PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR


                                      A-9-1

<PAGE>



         (3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION")
         OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
         SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND
         (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING
         TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING
         THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR
         OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
         AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE
         DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
         SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
         HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
         ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
         HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
         PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND
         SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
         DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.


<TABLE>
<CAPTION>
<S>                                                         <C>
Series 2002-WMC1                                            Aggregate Percentage Interest of the Class R-
                                                            3 Certificates as of the Issue Date: 100.00%
Cut-off Date and date of Pooling and
Servicing Agreement: January 1, 2002                        Servicer: Litton Loan Servicing LP

First Distribution Date: February 25, 2002                  Trustee: U.S. Bank National Association

No. __                                                      Trust Administrator: Citibank, N.A.

                                                            Issue Date: January __, 2002
</TABLE>





                                      A-9-2

<PAGE>



                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
         SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE SERVICER, THE
         TRUSTEE, THE TRUST ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
         NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
         GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________ is the registered owner of a
Percentage Interest (as specified above) in that certain beneficial ownership
interest evidenced by all the Certificates of the Class to which this
Certificate belongs created pursuant to a Pooling and Servicing Agreement, dated
as specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor," which term includes any successor
entity under the Agreement), the Servicer, the Trustee and the Trust
Administrator, a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.

                  Pursuant to the terms of the Agreement, distributions 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 (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the 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 the Holders of Class R-3 Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trust Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trust Administrator in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class R-3 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class R-3 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trust Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trust Administrator for that purpose as provided in the Agreement.



                                      A-9-3

<PAGE>



                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the Trust
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Servicer, the Trustee and the Trust Administrator
with the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. 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 herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trust Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Trust Administrator 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trust Administrator shall require receipt of
(i) if such transfer is purportedly being made in reliance upon Rule 144A under
the 1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Trust Administrator or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trust Administrator or


                                      A-9-4

<PAGE>



the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Trust Administrator, 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.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trust Administrator (i) an affidavit to the effect that such transferee is any
Person other than a Disqualified Organization or the agent (including a broker,
nominee or middleman) of a Disqualified Organization, and (ii) a certificate
that acknowledges that (A) the Class R-3 Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-3 Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  The Depositor, the Servicer, the Trustee, the Trust
Administrator and any agent of the Depositor, the Servicer, the Trustee or the
Trust Administrator may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,


                                      A-9-5

<PAGE>



the Servicer, the Trustee, the Trust Administrator nor any such agent shall be
affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan and REO Property
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee and the Trust Administrator assumes no
responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trust Administrator, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.




                                      A-9-6

<PAGE>



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

Dated: January __, 2002


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                   Authorized Officer



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

         This is one of the Class R-3 Certificates referred to in the
within-mentioned Agreement.


                                          CITIBANK, N.A., as Trust Administrator


                                          By:______________________________
                                                  Authorized Signatory





                                      A-9-7

<PAGE>



                                  ABBREVIATIONS
                                  -------------

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common                    UNIF GIFT MIN ACT - Custodian
                                                                      ---------

TEN ENT - as tenants by the entireties                  (Cust) (Minor) under
                                                        Uniform Gifts
JT TEN - as joint tenants with right                    to Minors Act
         if survivorship and not as                      _______________
          tenants in common                                  (State)

         Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such 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
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                           -------------------------------
                                           Signature by or on behalf of assignor



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






                                      A-9-8

<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.


                                      A-9-9

<PAGE>



                                    EXHIBIT B

                                   [Reserved]




                                       B-1

<PAGE>



                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                [Date]

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

Litton Loan Servicing LP
5373 West Alabama
Houston, Texas 77056

         Re: Pooling and Servicing Agreement, dated as of January 1, 2002, among
             Salomon Brothers Mortgage Securities VII, Inc., Litton Loan
             Servicing LP, U.S. Bank National Association and Citibank, N.A. as
             Trust Administrator, Asset Backed Pass-Through Certificates, Series
             2002-WMC1
             -------------------------------------------------------------------

Ladies and Gentlemen:

                  Attached is the Trustee's preliminary exceptions in accordance
with Section 2.02 of the referenced Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Pooling and
Servicing Agreement.

                  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 the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan, or (iii) whether any Mortgage File
included any of the documents specified in clause (v) of Section 2.01 of the
Pooling and Servicing Agreement.

                                            U.S. BANK NATIONAL ASSOCIATION

                                            By:______________________________
                                            Name:
                                            Title:







                                      C-1-1

<PAGE>



                                   EXHIBIT C-2
                                   -----------

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                [Date]

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

Litton Loan Servicing LP
5373 West Alabama
Houston, Texas 77056

                  Re:      Pooling and Servicing Agreement, dated as of January
                           1, 2002, among Salomon Brothers Mortgage Securities
                           VII, Inc., Litton Loan Servicing LP, U.S. Bank
                           National Association and Citibank, N.A. as Trust
                           Administrator, Asset Backed Pass-through
                           Certificates, Series 2002-WMC1
                           ----------------------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.02 of the above-captioned 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 attachment hereto), it or a
Custodian on its behalf has received:

                  (i) the original recorded Mortgage, and the original recorded
         power of attorney, if the Mortgage was executed pursuant to a power of
         attorney, or a certified copy thereof in those instances where the
         public recording office retains the original or where the original has
         been lost; and

                  (ii) an original Assignment in recordable form or a recorded
         Assignment to the Trustee together with the original recorded
         Assignment or Assignments showing a complete chain of assignment from
         the originator, or a certified copy of such Assignments in those
         instances where the public recording retains the original or where
         original has been lost; and

                  (iii) the original lender's title insurance policy.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced 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 the 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.



                                      C-2-1

<PAGE>



                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.

                                          U.S. BANK NATIONAL ASSOCIATION

                                          By:________________________________
                                          Name:
                                          Title:






                                      C-2-2

<PAGE>



                                    EXHIBIT D
                                    ---------

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT




                                       D-1

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

                  This is a Mortgage Loan Purchase Agreement (this "Agreement"),
dated January 23, 2002, among WMC Mortgage Corp., a California corporation (the
"Originator"), Salomon Brothers Realty Corp., a New York corporation (the
"Seller") and Salomon Brothers Mortgage Securities VII, Inc., a Delaware
corporation (the "Purchaser").

                              Preliminary Statement
                              ---------------------

                  The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Purchaser intends to deposit the Mortgage Loans
into a mortgage pool comprising the Trust Fund. The Trust Fund will be evidenced
by a single series of mortgage pass-through certificates designated as Series
2002-WMC1 (the "Certificates"). The Certificates will consist of seven classes
of certificates and will be issued pursuant to a Pooling and Servicing
Agreement, dated as of January 1, 2002 (the "Pooling and Servicing Agreement"),
among the Depositor as depositor, Litton Loan Servicing LP as servicer (the
"Servicer"), U.S. Bank National Association as trustee (the "Trustee") and
Citibank, N.A. as trust administrator (the "Trust Administrator"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.

                  The parties hereto agree as follows:

                  SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell
and the Purchaser agrees to purchase, on or before January 25, 2002 (the
"Closing Date"), certain fixed-rate and adjustable-rate conventional, one- to
four-family, residential mortgage loans (the "Mortgage Loans"), having an
aggregate principal balance as of the close of business on January 1, 2002, (the
"Cut-off Date") of approximately $247,549,189.97 (the "Closing Balance"), after
giving effect to all payments due on the Mortgage Loans on or before the Cut-off
Date, whether or not received including the right to any Prepayment Charges
payable by the related Mortgagors in connection with any Principal Prepayments
on the Mortgage Loans.

                  SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare or cause to be prepared on or prior to the Closing Date a final schedule
(the "Closing Schedule") that shall describe such Mortgage Loans and set forth
all of the Mortgage Loans to be purchased under this Agreement, including the
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.

                  SECTION 3. CONSIDERATION.

                  (a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, pay to or upon the
order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to the net sale proceeds of the Certificates.




<PAGE>



                  (b) The Purchaser or any assignee, transferee or designee of
the Purchaser shall be entitled to all scheduled payments of principal due after
the Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.

                  (c) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the Certificateholders.

                  SECTION 4. TRANSFER OF THE MORTGAGE LOANS.

                  (a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
and in connection therewith hereby assigns, to the Purchaser, effective as of
the Closing Date, without recourse but subject to the terms of this Agreement,
all of its right, title and interest in, to and under the Mortgage Loans,
including the related Prepayment Charges. The contents of each Mortgage File not
delivered to the Purchaser or to any assignee, transferee or designee of the
Purchaser on or prior to the Closing Date are and shall be held in trust by the
Seller for the benefit of the Purchaser or any assignee, transferee or designee
of the Purchaser. Upon the sale of the Mortgage Loans, the ownership of each
Mortgage Note, the related Mortgage and the other contents of the related
Mortgage File is vested in the Purchaser and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or that come
into the possession of the Seller on or after the Closing Date shall immediately
vest in the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser.

