NEW CENTURY MORTGAGE SECURITIES, INC.

                                    Depositor




                        NEW CENTURY MORTGAGE CORPORATION

                                 Master Servicer



                                       and



                      DEUTSCHE BANK NATIONAL TRUST COMPANY

                                     Trustee



                         POOLING AND SERVICING AGREEMENT
                           Dated as of January 1, 2003


                New Century Home Equity Loan Trust, Series 2003-1
                     Asset Backed Pass-Through Certificates

                                  Series 2003-1




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                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS
SECTION 1.01.   Defined Terms................................................-1-
SECTION 1.02.   Allocation of Certain Interest Shortfalls...................-39-

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01.   Conveyance of the Mortgage Loans............................-40-
SECTION 2.02.   Acceptance of REMIC I by Trustee............................-42-
SECTION 2.03.   Repurchase or Substitution of Mortgage Loans by the
                Originator or the Seller....................................-43-
SECTION 2.04.   Reserved....................................................-45-
SECTION 2.05.   Representations, Warranties and Covenants of the Master
                Servicer....................................................-45-
SECTION 2.06.   Issuance of the REMIC I Regular Interests and the Class R-I
                Interest....................................................-48-
SECTION 2.07.   Conveyance of the REMIC I Regular Interests; Acceptance of
                REMIC II by the Trustee.....................................-48-
SECTION 2.08.   Issuance of Class R Certificates............................-48-

                                         ARTICLE III

                                ADMINISTRATION AND SERVICING
                                    OF THE MORTGAGE LOANS
SECTION 3.01.   Master Servicer to Act as Master Servicer...................-50-
SECTION 3.02.   Sub-Servicing Agreements Between Master Servicer and Sub-
                Servicers...................................................-52-
SECTION 3.03.   Successor Sub-Servicers.....................................-53-
SECTION 3.04.   Liability of the Master Servicer............................-53-
SECTION 3.05.   No Contractual Relationship Between Sub-Servicers, the
                Trustee or the Certificateholders...........................-54-
SECTION 3.06.   Assumption or Termination of Sub-Servicing Agreements by
                the Trustee.................................................-54-
SECTION 3.07.   Collection of Certain Mortgage Loan Payments................-55-
SECTION 3.08.   Sub-Servicing Accounts......................................-55-
SECTION 3.09.   Collection of Taxes, Assessments and Similar Items;
                Servicing Accounts..........................................-55-
SECTION 3.10.   Collection Account, Distribution Account....................-56-
SECTION 3.11.   Withdrawals from the Collection Account and Distribution
                Account.....................................................-59-
SECTION 3.12.   Investment of Funds in the Collection Account and the


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                Distribution Account........................................-60-
SECTION 3.13.   [Reserved]..................................................-61-
SECTION 3.14.   Maintenance of Hazard Insurance and Errors and Omissions
                and Fidelity Coverage.......................................-61-
SECTION 3.15.   Enforcement of Due-On-Sale Clauses; Assumption
                         Agreements.........................................-63-
SECTION 3.16.   Realization Upon Defaulted Mortgage Loans...................-64-
SECTION 3.17.   Trustee to Cooperate; Release of Mortgage Files.............-66-
SECTION 3.18.   Servicing Compensation......................................-67-
SECTION 3.19.   Reports to the Trustee; Collection Account Statements.......-68-
SECTION 3.20.   Statement as to Compliance..................................-68-
SECTION 3.21.   Independent Public Accountants' Servicing Report............-68-
SECTION 3.22.   Access to Certain Documentation.............................-69-
SECTION 3.23.   Title, Management and Disposition of REO Property...........-69-
SECTION 3.24.   Obligations of the Master Servicer in Respect of
                Prepayment Interest Shortfalls..............................-73-
SECTION 3.25.   Obligations of the Master Servicer in Respect of
                Mortgage Rates and Monthly Payments.........................-73-
SECTION 3.26.   Advance Facility............................................-73-
SECTION 3.28    Net WAC Rate Carryover Reserve Account......................-74-

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01.   Distributions...............................................-76-
SECTION 4.02.   Statements to Certificateholders............................-82-
SECTION 4.03.   Remittance Reports; P&I Advances............................-85-
SECTION 4.04.   Allocation of Realized Losses...............................-86-
SECTION 4.05.   Compliance with Withholding Requirements....................-88-

                                    ARTICLE V

                                THE CERTIFICATES
SECTION 5.01.   The Certificate.............................................-90-
SECTION 5.02.   Registration of Transfer and Exchange of Certificates.......-91-
SECTION 5.03.   Mutilated, Destroyed, Lost or Stolen Certificates...........-96-
SECTION 5.04.   Persons Deemed Owners.......................................-96-
SECTION 5.05.   Certain Available Information...............................-97-