                  (b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on
or prior to the Closing Date, deliver or cause to be delivered to the Purchaser
or any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed in blank or in the
         following form: "Pay to the order of U. S. Bank National Association,
         as Trustee under the applicable agreement, without recourse," with all
         prior and intervening endorsements showing a complete chain of
         endorsement from the originator to the Person so endorsing to the
         Trustee;

                  (ii) the original Mortgage with evidence of recording thereon,
         and the original recorded power of attorney, if the Mortgage was
         executed pursuant to a power of attorney, with evidence of recording
         thereon;

                  (iii) an original Assignment in blank;

                  (iv) the original recorded Assignment or Assignments showing a
         complete chain of assignment from the originator to the Person
         assigning the Mortgage to the Trustee as contemplated by the
         immediately preceding clause (iii);

                  (v) the original or copies of each assumption, modification,
         written assurance or substitution agreement, if any; and


                                       -2-

<PAGE>



                  (vi) the original lender's title insurance policy, together
         with all endorsements or riders that were issued with or subsequent to
         the issuance of such policy, insuring the priority of the Mortgage as a
         first lien on the Mortgaged Property represented therein as a fee
         interest vested in the Mortgagor, or in the event such original title
         policy is unavailable, a written commitment or uniform binder or
         preliminary report of title issued by the title insurance or escrow
         company.

                  The Originator promptly shall (within sixty Business Days
following the later of the Closing Date and the date of the receipt by the
Originator of the recording information for a Mortgage but in no event later
than ninety days following the Closing Date) submit or cause to be submitted for
recording, at no expense to the Purchaser (or the Trust Fund, the Trustee or the
Trust Administrator under the Pooling and Servicing Agreement), in the
appropriate public office for real property records, each Assignment referred to
in clauses (b)(iii) and (b)(iv) of this Section 4 and shall execute or cause to
be executed each original Assignment in the following form: "U.S. Bank National
Association, as Trustee under the applicable agreement." In the event that any
such Assignment is lost or returned unrecorded because of a defect therein, the
Originator promptly shall prepare or cause to be prepared a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.

                  With respect to a maximum of approximately 2.0% of the
Mortgage Loans, by outstanding principal balance of the Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 4(b)(i) above
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Purchaser of a photocopy of such
Mortgage Note, if available, with a lost note affidavit substantially in the
form of Exhibit K to the Pooling and Servicing Agreement. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser within three Business Days.

                  If any of the documents referred to in Sections 4(b)(ii),
(iii) or (iv) above has, as of the Closing Date, been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Purchaser of a copy of each
such document certified by the Originator in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Originator, delivery to the Purchaser promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee, the Trust Administrator and
the Rating Agencies by the Originator if delivery pursuant to clause (2) above
will be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 4(b)(vi) above, the
Originator shall deliver or cause to be delivered to the Purchaser, promptly
after receipt thereof, the original lender's title insurance policy. The
Originator shall deliver or cause to be delivered to the Purchaser promptly upon
receipt thereof any other original documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Mortgage
Loan.


                                       -3-

<PAGE>



                  Each original document relating to a Mortgage Loan which is
not delivered to the Purchaser or its assignee, transferee or designee, if held
by the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.

                  (c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered
pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or any
assignee, transferee or designee of the Purchaser at any time before or after
the Closing Date (and with respect to each document permitted to be delivered
after the Closing Date, within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.

                  (d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller or the Originator, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser. Any
expense reasonably incurred by or on behalf of the Purchaser or the Trustee in
connection with enforcing any obligations of the Seller or the Originator under
this Agreement will be promptly reimbursed by the Seller or the Originator, as
applicable.

                  (e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date,
the Originator shall either (i) deliver in escrow to the Purchaser, or to any
assignee, transferee or designee of the Purchaser for examination, the Mortgage
File pertaining to each Mortgage Loan or (ii) make such Mortgage Files available
to the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours before the Closing Date and within 60 days after the Closing
Date. If any such person makes such examination prior to the Closing Date and
identifies any Mortgage Loans that do not conform to the requirements of the
Purchaser as described in this Agreement, such Mortgage Loans shall be deleted
from the Closing Schedule. The Purchaser may, at its option and without notice
to the Seller, purchase all or part of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or any person has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the rights of the Purchaser or any assignee,
transferee or designee of the Purchaser to demand repurchase or other relief as
provided herein or under the Pooling and Servicing Agreement.

                  SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                             ORIGINATOR AND THE SELLER.

                  (a) The Originator hereby represents and warrants to the
Seller and the Purchaser, as of the date hereof and as of the Closing Date, and
covenants, that:

                  (i) The Originator is duly organized, validly existing and in
         good standing under the laws of the state of California and is and will
         remain in compliance with the laws of each state in which any Mortgaged
         Property is located to the extent such compliance is necessary to
         ensure the enforceability of each Mortgage Loan;



                                       -4-

<PAGE>



                  (ii) The Originator had the full power and authority to
         originate, acquire and hold each Mortgage Loan and to sell each
         Mortgage Loan to the Seller, and has the full power and authority to
         execute, deliver and perform, and to enter into and consummate, all
         transactions contemplated by this Agreement. The Originator has duly
         authorized the execution, delivery and performance of this Agreement,
         has duly executed and delivered this Agreement, and this Agreement,
         assuming due authorization, execution and delivery by the Seller and
         the Purchaser, constitutes a legal, valid and binding obligation of the
         Originator, enforceable against it in accordance with its terms except
         as the enforceability thereof may be limited by bankruptcy, insolvency
         or reorganization;

                  (iii) The execution and delivery of this Agreement by the
         Originator and the performance of and compliance with the terms of this
         Agreement which are applicable to the Originator will not violate the
         Originator's articles of incorporation or by-laws or constitute a
         default under or result in a breach or acceleration of, any material
         contract, agreement or other instrument to which the Originator is a
         party or which may be applicable to the Originator or its assets;

                  (iv) The Originator is not in violation of, and the execution
         and delivery of this Agreement by the Originator and its performance
         and compliance with the terms of this Agreement will not constitute a
         violation with respect to, any order or decree of any court or any
         order or regulation of any federal, state, municipal or governmental
         agency having jurisdiction over the Originator or its assets, which
         violation might have consequences that would materially and adversely
         affect the condition (financial or otherwise) or the operation of the
         Originator or its assets or might have consequences that would
         materially and adversely affect the enforceability of the Mortgage
         Loans or this Agreement or the performance of its obligations and
         duties hereunder;

                  (v) The Originator is a HUD approved mortgagee pursuant to
         Section 203 of the National Housing Act. No event has occurred,
         including but not limited to a change in insurance coverage, which
         would make the Originator unable to comply with HUD eligibility
         requirements or which would require notification to HUD;

                  (vi) The Originator does not believe, nor does it have any
         reason or cause to believe, that it cannot perform each and every
         covenant of the Originator contained in this Agreement;

                  (viii) Immediately prior to the sale of the Mortgage Loans to
         the Seller, the Originator was the owner of record of the related
         Mortgage and the indebtedness evidenced by the related Mortgage Note
         and, in the event that the Originator retains record title, the
         Originator shall retain such record title to each Mortgage, each
         related Mortgage Note and the related Mortgage Files with respect
         thereto in trust for the Seller as the owner thereof and from and after
         the date hereof;

                  (ix) There are no actions or proceedings against, or
         investigations of, the Originator before any court, administrative or
         other tribunal (A) that are reasonably likely to prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of the


                                       -5-

<PAGE>



         transactions contemplated by this Agreement or (C) that are reasonably
         likely to prohibit or materially and adversely affect the performance
         by the Originator of its obligations under, or the validity or
         enforceability of, this Agreement;

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

                  (xi) The consummation of the transactions contemplated by this
         Agreement are in the ordinary course of business of the Originator, and
         the transfer, assignment and conveyance of the Mortgage Notes and the
         Mortgages by the Originator to the Seller were not subject to the bulk
         transfer or any similar statutory provisions.

                  (b) The Seller hereby represents and warrants to the
Originator and the Purchaser, as of the date hereof and as of the Closing Date,
and covenants, that:

                  (i) The Seller is duly organized, validly existing and in good
         standing as a corporation under the laws of the State of New York with
         full corporate power and authority to conduct its business as presently
         conducted by it to the extent material to the consummation of the
         transactions contemplated herein. The Seller has the full corporate
         power and authority to own the Mortgage Loans and to transfer and
         convey the Mortgage Loans to the Purchaser and has the full corporate
         power and authority to execute and deliver, engage in the transactions
         contemplated by, and perform and observe the terms and conditions of
         this Agreement.

                  (ii) The Seller has duly authorized the execution, delivery
         and performance of this Agreement, has duly executed and delivered this
         Agreement, and this Agreement, assuming due authorization, execution
         and delivery by the Originator and the Purchaser, constitutes a legal,
         valid and binding obligation of the Seller, enforceable against it in
         accordance with its terms except as the enforceability thereof may be
         limited by bankruptcy, insolvency or reorganization or by general
         principles of equity.

                  (iii) The execution, delivery and performance of this
         Agreement by the Seller (x) does not conflict and will not conflict
         with, does not breach and will not result in a breach of and does not
         constitute and will not constitute a default (or an event, which with
         notice or lapse of time or both, would constitute a default) under (A)
         any terms or provisions of the articles of incorporation or by-laws of
         the Seller, (B) any term or provision of any material agreement,
         contract, instrument or indenture, to which the Seller is a party or by
         which the Seller or any of its property is bound or (C) any law, rule,
         regulation, order, judgment, writ, injunction or decree of any court or
         governmental authority having jurisdiction over the Seller or any of
         its property and (y) does not create or impose and will not result 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.


                                       -6-

<PAGE>



                  (iv) No consent, approval, authorization or order of,
         registration or filing with, or notice on behalf of the Seller to any
         governmental authority or court is required, under federal laws or the
         laws of the State of New York, for the execution, delivery and
         performance by the Seller of, or compliance by the Seller with, this
         Agreement or the consummation by the Seller of any other transaction
         contemplated hereby and by the Pooling and Servicing Agreement;
         provided, however, that the Seller makes no representation or warranty
         regarding federal or state securities laws in connection with the sale
         or distribution of the Certificates.

                  (v) This Agreement does not contain any untrue statement of
         material fact or omit to state a material fact necessary to make the
         statements contained herein not misleading. The written statements,
         reports and other documents prepared and furnished or to be prepared
         and furnished by the Seller pursuant to this Agreement or in connection
         with the transactions contemplated hereby taken in the aggregate do not
         contain any untrue statement of material fact or omit to state a
         material fact necessary to make the statements contained therein not
         misleading.

                  (vi) The Seller is not in violation of, and the execution and
         delivery of this Agreement by the Seller and its performance and
         compliance with the terms of this Agreement will not constitute a
         violation with respect to, any order or decree of any court or any
         order or regulation of any federal, state, municipal or governmental
         agency having jurisdiction over the Seller or its assets, which
         violation might have consequences that would materially and adversely
         affect the condition (financial or otherwise) or the operation of the
         Seller or its assets or might have consequences that would materially
         and adversely affect the performance of its obligations and duties
         hereunder.

                  (vii) The Seller does not believe, nor does it have any reason
         or cause to believe, that it cannot perform each and every covenant
         contained in this Agreement.

                  (viii) Immediately prior to the sale of the Mortgage Loans to
         the Purchaser as herein contemplated, the Seller will be the owner of
         the related Mortgage and the indebtedness evidenced by the related
         Mortgage Note, and, upon the payment to the Seller of the Purchase
         Price, in the event that the Seller retains or has retained record
         title, the Seller shall retain such record title to each Mortgage, each
         related Mortgage Note and the related Mortgage Files with respect
         thereto in trust for the Purchaser as the owner thereof from and after
         the date hereof.

                  (ix) There are no actions or proceedings against, or
         investigations known to it of, the Seller before any court,
         administrative or other tribunal (A) that might prohibit its entering
         into this Agreement, (B) seeking to prevent the sale of the Mortgage
         Loans by the Seller or the consummation of the transactions
         contemplated by this Agreement or (C) that might prohibit or materially
         and adversely affect the performance by the Seller of its obligations
         under, or validity or enforceability of, this Agreement.

                  (x) The consummation of the transactions contemplated by this
         Agreement are in the ordinary course of business of the Seller, and the
         transfer, assignment and conveyance


                                       -7-

<PAGE>



         of the Mortgage Notes and the Mortgages by the Seller are not subject
         to the bulk transfer or any similar statutory provisions.

                  (xi) The Seller has not dealt with any broker, investment
         banker, agent or other person, except for the Purchaser or any of its
         affiliates, that may be entitled to any commission or compensation in
         connection with the sale of the Mortgage Loans.

                  (xiii) There is no litigation currently pending or, to the
         best of the Seller's knowledge without independent investigation,
         threatened against the Seller that would reasonably be expected to
         adversely affect the transfer of the Mortgage Loans, the issuance of
         the Certificates or the execution, delivery, performance or
         enforceability of this Agreement, or that would result in a material
         adverse change in the financial condition of the Seller.

                  (xiv) Each Mortgage Loan constitutes a "qualified mortgage"
         within the meaning of Section 860G(a)(3) of the Code.

                  SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
                             RELATING TO THE MORTGAGE LOANS.

                  REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE
                  LOANS.

                  (a) The Originator hereby represents and warrants to the
Seller and the Purchaser that as to each Mortgage Loan as of the Closing Date or
as of such other date as specified herein:

                  (i) The information set forth in the mortgage loan schedule
provided to the Seller by the Originator was true and correct;

                  (ii) The Originator has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of the related Mortgaged Property, directly or indirectly, for the payment
of any amount required by the Mortgage Note or Mortgage; and there has been no
delinquency, exclusive of any period of grace, in any payment by the Mortgagor
thereunder since the origination of the Mortgage Loan;

                  (iii) As of the date on which servicing for the Mortgage Loan
transferred from the Originator (the "Servicing Transfer Date"), there were no
delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments or other similar outstanding charges
affecting the related Mortgaged Property;

                  (iv) As of the Servicing Transfer Date, the terms of the
Mortgage Note and the Mortgage had not been waived, altered or modified in any
respect, except by written instruments, recorded in the applicable public
recording office if necessary to maintain the lien priority of the Mortgage, and
which have been delivered to the Purchaser; the substance of any such waiver,
alteration or modification has been approved by the title insurer, to the extent
required by the related policy, and is reflected on the Mortgage Loan Schedule.
As of the Servicing Transfer Date, no instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been


                                       -8-

<PAGE>



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 has been delivered to the Purchaser and the terms of which
are reflected in the Mortgage Loan Schedule;

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

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

                  (vii) As of the Servicing Transfer Date, 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, anti-predatory lending, equal credit opportunity, fair housing or
disclosure laws applicable to the origination and servicing of mortgage loans of
a type similar to the Mortgage Loans had been complied with;

                  (viii) 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 satisfaction,
cancellation, subordination, rescission or release;

                  (ix) As of the Servicing Transfer Date, the Mortgage was a
valid, existing and enforceable first lien on the Mortgaged Property, including
all improvements on the Mortgaged Property subject only to (a) the lien of
current real property taxes and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of the Mortgage Loan
and which do not adversely affect the Value of the Mortgaged Property, and (c)
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 value or marketability of the


                                       -9-

<PAGE>



related Mortgaged Property. Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with the Mortgage
Loan establishes and creates a valid, existing and enforceable first lien and
first priority security interest on the property described therein and the
Originator had full right to sell and assign the same to the Seller. Except as
disclosed in writing by the Originator to the Seller and the Purchaser, the
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage.

                  (x) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, subject to applicable bankruptcy laws,
general principles of equity and laws affecting creditors rights;

                  (xi) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person;

                  (xii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds 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 have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;

                  (xiii) At the time of the sale of the Mortgage Loans to the
Seller, the Originator was the sole legal, beneficial and equitable owner of the
Mortgage Note and the Mortgage and had full right to transfer and sell the
Mortgage Loan to the Seller free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest;

                  (xiv) All parties which have had any interest in the Mortgage
Loan (other than the Seller), whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) in compliance with any and all applicable "doing business" and
licensing requirements of the laws of the state wherein the Mortgaged Property
is located;

                  (xv) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") ALTA lender's title insurance policy (which, in the case of
an Adjustable-Rate Mortgage Loan has an adjustable rate mortgage endorsement in
the form of ALTA 6.0 or 6.1) acceptable to Fannie Mae and Freddie Mac, issued by
a title insurer acceptable to Fannie Mae and Freddie Mac and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained in (ix)(a), (b) and (c) above) the
Originator, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan and, with respect
to any Adjustable-Rate Mortgage Loan, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of the
Mortgage providing for adjustment in the Mortgage Rate and Monthly Payment.
Additionally, such lender's title insurance


                                      -10-

<PAGE>



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

                  (xvi) As of the Servicing Transfer Date, there was no default,
breach, violation or event of acceleration existing under the Mortgage or the
Mortgage Note and, to the Originator's knowledge, no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration; the
Originator has not waived any default, breach, violation or event of
acceleration;

                  (xvii) As of the Servicing Transfer Date, there were no
mechanics' or similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under law could give rise to such
lien) affecting the related Mortgaged Property which are or may be liens prior
to, or equal or coordinate with, the lien of the related Mortgage;