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01.   Liability of the Depositor and the Master Servicer..........-98-
SECTION 6.02.   Merger or Consolidation of the Depositor or the Master
                Servicer....................................................-98-
SECTION 6.03.   Limitation on Liability of the Depositor, the Master Servicer


                                      -ii-

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                and Others..................................................-98-
SECTION 6.04.   Limitation on Resignation of the Master Servicer............-99-
SECTION 6.05.   Rights of the Depositor in Respect of the Master Servicer..-100-
SECTION 6.06.   Collection Advisor.........................................-100-

                                   ARTICLE VII

                                     DEFAULT
SECTION 7.01.   Master Servicer Events of Default..........................-102-
SECTION 7.02.   Trustee to Act; Appointment of Successor...................-104-
SECTION 7.03.   Notification to Certificateholders.........................-105-
SECTION 7.04.   Waiver of Master Servicer Events of Default................-105-

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE
8.01.    Duties of Trustee.................................................-106-
8.02.    Certain Matters Affecting the Trustee.............................-107-
8.03.    Trustee Not Liable for Certificates or Mortgage Loans.............-108-
8.04.    Trustee May Own Certificates......................................-108-
8.05.    Trustee's Fees and Expenses.......................................-108-
8.06.    Eligibility Requirements for Trustee..............................-109-
8.07.    Resignation and Removal of the Trustee............................-109-
8.08.    Successor Trustee.................................................-110-
8.09.    Merger or Consolidation of Trustee................................-110-
8.10.    Appointment of Co-Trustee or Separate Trustee.....................-111-
8.11.    Reserved..........................................................-112-
8.12.    Appointment of Office or Agency...................................-112-
8.13.    Representations and Warranties of the Trustee.....................-112-

                                   ARTICLE IX

                                   TERMINATION
SECTION 9.01    Termination Upon Repurchase or Liquidation of All
                Mortgage Loans.............................................-114-
SECTION 9.02    Additional Termination Requirements........................-116-

                                    ARTICLE X

                                REMIC PROVISIONS
SECTION 10.01.  REMIC Administration.......................................-117-
SECTION 10.02.  Prohibited Transactions and Activities.....................-119-
SECTION 10.03.  Master Servicer and Trustee Indemnification...............-120-



                                      -iii-

<PAGE>



                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS
SECTION 11.01.  Amendment..................................................-121-
SECTION 11.02.  Recordation of Agreement; Counterparts.....................-122-
SECTION 11.03.  Limitation on Rights of Certificateholders.................-122-
SECTION 11.04.  Governing Law..............................................-123-
SECTION 11.05.  Notices....................................................-123-
SECTION 11.06.  Severability of Provisions.................................-124-
SECTION 11.07.  Notice to Rating Agencies..................................-124-
SECTION 11.08.  Article and Section References.............................-125-
SECTION 11.09.  Grant of Security Interest.................................-125-





                                      -iv-

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EXHIBITS

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 F-1     Form of Transferor Representation Letter and Form of Transferee
                Representation Letter in Connection with Transfer of the Class
                CE Certificates, Class P Certificates or Residual 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 Residual 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 Form of Lost
                Note Affidavit
Exhibit J-1     Form of Certification to Be Provided by the Depositor with Form
                10-K
Exhibit J-2     Form of Certification to Be Provided to Depositor by the Trustee
Exhibit K       Form of Collection Advisory Agreement

Schedule 1      Mortgage Loan Schedule
Schedule 2      Prepayment Charge Schedule






                                       -v-

<PAGE>



          This Pooling and Servicing Agreement, is dated and effective as of
January 1, 2003, among NEW CENTURY MORTGAGE SECURITIES, INC. as Depositor, NEW
CENTURY MORTGAGE CORPORATION, as Master Servicer and DEUTSCHE BANK NATIONAL
TRUST COMPANY as Trustee.

                             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 Master Servicer Prepayment Charge Payment Amount and the Net WAC
Rate Carryover Reserve Account) 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.



                      REMIC I                Initial             Latest Possible
Designation       Remittance Rate    Uncertificated Balance     Maturity Date(1)
-----------       ---------------    ----------------------     ----------------

  I-LTAA            Variable(2)          $483,732,914.35        January 25, 2033
   I-LTA            Variable(2)          $ 3,948,840.00         January 25, 2033
  I-LTM1            Variable(2)           $ 325,780.00          January 25, 2033
  I-LTM2            Variable(2)           $ 271,480.00          January 25, 2033
  I-LTM3            Variable(2)           $ 217,180.00          January 25, 2033
  I-LTM4            Variable(2)            $ 74,050.00          January 25, 2033
  I-LTZZ            Variable(2)          $ 5,034,770.30         January 25, 2033
   I-LTP            Variable(2)             $ 100.00            January 25, 2033
_______________
(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.



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<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 Interests 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.