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

                  (xix) Principal payments on the Mortgage Loan commenced no
more than sixty days after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Rate. Except with respect to any
Mortgage Loan identified on the Mortgage Loan Schedule as a balloon mortgage
loan (each, a "Balloon Mortgage Loan"), the Mortgage Note is payable on the
first day of each month in Monthly Payments, which, in the case of a Fixed-Rate
Mortgage Loan, are sufficient to fully amortize the original principal balance
over the original term thereof and to pay interest at the related Mortgage Rate,
and, in the case of an Adjustable-Rate Mortgage Loan, are changed on each
Adjustment Date, and in any case, are sufficient to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Rate. In the case of a Balloon Mortgage Loan, the Mortgage Note
is payable in monthly payments based on a thirty (30) year amortization schedule
and a final monthly payment substantially greater than the preceding monthly
payment which is sufficient to amortize the remaining principal balance of the
Balloon Mortgage Loan. The Mortgage Note does not permit negative amortization.
No Adjustable-Rate Mortgage Loan is convertible to a Fixed-Rate Mortgage Loan;

                  (xx) During the time that the Originator serviced the Mortgage
Loan, the origination and collection practices used by the Originator with
respect to each Mortgage Note and Mortgage have been in all respects legal and
customary in the mortgage origination and servicing industry. During the time
that the Originator serviced the Mortgage Loan, the Mortgage Loan has been
serviced by the Originator and any predecessor servicer in accordance with the
terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments
collected by the Originator, if any, all such payments are in the possession of,
or under the control of, the Originator and there


                                      -11-

<PAGE>



exist no deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. No escrow deposits or Escrow Payments
or other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Originator for any work on a Mortgaged Property
which has not been completed;

                  (xxi) As of the Servicing Transfer Date, the Mortgaged
Property was free of damage and waste and there is no proceeding pending for the
total or partial condemnation thereof;

                  (xxii) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (b)
otherwise by judicial foreclosure. As of the Servicing Transfer Date, the
Mortgaged Property was not subject to any bankruptcy proceeding or foreclosure
proceeding and the Mortgagor had not filed for protection under applicable
bankruptcy laws. There is no homestead or other exemption available to the
Mortgagor which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage. The Mortgagor has not
notified the Originator and the Originator has no knowledge of any relief
requested or allowed to the Mortgagor under the Soldiers and Sailors Civil
Relief Act of 1940;

                  (xxiii) The Mortgage Loan was underwritten in accordance with
the underwriting standards of the Originator in effect at the time the Mortgage
Loan was originated including exceptions made in accordance with the
Originator's underwriting guidelines;

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

                  (xxv) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of Fannie Mae and Freddie Mac
and was made and signed, prior to the approval of the Mortgage Loan application,
by a qualified appraiser, duly appointed by the Originator, who had no interest,
direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of
the Mortgage Loan and who met the minimum qualifications of Fannie Mae and
Freddie Mac. Each appraisal of the Mortgage Loan was made in accordance with the
relevant provisions of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989;

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

                  (xxvii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the


                                      -12-

<PAGE>



Originator, the Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any
source other than the Mortgagor or (c) contains 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;

                  (xxviii) The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of fixed rate mortgage loans in the case of
Fixed-Rate Mortgage Loans, and adjustable rate mortgage loans in the case of
Adjustable-Rate Mortgage Loans and rescission materials with respect to
refinanced Mortgage Loans, and such statement is and will remain in the Mortgage
File;

                  (xxix) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade in or exchange of a Mortgaged Property;

                  (xxx) As of the Servicing Transfer Date, the Mortgaged
Property was lawfully occupied under applicable law; all inspections, licenses
and certificates required to be made or issued under applicable law 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, have been made or obtained from the appropriate authorities;

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

                  (xxxii) The Assignment is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the Mortgaged Property
is located;

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

                  (xxxiv) Except as identified on the Mortgage Loan Schedule, no
Mortgage Loan has a balloon payment feature;

                  (xxxv) If the residential dwelling on the Mortgaged Property
is a condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the eligibility requirements of Fannie Mae and Freddie Mac;



                                      -13-

<PAGE>



                  (xxxvi) Interest on each Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months;

                  (xxxvii) As of the Servicing Transfer Date, the Mortgaged
Property was in material compliance with all applicable environmental laws
pertaining to environmental hazards including, without limitation, asbestos, and
neither the Originator nor, to the Originator's knowledge, the related
Mortgagor, has received any notice of any violation or potential violation of
such law;

                  (xxxviii) The Originator shall, at its own expense, cause each
Mortgage Loan to be covered by a transferable contract maintained for the
Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property (a "Tax Service Contract"), which is assignable to the Purchaser or its
designee; provided however, that if the Originator fails to purchase such Tax
Service Contract, the Originator shall be required to reimburse the Purchaser
for the costs of any such Tax Service Contract;

                  (xxxix) Each Mortgage Loan is covered by a transferable
contract maintained for the Mortgaged Property with a nationally recognized
flood zone service provider for the purpose of obtaining the current flood zone
status relating to such Mortgaged Property (a "Flood Zone Service Contract"), if
applicable, which is assignable to the Purchaser or its designee or, for each
Mortgage Loan not covered by such Flood Zone Service Contract, the Originator
agrees to purchase such Flood Zone Service Contract;

                  (xl) No Mortgage Loan had a Loan-to-Value Ratio at origination
in excess of 100%;

                  (xli) No Mortgage Loan was selected for sale to the Seller
from the Originator's portfolio of comparable mortgage loans in a manner so as
to adversely affect the interests of the Seller;

                  (xlii) No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 ("HOEPA");

                  (xliii) No Mortgage Loan had a credit score from Fair, Isaac
and Co., Inc. of lower than 500 at the time of origination;

                  (xliv) No Mortgagor has purchased single premium credit life
insurance in conjunction with the origination of the Mortgage Loan;

                  (xlvi) No more than 1% of the Mortgage Loans (as measured by
aggregate unpaid principal balance as of the Cut-off Date) are secured by
leasehold estates. With respect to each Mortgage Loan that is secured in whole
or in part by the interest of the mortgagor as a lessee under a ground lease of
the related Mortgaged Property (a "Ground Lease") and not by a fee interest in
such Mortgaged Property:

                  a.       The mortgagor is the owner of a valid and subsisting
                           interest as tenant under the Ground Lease;


                                      -14-

<PAGE>




                  b.       The Ground Lease is in full force and effect,
                           unmodified and not supplemented by any writing or
                           otherwise;

                  c.       The mortgagor is not in default under any of the
                           terms thereof and there are no circumstances which,
                           with the passage of time or the giving of notice or
                           both, would constitute an event of default
                           thereunder;

                  d.       The lessor under the Ground Lease is not in default
                           under any of the terms or provisions thereof on the
                           part of the lessor to be observed or performed;

                  e.       The term of the Ground Lease exceeds the maturity
                           date of the related Mortgage Loan by at least ten
                           years;

                  f.       The Ground Lease or a memorandum thereof has been
                           recorded and by its terms permits the leasehold
                           estate to be mortgaged. The Ground Lease grants any
                           leasehold mortgagee standard protection necessary to
                           protect the security of a leasehold mortgagee;

                  g.       The Ground Lease does not contain any default
                           provisions that could give rise to forfeiture or
                           termination of the Ground Lease except for the
                           non-payment of the Ground Lease rents;

                  h.       The execution, delivery and performance of the
                           Mortgage do not require the consent (other than those
                           consents which have been obtained and are in full
                           force and effect) under, and will not contravene any
                           provision of or cause a default under, the Ground
                           Lease; and

                  i.       The Ground Lease provides that the leasehold can be
                           transferred, mortgaged and sublet an unlimited number
                           of times either without restriction or on payment of
                           a reasonable fee and delivery of reasonable
                           documentation to the lessor.

                  (b) The Seller hereby represents and warrants to the Purchaser
that as to each Mortgage Loan as of the Closing Date:

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

                  (ii) All payments required to be made up to the close of
business on the Cut-off Date for such Mortgage Loan under the terms of the
Mortgage Note have been made;

                  (iii) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments or
other similar outstanding charges affecting the related Mortgaged Property;



                                      -15-

<PAGE>



                  (iv) The terms of the Mortgage Note and the Mortgage have not
been waived, altered or modified in any respect, except by written instruments,
recorded in the applicable public recording office if necessary to maintain the
lien priority of the Mortgage, and which have been delivered to the Purchaser;
the substance of any such waiver, alteration or modification has been approved
by the title insurer, to the extent required by the related policy, and is
reflected on the Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement approved by the title
insurer, to the extent required by the policy, and which assumption agreement
has been delivered to the Purchaser and the terms of which are reflected in the
Mortgage Loan Schedule;

                  (v) All buildings upon the Mortgaged Property are insured by
an insurer acceptable to Fannie Mae and Freddie Mac against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located. If the Mortgaged Property is in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of Fannie Mae and Freddie
Mac;

                  (vi) 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, anti-predatory lending, equal
credit opportunity, fair housing or disclosure laws applicable to the
origination and servicing of mortgage loans of a type similar to the Mortgage
Loans have been complied with;

                  (vii) 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 satisfaction,
cancellation, subordination, rescission or release;

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

                  (ix) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and, to the
Seller's knowledge, no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; the Seller has not waived any default,
breach, violation or event of acceleration;


                                      -16-

<PAGE>



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

                  (xi) The origination and collection practices with respect to
each Mortgage Note and Mortgage have been in all respects legal and customary in
the mortgage origination and servicing industry. The Mortgage Loan has been
serviced in accordance with the terms of the Mortgage Note. With respect to
escrow deposits and Escrow Payments collected by the Seller, if any, all such
payments are in the possession of, or under the control of, the Seller and there
exist no deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. No escrow deposits or Escrow Payments
or other charges or payments due the Seller have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Seller for any work on a Mortgaged Property which
has not been completed;

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

                  (xiii) The Mortgaged Property is not presently subject to any
bankruptcy proceeding or foreclosure proceeding and the Mortgagor has not filed
for protection under applicable bankruptcy laws;

                  (xiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued under applicable law 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, have been made or
obtained from the appropriate authorities;

                  (xv) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards including,
without limitation, asbestos, and neither the Seller nor, to the Seller's
knowledge, the related Mortgagor, has received any notice of any violation or
potential violation of such law; and

                  (xvi) 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) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located.

                  SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
                             AND FOR BREACH OF REPRESENTATION AND WARRANTY.

                  (a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Seller or the Purchaser to review or examine


                                      -17-

<PAGE>



such documents and shall inure to the benefit of any assignee, transferee or
designee of the Purchaser, including the Trustee for the benefit of holders of
the Certificates.

                  Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by or at the direction of the
Seller (as listed on the Trustee's Preliminary Exception Report) as part of any
Mortgage File, or of a breach of any of the representations and warranties
contained in Section 6 that materially and adversely affects the value of any
Mortgage Loan or the interest therein of the Purchaser or the Purchaser's
assignee, transferee or designee, the party discovering such breach shall give
prompt written notice to the Originator or the Seller, as applicable. Within
sixty (60) days of its discovery or its receipt of notice of any such missing
documentation that was not transferred to the Purchaser as described above, or
of materially defective documentation, or of any such breach of a representation
and warranty, the Originator or the Seller, as applicable, promptly shall
deliver such missing document or cure such defect or breach in all material
respects or, in the event the Originator or the Seller cannot deliver such
missing document or cannot cure such defect or breach, the Originator or the
Seller, as applicable, shall, within ninety (90) days of its discovery or
receipt of notice, either (i) repurchase the affected Mortgage Loan at the
Purchase Price (as such term is defined in the Pooling and Servicing Agreement)
or (ii) pursuant to the provisions of the Pooling and Servicing Agreement, cause
the removal of such Mortgage Loan from the Trust Fund and substitute one or more
Qualified Substitute Mortgage Loans. The Originator or the Seller, as
applicable, shall amend the Closing Schedule to reflect the withdrawal of such
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement. The Originator or the Seller, as applicable, shall deliver to the
Purchaser such amended Closing Schedule and shall deliver such other documents
as are required by this Agreement or the Pooling and Servicing Agreement within
five (5) days of any such amendment. Any repurchase pursuant to this Section
7(a) shall be accomplished by transfer to an account designated by the Purchaser
of the amount of the Purchase Price in accordance with Section 2.03 of the
Pooling and Servicing Agreement. Any repurchase required by this Section shall
be made in a manner consistent with Section 2.03 of the Pooling and Servicing
Agreement.

                  (c) Notwithstanding the foregoing, with respect to an alleged
breach of a representation and warranty which breach is covered by a title
insurance policy, the Purchaser shall use reasonable efforts to enforce the
provisions of any related title insurance policy prior to seeking a remedy
against the Originator or the Seller hereunder.

                  (d) It is understood and agreed that the obligations of the
Originator or the Seller set forth in this Section 7 to cure or repurchase a
defective Mortgage Loan constitute the sole remedies of the Purchaser against
the Originator or the Seller respecting a missing document or a breach of the
representations and warranties contained in Section 6.

                  SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The
closing of the purchase and sale of the Mortgage Loans shall be held at the New
York City office of Thacher Proffitt & Wood at 10:00 a.m. New York City time on
the Closing Date.

                  The closing shall be subject to each of the following
conditions:



                                      -18-

<PAGE>



                  (a)      All of the representations and warranties of the
                           Seller and the Originator under this Agreement shall
                           be true and correct in all material respects as of
                           the date as of which they are made and no event shall
                           have occurred which, with notice or the passage of
                           time, would constitute a default under this
                           Agreement;

                  (b)      The Purchaser shall have received, or the attorneys
                           of the Purchaser shall have received in escrow (to be
                           released from escrow at the time of closing), all
                           Closing Documents as specified in Section 9 of this
                           Agreement, in such forms as are agreed upon and
                           acceptable to the Purchaser, duly executed by all
                           signatories other than the Purchaser as required
                           pursuant to the respective terms thereof;

                  (c)      The Seller shall have delivered or caused to be
                           delivered and released to the Purchaser or to its
                           designee, all documents (including without
                           limitation, the Mortgage Loans) required to be so
                           delivered by the Purchaser pursuant to Section 2.01
                           of the Pooling and Servicing Agreement;

                  (d)      The Seller shall have executed the Indemnification
                           Agreement, dated as of January 25, 2002, between the
                           Purchaser and Litton, and shall have assumed all of
                           the obligations of the Purchaser thereunder; and

                  (e)      All other terms and conditions of this Agreement and
                           the Pooling and Servicing Agreement shall have been
                           complied with.

                  Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Closing Date, against
delivery and release by the Seller to the Trustee of all documents required
pursuant to the Pooling and Servicing Agreement, the consideration for the
Mortgage Loans as specified in Section 3 of this Agreement, by delivery to the
Seller of the Purchase Price in immediately available funds.

                  SECTION 9. CLOSING DOCUMENTS. Without limiting the generality
of Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:

                  (a)      An Officer's Certificate of the Seller, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser and Salomon Smith Barney Inc. (the
                           "Representative") may rely, and attached thereto
                           copies of the certificate of incorporation, by-laws
                           and certificate of good standing of the Seller under
                           the laws of New York;

                  (b)      An Officer's Certificate of the Seller, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser and the Representative may rely, with
                           respect to certain facts regarding the sale of the
                           Mortgage Loans by the Seller to the Purchaser;



                                      -19-

<PAGE>



                  (c)      An Opinion of Counsel of the Seller, dated the
                           Closing Date, in form satisfactory to and addressed
                           to the Purchaser and the Representative;

                  (d)      An Officer's Certificate of the Originator, dated the
                           Closing Date, in form satisfactory to and upon which
                           the Purchaser and the Representative may rely, and
                           attached thereto copies of the certificate of
                           incorporation, by-laws and certificate of good
                           standing of the Originator under the laws of
                           California;

                  (e)      Such opinions of counsel as the Rating Agencies, the
                           Trustee or the Trust Administrator may request in
                           connection with the sale of the Mortgage Loans by the
                           Seller to the Purchaser or the Seller's execution and
                           delivery of, or performance under, this Agreement;

                  (f)      A letter from Deloitte & Touche LLP, certified public
                           accountants, to the effect that they have performed
                           certain specified procedures as a result of which
                           they determined that certain information of an
                           accounting, financial or statistical nature set forth
                           in the Purchaser's prospectus supplement for Series
                           2002-WMC1, dated January 23, 2002 (the "Prospectus
                           Supplement") relating to the Offered Certificates
                           contained under the captions "Summary--The Mortgage
                           Loans," "Risk Factors," (to the extent of information
                           concerning the Mortgage Loans contained therein) "The
                           Mortgage Pool" agrees with the records of the Seller;

                  (h)      Such further information, certificates, opinions and
                           documents as the Purchaser or the Representative may
                           reasonably request.

                  SECTION 10. COSTS. The Originator shall pay (or shall
reimburse the Purchaser or any other Person to the extent that the Purchaser or
such other Person shall pay) all costs and expenses incurred in connection with
the transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the fees and expenses of the Originator's
accountants and attorneys, the costs and expenses incurred in connection with
producing the Originator's loan loss, foreclosure and delinquency experience,
and the costs and expenses incurred in connection with obtaining the documents
referred to in Sections 9(d), 9(e) and 9(f).

                  The Seller shall pay (or shall reimburse the Purchaser or any
other Person to the extent that the Purchaser or such other Person shall pay)
the fees and expenses of the Seller's accountants and attorneys, the costs and
expenses incurred in connection with producing the Servicer's or any
Subservicer's loan loss, foreclosure and delinquency experience, the costs and
expenses incurred in connection with obtaining the documents referred to in
Sections 9(a), 9(b), 9(c) and 9(h), the costs and expenses of printing (or
otherwise reproducing) and delivering this Agreement, the Pooling and Servicing
Agreement, the Certificates, the prospectus and Prospectus Supplement, and any
private placement memorandum relating to the Certificates and other related
documents, the initial fees, costs and expenses of the Trustee and the Trust
Administrator, the fees and expenses of the Purchaser's counsel in connection
with the preparation of all documents relating


                                      -20-

<PAGE>



to the securitization of the Mortgage Loans, the filing fee charged by the
Securities and Exchange Commission for registration of the Certificates, the
cost of outside special counsel that may be required by the Originator and the
fees charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.