                                       Initial Aggregate
                                     Certificate Principal      Latest Possible
Designation      Pass-Through Rate          Balance             Maturity Date(1)
-----------      -----------------   ---------------------      ----------------
  Class A           Variable(2)         $394,884,000.00         January 25, 2033
 Class M-1          Variable(2)         $ 32,578,000.00         January 25, 2033
 Class M-2          Variable(2)         $ 27,148,000.00         January 25, 2033
 Class M-3          Variable(2)         $ 21,718,000.00         January 25, 2033
 Class M-4          Variable(2)         $ 7,405,000.00          January 25, 2033
 Class CE           Variable(2)        $ 9,872,014.65(3)        January 25, 2033
  Class P             N/A(4)               $ 100.00             January 25, 2033
_______________
(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 Original Mortgage Loans had an aggregate
Scheduled Principal Balance equal to $493,605,114.65.

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




                                      -vii-

<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 of Realized Losses, if any, pursuant to Section 4.04
hereof.

          "Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans identified
in 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.

          "Advancing Person": As defined in Section 3.26(a) 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


                                       -1-

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voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

          "Agreement": This Pooling and Servicing Agreement and all amendments
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 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 Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Master Servicer for such Distribution Date pursuant to
Section 4.03 and (e) the aggregate of any advances made by the Trustee as
successor Master Servicer or any other successor Master Servicer for such
Distribution Date pursuant to Section 7.02(b), reduced (to not less than zero),
by (2) 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 Master
Servicer, the Trustee, 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, (v) the Trustee Fee payable from the Distribution Account pursuant to
Section 8.05, (vi) amounts deposited in the Collection Account or the
Distribution Account in error and (vii) the amount of any Prepayment Charges
collected by the Master Servicer in connection with the Principal Prepayment of
any of the Mortgage Loans or any Master Servicer Prepayment Charge Payment
Amount.

          "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


                                       -2-

<PAGE>



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 California, the
State of New York or in the city in which 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 2003-1, Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class CE,
Class P, Class R issued under this Agreement.

          "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 Residual 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 Master 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 may conclusively rely upon a
certificate of the Depositor or the Master 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 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 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 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
REMIC I Regular Interest I-LTA, 0.49% 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


                                       -3-

<PAGE>



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
0.98% in the case of each Distribution Date thereafter.

          With respect to the Class M-1 Certificates and REMIC I Regular
Interest I-LTM1, 1.05% 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 1.575% in the case of each
Distribution Date thereafter.

          With respect to the Class M-2 Certificates and REMIC I Regular
Interest I-LTM2, 2.05% 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 sum of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date and 3.075% in the case of
each Distribution Date thereafter.

          With respect to the Class M-3 Certificates and REMIC I Regular
Interest I-LTM3, 3.50% 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 5.25% in the case of each Distribution
Date thereafter.

          With respect to the Class M-4 Certificates and REMIC I Regular
Interest I-LTM4, 3.50% 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 5.25% in the case of each Distribution
Date thereafter.

          "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 in the case of a Mezzanine
Certificate, 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.



                                       -4-

<PAGE>



          "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, 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) 60.00% 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 $2,468,026.

          "Class CE Certificate": Any one of the Class CE Certificates executed,
authenticated and delivered by the Trustee, 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, 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)
73.20% 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
$2,468,026.

          "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee, 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) 84.20% 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 $2,468,026.


                                       -5-

<PAGE>




          "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee, 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 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) 93.00% 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 $2,468,026.

          "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed, authenticated and delivered by the Trustee, 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)
96.00% 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
$2,468,026.

          "Class P Certificate": Any one of the Class P Certificates executed,
authenticated and delivered by the Trustee, 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, 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.


                                       -6-

<PAGE>




          "Closing Date": January 24, 2003.

          "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 Master Servicer pursuant to
Section 3.10(a), which shall be entitled "New Century Mortgage Corporation, as
Master Servicer for Deutsche Bank National Trust Company, as Trustee, in trust
for the registered holders of New Century Mortgage Securities, Inc., New Century
Home Equity Loan Trust, Series 2003-1, Asset Backed Pass-Through Certificates."
The Collection Account must be an Eligible Account.

          "Collection Advisor": The collection advisor designated in the
Collection Advisory Agreement.

          "Collection Advisory Agreement": The agreement between the Master
Servicer and the Collection Advisor, regarding the loss mitigation and advisory
services to be provided by the Collection Advisor, substantially in the form
attached hereto as Exhibit K.