                  SECTION 11. [RESERVED].

                  SECTION 12. INDEMNIFICATION. (a) The Originator shall
indemnify and hold harmless each of (i) the Purchaser, (ii) the Underwriters,
(iii) the Person, if any, to which the Purchaser assigns its rights in and to a
Mortgage Loan and each of their respective successors and assigns and (iv) each
person, if any, who controls the Purchaser within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "1933 Act") ((i) through (iv)
collectively, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or any private placement
memorandum relating to the offering by the Purchaser or an affiliate thereof, of
the Class CE Certificates or the Class P Certificates or net interest margin
securities backed by distributions on the Class CE Certificates or Class P
Certificates, or the omission or the alleged omission to state therein the
material fact necessary in order to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished in writing to the Purchaser or
any of its affiliates by the Originator or any of its affiliates specifically
for use therein, which shall include, with respect to the Prospectus Supplement,
the information set forth under the caption "The Originator" and, with respect
to any private placement memorandum, any information of a comparable nature and
(b) any representation, warranty or covenant made by the Originator or any
affiliate of the Originator herein, on which the Purchaser has relied, being, or
alleged to be, untrue or incorrect and which would have a material adverse
effect upon the Mortgage Loans; provided, however, that to the extent that any
such losses, claims, expenses, damages or liabilities to which the Indemnified
Party may become subject arise out of or are based upon both (1) statements,
omissions, representations, warranties or covenants of the Originator described
in clause (a) or (b) above and (2) any other factual basis, the Originator shall
indemnify and hold harmless the Indemnified Party only to the extent that the
losses, claims, expenses, damages, or liabilities of the person or persons
asserting the claim are determined to rise from or be based upon matters set
forth in clause (1) above and do not result from the negligence or willful
misconduct of such Indemnified Party. This indemnity shall be in addition to any
liability that the Originator may otherwise have.

                  Notwithstanding the foregoing, the Originator shall not be
required to pay consequential damages in connection with this Section 12(a).

                  (b) The Seller shall indemnify and hold harmless each of (i)
the Purchaser, (ii) the Underwriters, (iii) the Person, if any, to which the
Purchaser assigns its rights in and to a Mortgage Loan and each of their
respective successors and assigns and (iv) each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act of 1933, as
amended


                                      -21-

<PAGE>



(the "1933 Act") ((i) through (iv) collectively, the "Indemnified Party")
against any and all losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, expenses, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (a) any untrue statement or
alleged untrue statement of any material fact contained in the Prospectus
Supplement or any private placement memorandum relating to the offering by the
Purchaser or an affiliate thereof, of the Class CE Certificates or the Class P
Certificates or net interest margin securities backed by distributions on the
Class CE Certificates or Class P Certificates, or the omission or the alleged
omission to state therein the material fact necessary in order to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with (i)
information furnished in writing to the Purchaser or any of its affiliates by
the Seller or any of its affiliates specifically for use therein, which shall
include, with respect to the Prospectus Supplement, the information set forth
under the captions "Summary--The Mortgage Loans," "Risk Factors," (to the extent
of information concerning the Mortgage Loans contained therein) and "The
Mortgage Pool" and, with respect to any private placement memorandum, any
information of a comparable nature, or (ii) the data files containing
information with respect to the Mortgage Loans as transmitted by modem to the
Purchaser by the Seller or any of its affiliates (as such transmitted
information may have been amended in writing by the Seller or any of its
affiliates with the written consent of the Purchaser subsequent to such
transmission), (b) any representation, warranty or covenant made by the Seller
or any affiliate of the Seller herein, on which the Purchaser has relied, being,
or alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriters to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Seller or an affiliate of the Seller, including the
current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the Seller
described in clause (a), (b) or (c) above and (2) any other factual basis, the
Seller shall indemnify and hold harmless the Indemnified Party only to the
extent that the losses, claims, expenses, damages, or liabilities of the person
or persons asserting the claim are determined to rise from or be based upon
matters set forth in clause (1) above and do not result from the gross
negligence or willful misconduct of such Indemnified Party. This indemnity shall
be in addition to any liability that the Seller may otherwise have.

                  SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Purchaser for the losses
and damages incurred by the Purchaser in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. As of the Closing
Date, the Seller hereby grants to the Purchaser a lien on and a continuing
security interest in the Seller's interest in each Mortgage Loan and each
document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to the
Purchaser's (i) right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement, and (ii) obligation to deliver or cause
to be delivered the


                                      -22-

<PAGE>



consideration for the Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
Loans rejected by the Purchaser shall concurrently therewith be released from
the security interest created hereby. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.

                  Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the re-delivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.

                  SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at 390 Greenwich Street, 4th Floor, New
York, New York 10013, Attention: Mortgage Finance Group, or such other address
as may hereafter be furnished to the Originator and the Seller in writing by the
Purchaser; if to the Seller, addressed to the Seller at 390 Greenwich Street,
4th Floor, New York, New York 10013, Attention: Mortgage Finance Group, or to
such other address as the Originator and the Seller may designate in writing to
the Purchaser and if to the Originator, addressed to the Originator at WMC
Mortgage Corp., 6320 Canoga Avenue, Woodland Hills, California 91367, Attn:
Mardy Grossman, with a copy to: WMC Mortgage Corp., 6320 Canoga Avenue, Woodland
Hill, California 91367, Attn: George Eshaghian, or such other address as may
hereafter be furnished to the Purchaser and the Seller in writing by the
Originator.

                  SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  SECTION 16. AGREEMENT OF PARTIES. The Seller, the Originator
and the Purchaser each agree to execute and deliver such instruments and take
such actions as either of the others may, from time to time, reasonably request
in order to effectuate the purpose and to carry out the terms of this Agreement
and the Pooling and Servicing Agreement.

                  SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or


                                      -23-

<PAGE>



hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.

         (b) The Originator agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser, notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate or other instrument shall continue in full force and
effect, notwithstanding subsequent termination of this Agreement, the Pooling
and Servicing Agreement or the Trust Fund.

                  SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES
HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.

                  SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Seller to the Purchaser as provided in
Section 4 hereof be, and be construed as, a sale of the Mortgage Loans by the
Seller to the Purchaser and not as a pledge of the Mortgage Loans by the Seller
to the Purchaser to secure a debt or other obligation of the Seller. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time


                                      -24-

<PAGE>



held or invested in the Collection Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession" by the secured party for purposes of
perfecting the security interest pursuant to the New York Uniform Commercial
Code; and (4) notifications to persons holding such property and
acknowledgments, receipts or confirmations from persons holding such property
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to Section 4(d)
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser 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 Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.











                                      -25-

<PAGE>


                  IN WITNESS WHEREOF, the Purchaser, the Seller and the
Originator have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.


                                            SALOMON BROTHERS MORTGAGE
                                            SECURITIES VII, INC.


                                            By:________________________________
                                            Name:
                                            Title:



                                            SALOMON BROTHERS REALTY CORP.


                                            By:________________________________
                                            Name:
                                            Title:



                                            WMC MORTGAGE CORP.


                                            By:________________________________
                                            Name:
                                            Title:

<PAGE>



                                   EXHIBIT E-1
                                   -----------

                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)

Loan Information
----------------

         Name of Mortgagor:          __________________________________

         Master Servicer
         Loan No.:                   __________________________________

Trustee/Custodian
-----------------

         Name:             __________________________________

         Address:                   __________________________________
                                    __________________________________

         Trustee/Custodian
         Mortgage File No.:         __________________________________

Trust Administrator
-------------------

         Name:                      ______________________________

         Address:                   ______________________________
                                    ------------------------------

Depositor
---------

         Name:             SALOMON BROTHERS MORTGAGE
                           SECURITIES VII, INC.

         Address:          __________________________________
                           __________________________________

         Certificates:     Asset Backed Mortgage Pass-Through
                           Certificates, Series 2002-WMC1

                  The undersigned Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Asset
Backed Pass-Through Certificates, Series 2002-WMC1 the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of January 1, 2002, among the Trustee, the Trust
Administrator, the Depositor and the Servicer (the "Pooling and Servicing
Agreement").


                                      E-1-1

<PAGE>





                  ( ) Promissory Note dated _______________, 20__, in the
original principal sum of $__________, made by _____________________, payable
to, or endorsed to the order of, the Trustee.

                  ( ) Mortgage recorded on _________________________ as
instrument no. ____________________ in the County Recorder's Office of the
County of _________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.

                  ( ) Deed of Trust recorded on ___________________ as
instrument no. ________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.

                  ( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on ___________________ as instrument no. _________ in the County
Recorder's Office of the County of _______________, State of
_______________________ in book/reel/docket ____________ of official records at
page/image ____________.

                  ( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  ( ) ---------------------------------------------

                  The undersigned Servicer hereby acknowledges and agrees as
follows:

                  (1) The Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee and the Trust Administrator,
solely for the purposes provided in the Agreement.

                  (2) The Servicer shall not cause or permit the Documents to
become subject to, or encumbered by, any claim, liens, security interest,
charges, writs of attachment or other impositions nor shall the Servicer assert
or seek to assert any claims or rights of setoff to or against the Documents or
any proceeds thereof.

                  (3) The Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan


                                      E-1-2

<PAGE>



relating to the Documents has been liquidated and the proceeds thereof have been
remitted to the Collection Account and except as expressly provided in the
Agreement.

                  (4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the Servicer
shall at all times be earmarked for the account of the Trustee, and the Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Servicer's possession, custody or control.

Dated:

                                      LITTON LOAN SERVICING LP


                                      By:__________________________
                                      Name:
                                      Title:




                                      E-1-3

<PAGE>



                                   EXHIBIT E-2
                                   -----------

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATES
                                SERIES 2002-WMC1

___________________________________________________ HEREBY CERTIFIES THAT HE/SHE
IS AN OFFICER OF THE SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER: _________________ BORROWER'S NAME:______________________

COUNTY: ______________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

______________________________               DATED:______________________

/ / VICE PRESIDENT

/ / ASSISTANT VICE PRESIDENT





                                      E-2-1

<PAGE>



                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                          [Date]

Citibank, N.A.
111 Wall Street
New York, New York 10005


                  Re:      Salomon Home Equity Loan Trust, Series 2002-WMC1,
                           Asset Backed Mortgage Pass-Through Certificates,
                           Class ___, representing a ___% Class ___ Percentage
                           Interest
                           ---------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
January 1, 2002, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, Litton Loan Servicing LP as Servicer, U.S. Bank National Association
as Trustee and Citibank, N.A. as Trust Administrator (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.




                                      F-1-1

<PAGE>



                  Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.

                                               Very truly yours,

                                               [Transferor]

                                               By:___________________________
                                               Name:
                                               Title:





                                      F-1-2

<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                [Date]

Citibank, N.A.
111 Wall Street
New York, New York 10005

                  Re:      Salomon Home Equity Loan Trust, Series 2002-WMC1,
                           Asset Backed Mortgage Pass-Through Certificates,
                           Class ___, representing a ___% Percentage Interest


Ladies and Gentlemen:

                  In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
"1933 Act") and has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that the
sale to it is being made in reliance on Rule 144A. The Transferee is acquiring
the Certificates for its own account or for the account of a qualified
institutional buyer, and understands that such Certificate 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 1933 Act.

                  2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement referred to below, and (d) any credit enhancement mechanism associated
with the Certificates, that it has requested.

                  All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of January 1, 2002, among Salomon Brothers Mortgage
Securities VII, Inc. as Depositor, Litton Loan Servicing LP as Servicer, U.S.
Bank National Association as Trustee and Citibank, N.A. as Trust Administrator,
pursuant to which the Certificates were issued.

                                              [TRANSFEREE]

                                              By:__________________________
                                              Name:
                                              Title:



                                      F-1-3

<PAGE>





                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Ctibibank, N.A., as Trust Administrator, with
respect to the mortgage pass-through certificates (the "Certificates") described
in the Transferee Certificate to which this certification relates and to which
this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
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 Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.

         ___ CORPORATION, ETC. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.

         ___ BANK. The Transferee (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 Transferee (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

--------

        1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities. $25,000,000 as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.



                                      F-1-4

<PAGE>



         ___ BROKER-DEALER. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.

         ___ INSURANCE COMPANY. The Transferee 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 Transferee 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 Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974.

         ___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.

                  3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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 Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.

                  5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor 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 Transferee may be in reliance on Rule 144A.


         ___      ___      Will the Transferee be purchasing the Certificates
         Yes      No       only for the Transferee's own account?



                                      F-1-5

<PAGE>



                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

                  7. The Transferee 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 Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

Dated:

                                 ------------------------------------
                                 Print Name of Transferee


                                 By:_________________________________
                                 Name:
                                 Title:


                                      F-1-6

<PAGE>



                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Citibank, N.A., as Trust Administrator, with
respect to the mortgage pass- through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee'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 Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

         ____              The Transferee owned $___________________ in
                           securities (other than the excluded securities
                           referred to below) as of the end of the Transferee's
                           most recent fiscal year (such amount being calculated
                           in accordance with Rule 144A).

         ____              The Transferee 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 Transferee'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 Transferee or are part of the
Transferee'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.


                                      F-1-7

<PAGE>



                  5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

                  6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                            -----------------------------------
                                            Print Name of Transferee or Advisor


                                            By:________________________________
                                            Name:
                                            Title:

                                            IF AN ADVISER:

                                            -----------------------------------
                                            Print Name of Transferee



                                      F-1-8

<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER
                    ----------------------------------------

                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                  1.  I am an executive officer of the Purchaser.

                  2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933, as
amended.

                  3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.

                                                Name of Purchaser

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

                                                By:____________________________
                                                Name:
                                                Title:


Date of this certificate:

Date of information provided in paragraph 3



                                      F-1-9

<PAGE>



                                   EXHIBIT F-2
                                   -----------

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK       )

COUNTY OF NEW YORK      )

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ______________________ of __________________________
(the "Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Salomon Home Equity Loan Trust, Series
2002-WMC1, Asset Backed Mortgage Pass-Through Certificates, Class R
Certificates, (the "Class R Certificates"), on behalf of whom I make this
affidavit and agreement. Capitalized terms used but not defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement
pursuant to which the Class R Certificates were issued.

                  2. The Owner (i) is and will be a "Permitted Transferee" as of
____________, 20__ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.

                  3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under 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 is to impede the assessment or collection of tax.



                                      F-2-1

<PAGE>



                  4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time during the taxable year
of the pass-through entity, a non-Permitted Transferee is the record holder of
an interest in such entity. (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.)

                  5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

                  6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.

                  7. The Owner's taxpayer identification number is
_________________.

                  8. The Owner has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.

                  9. The Owner is not acquiring and will not transfer the Class
R Certificates in order to impede the assessment or collection of any tax.

                  10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.

                  11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.

                  12. The Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.

                  13. The Owner is not acquiring the Class R Certificates with
the intent to transfer the Class R Certificates to any person or entity that
will not have sufficient assets to pay any taxes


                                      F-2-2

<PAGE>



owed by the holder of such Class R Certificates, or that may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remain outstanding.

                  14. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R Certificate were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.

                  15. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates to
impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the Class
R Certificates remains outstanding; and (iii) is not a "Permitted Transferee".

                  16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

                  17. The Owner of the Class R Certificate, hereby agrees that
in the event that the Trust Fund created by the Pooling and Servicing Agreement
is terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates (with respect to a
termination of REMIC I) any amounts in excess of par received in connection with
such termination. Accordingly, in the event of such termination, the Trustee is
hereby authorized to withhold any such amounts in excess of par and to pay such
amounts directly to the Holders of the Class CE Certificates. This agreement
shall bind and be enforceable against any successor, transferee or assigned of
the undersigned in the Class R Certificate. In connection with any transfer of
the Class R Certificate, the Owner shall obtain an agreement substantially
similar to this clause from any subsequent owner.



                                      F-2-3

<PAGE>



                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                                  [OWNER]

                                                  By:__________________________
                                                  Name:
                                                  Title:    [Vice] President

ATTEST:

By:_________________________________
Name:
Title:            [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 a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.



                                                ----------------------------
                                                        Notary Public

                                                County of __________________
                                                State of ___________________

                                                My Commission expires:




                                      F-2-4

<PAGE>



                          FORM OF TRANSFEROR AFFIDAVIT
                          ----------------------------

STATE OF NEW YORK       )

COUNTY OF NEW YORK      )

                  __________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ____________________ of ____________________________
(the "Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.

                  2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

                  3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

                  4. The Owner understands that the Purchaser has delivered to
the Trustee a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.

                  5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.

                  6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.



                                      F-2-5

<PAGE>



                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                              [OWNER]

                                              By:_____________________________
                                              Name:
                                              Title:      [Vice] President

ATTEST:

By:______________________________
Name:
Title:   [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 a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
20___.



                                                  ----------------------------
                                                          Notary Public

                                                  County of __________________
                                                  State of ___________________

                                                  My Commission expires:








                                      F-2-6

<PAGE>



                                    EXHIBIT G
                                    ---------

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                             _____________, 20__

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

Citibank, N.A.
111 Wall Street
New York, New York 10005

Litton Loan Servicing LP
5373 West Alabama
Houston, Texas 77056

         Re:  Salomon Home Equity Loan Trust, Series 2002-WMC1, Asset Backed
              Mortgage Pass-Through Certificates, Class ___


Dear Sirs:

                  _______________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of Salomon Home Equity Loan Trust, Series 2002-WMC1, Asset
Backed Pass-Through Certificates, Class [CE] [P] [R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of January 1, 2002, among Salomon Brothers Mortgage
Securities VII, Inc. as depositor (the "Depositor"), Litton Loan Servicing LP as
servicer (the "Servicer"), U.S. Bank National Association as trustee (the
"Trustee") and Citibank, N.A. as trust administrator (the "Trust
Administrator"). Capitalized terms used herein and not otherwise defined shall
have the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee, the Trust Administrator and the Servicer that:

         The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R.ss.2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation at 29 C.F.R.ss.
2510.3-101.



                                       G-1

<PAGE>



                                           Very truly yours,

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

                                           By:____________________________
                                           Name:
                                           Title:







                                       G-2

<PAGE>



                                    EXHIBIT H

                     FORM OF REPORT PURSUANT TO SECTION 4.06

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


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

                                  Annual Report

                     Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 (Fee Required)

                     For fiscal year ended ________________

                       Commission file number: 333-_______


                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
            (as depositor under the Pooling and Servicing Agreement,
           dated as of January 1, 2002, providing for the issuance of
            Asset Backed Pass-Through Certificates, Series 2002-WMC1)


                 Salomon Brothers Mortgage Securities VII, Inc.
                 ----------------------------------------------

             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------




           DELAWARE                                        13-3439681
           --------                                        ----------
(State or Other Jurisdiction                            (I.R.S. Employer
of Incorporation)                                       Identification Number)

390 Greenwich Street
NEW YORK, NEW YORK                                             10013
--------------------------------------------                   ------
(Address of Principal Executive Offices)                       (Zip Code)


Registrant's telephone number, including area code:  (212) 816-6000
                                                     --------------

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



                                       H-1

<PAGE>




Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                                          X YES   ___No
                                                         --
Item 1.  Business:

Not applicable

Item 2.  Properties:

Not applicable

Item 3.  Legal Proceedings:

None

Item 4.  Submission of Matters to a Vote of Security-Holders

None

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

To the best knowledge of the registrant there is no established public trading
market for the certificates.

There are approximately _____ holders of record as of the end of the reporting
year.

Item 6.  Selected Financial Data.

Not applicable.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Not applicable



                                       H-2

<PAGE>



Item 8.  Financial Statements and Supplementary Data.

Not applicable.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

None

Item 10.

Not applicable

Item 11.  Executive Compensation

Not applicable

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Not applicable

Item 13.  Certain Relationships and Related Transactions

Not applicable

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)       The company filed on Form 8-K, separately for each
                  distribution date, the distribution of funds related to the
                  trust for each of the following distribution dates:

                           DISTRIBUTION DATE           FORM 8-K FILING DATE
                           -----------------           --------------------
                           ____________________        __________________
                           ____________________        __________________
                           ____________________        __________________

         b)       99.1     Annual Report of Independent Public Accountants' as
                           to master servicing activities or servicing
                           activities, as applicable

                           (a) Litton Loan Servicing LP, as servicer

                  99.2     Annual Statement of Compliance with obligations under
                           the Pooling and Servicing Agreement or servicing
                           agreement, as applicable, of:

                           (a) Litton Loan Servicing LP, as servicer



                                       H-3

<PAGE>



Such document (i) is not filed herewith since such document was not received by
the Reporting Person at least three business days prior to the due date of this
report; and (ii) will be included in an amendment to this report on Form 10-K/A
to be filed within 30 days of the Reporting Person's receipt of such document.


                                   Signatures

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

Date: ___________

                                Salomon Brothers Mortgage Securities VII,
                                Inc., by Citibank N.A., as Trust Administrator
                                for Salomon Home Equity Loan Trust, Series
                                2002-WMC1, Asset Backed Pass-Through
                                Certificates.

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








                                       H-4

<PAGE>



                                    EXHIBIT I

                                   [RESERVED]



                                       I-1

<PAGE>



                                    EXHIBIT J

            FORM OF OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS

                              Officer's Certificate

                Salomon Home Equity Loan Trust, Series 2002-WMC1,
                 Asset Backed Mortgage Pass-Through Certificates


Citibank, N.A., Trust Administrator
111 Wall Street
New York, New York 10005

         Re:      Prepayments

Dear Sir or Madam:

                  __________________ hereby certifies that he/she is an officer
of the Servicer, holding the office set forth beneath his/her name and hereby
further certifies as follows:

                  With respect to the Mortgage Loans, as the term is defined in
the Pooling and Servicing Agreement, dated as of January 1, 2002 (the "Pooling
and Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc.
as depositor (the "Depositor"), Litton Loan Servicing LP as servicer (the
"Servicer"), U.S. Bank National Association as trustee (the "Trustee") and
Citibank, N.A. as trust administrator (the "Trust Administrator"), set forth in
the attached schedule:

                  (1) A Principal Prepayment in full was received during the
related Due Period;

                  (2) Any prepayment penalty due under the terms of the Mortgage
Note with respect to such Principal Prepayment in full was received from the
mortgagor and delivered to the Trust Administrator for deposit in the
Distribution Account; ____ Yes ____ No

                  (3) As to each Mortgage Loan so noted on the attached
schedule, all or part of the prepayment penalty required in connection with the
Principal Prepayment in full was waived based upon (Circle one): (i) the
Servicer's determination that such waiver would maximize recovery of Liquidation
Proceeds for such Mortgage Loan, taking into account the value of such
prepayment penalty, or (ii)(A) the enforceability thereof is limited (1) by
bankruptcy insolvency, moratorium, receivership, or other similar law relating
to creditors' rights generally or (2) due to acceleration in connection with a
foreclosure or other involuntary payment, or (B) the enforceability is otherwise
limited or prohibited by applicable law;

                  (4) We certify that all amounts due in connection with the
waiver of a prepayment penalty inconsistent with number 3 above which are
required to be delivered to the Trust


                                       J-1

<PAGE>



Administrator for deposit in the Distribution Account pursuant to Section 3.01
of the Pooling and Servicing Agreement, have been or will be so delivered.

                                            By:_________________________
                                            Name:
                                            Title:


                                       J-2

<PAGE>



                                    EXHIBIT K

                           FORM OF LOST NOTE AFFIDAVIT

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT

                  I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:

         1.       The Seller's address is:   _____________________

         2.       The Seller previously delivered to the Purchaser a signed
                  Initial Certification with respect to such Mortgage and/or
                  Assignment of Mortgage;

         3.       Such Mortgage Note and/or Assignment of Mortgage was assigned
                  or sold to the Purchaser by ________________________, a
                  ____________ corporation pursuant to the terms and provisions
                  of a Mortgage Loan Purchase Agreement dated as of __________
                  __, _____;

         4.       Such Mortgage Note and/or Assignment of Mortgage is not
                  outstanding pursuant to a request for release of Documents;

         5.       Aforesaid Mortgage Note and/or Assignment of Mortgage (the
                  "Original") has been lost;

         6.       Deponent has made or caused to be made a diligent search for
                  the Original and has been unable to find or recover same;

         7.       The Seller was the Seller of the Original at the time of the
                  loss; and

         8.       Deponent agrees that, if said Original should ever come into
                  Seller's possession, custody or power, Seller will immediately
                  and without consideration surrender the Original to the
                  Purchaser.

         9.       Attached hereto is a true and correct copy of (i) the Note,
                  endorsed in blank by the Mortgagee and (ii) the Mortgage or
                  Deed of Trust (strike one) which


                                       K-1

<PAGE>



                  secures the Note, which Mortgage or Deed of Trust is recorded
                  in the county where the property is located.

         10.      Deponent hereby agrees that the Seller (a) shall indemnify and
                  hold harmless the Purchaser, its successors and assigns,
                  against any loss, liability or damage, including reasonable
                  attorney's fees, resulting from the unavailability of any
                  Notes, including but not limited to any loss, liability or
                  damage arising from (i) any false statement contained in this
                  Affidavit, (ii) any claim of any party that has already
                  purchased a mortgage loan evidenced by the Lost Note or any
                  interest in such mortgage loan, (iii) any claim of any
                  borrower with respect to the existence of terms of a mortgage
                  loan evidenced by the Lost Note on the related property to the
                  fact that the mortgage loan is not evidenced by an original
                  note and (iv) the issuance of a new instrument in lieu thereof
                  (items (i) through (iv) above hereinafter referred to as the
                  "Losses") and (b) if required by any Rating Agency in
                  connection with placing such Lost Note into a Pass-Through
                  Transfer, shall obtain a surety from an insurer acceptable to
                  the applicable Rating Agency to cover any Losses with respect
                  to such Lost Note.

         11.      This Affidavit is intended to be relied upon by the Purchaser,
                  its successors and assigns. _____________________, a
                  ______________ corporation represents and warrants that is has
                  the authority to perform its obligations under this Affidavit
                  of Lost Note.

Executed this ____ day, of ___________ ______.

                                                  SELLER

                                                  By:______________________
                                                  Name:
                                                  Title:

                  On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

                                                     Signature:

                                                     [Seal]



                                       K-2

<PAGE>



                                   Schedule 1

                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]



                                  Schedule 1-1

<PAGE>


                                   Schedule 2

                         SCHEDULE OF PREPAYMENT CHARGES

                             Available Upon Request




                                  Schedule 2-1