          "Collection Advisor Delinquency Trigger": The Collection Advisor
Delinquency Trigger will be in effect if the Delinquency Percentage exceeds the
applicable percentages set forth below with respect to such Distribution Date:



              DISTRIBUTION DATE OCCURRING IN         PERCENTAGE
              ------------------------------         ----------
              February 2003 through July 2003           6.00%
              August 2003 through January 2004         13.00%
              February 2004 through July 2004          15.00%
              August 2004 through January 2005         17.00%

          "Collection Advisor Mortgage Loans": The Mortgage Loans for which the
Master Servicer shall be required to transfer servicing to the Collection
Advisor pursuant to Section 6.06, which shall consist of the sum of (i) any
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 that, when
included in the calculation of the Delinquency Percentage for the related Due
Period, cause the Delinquency Percentage to exceed the Collection Advisor
Delinquency Trigger for such Distribution Date, (ii) 10% of all 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, as selected by the Master Servicer
MINUS (iii) any such Mortgage Loans for which the Master Servicer has undergone
loss mitigation efforts with the Mortgagor for collection of delinquent payments
pursuant to Section 3.07 and any such Mortgage Loan which is the subject of
litigation proceedings, is in foreclosure or is the subject of bankruptcy
proceedings; provided, however, to the extent that any Mortgage Loan would be a
Collection Advisor Mortgage Loan but for the reason set forth in (iii) above,
Collection Advisor Mortgage Loans shall also include (a) any


                                       -7-

<PAGE>



Mortgage Loans that, as of the last day of the previous calendar month, are 30
or more days delinquent, are in foreclosure, have been converted to REO
Properties or have been discharged by reason of bankruptcy MINUS (b) any such
Mortgage Loans for which the Master Servicer has undergone loss mitigation
efforts with the Mortgagor for collection of delinquent payments pursuant to
Section 3.07 and any such Mortgage Loan which is the subject of litigation
proceedings, is in foreclosure or is the subject of bankruptcy proceedings.

          "Commission": The Securities and Exchange Commission.

          "Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 1761 East St. Andrew Place,
Santa Ana, CA 92705-4934, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Master Servicer.

          "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 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, 2003. 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 the related Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance of all 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
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master 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": New Century Mortgage Securities, 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 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 at least P-1 by Moody's,
F-1 by Fitch (if rated by Fitch) and A-1 by S&P.

          "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 Master Servicer on behalf of the Trustee) shall not be
considered to Directly Operate an REO Property solely because the Trustee (or
the Master 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 as set forth in an Opinion of
Counsel delivered to the Trustee and the Depositor to the effect that the
holding of an Ownership Interest in a Residual Certificate by such Person may
cause any of REMIC I or REMIC II 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 Residual Certificate to such Person.
The terms "United States," "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions.

          "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b), which shall be entitled
"Deutsche Bank National Trust Company, as Trustee, in trust for the registered
holders of New Century Mortgage Securities, Inc., New Century Home Equity Loan
Trust, Series 2003-1, 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 2003.

          "Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is generally
the day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.

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

          "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 segregated, non-interest bearing trust
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution or trust company acting in its


                                      -10-

<PAGE>



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 Overcollateralization Target 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 month preceding the month in which the Distribution Date occurs minus the
sum of (i) the Trustee 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 (in the case of
any Adjustable-Rate Mortgage Loan) or Mortgage Rate (in the case of any Fixed
Rate Mortgage Loan) thereon as of the first day of the month preceding the month
in which the Distribution Date occurs minus the sum of (i) the Trustee Fee Rate
and (ii) the Servicing Fee Rate.

          "Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee or any director, officer, employee or agent of the Trustee 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) and any costs of the Trustee for the recording of the Assignments
pursuant to Section 2.01 (to the extent the Seller is unable to pay such costs).

          "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 Seller, the Depositor or the Master Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a determination
made by the Master Servicer that all Insurance Proceeds, Liquidation Proceeds
and other payments or recoveries which the Master Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Master Servicer shall maintain records, prepared by a
Servicing Officer, of each Final Recovery Determination made thereby.

          "Fitch": Fitch Ratings, Inc., or its successor in interest.

          "Formula Rate": For any Distribution Date and the Class A Certificates
and the


                                      -11-

<PAGE>



Mezzanine Certificates, 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 Master Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor,
the Master Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Master Servicer 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 Master Servicer or any Affiliate thereof, as the case may
be.

          "Independent Contractor": Either (i) any Person (other than the Master
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 Master Servicer) if the Trustee has 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 average of the interbank offered rates for
six-month or one-month United States dollar deposits in the London market as
published in THE WALL STREET JOURNAL and as most recently available either (i)
as of the first business day 45 days prior to such Adjustment Date or (ii) as of
the first business day of the month preceding the month of such Adjustment Date,
as 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


                                      -12-

<PAGE>



that the Master Servicer would follow in servicing mortgage loans held for its
own account, subject to the 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 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, the Mezzanine Certificates, 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 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": With respect to any Distribution Date,
that portion of the Available Distribution Amount for such Distribution Date
attributable to 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


                                      -13-

<PAGE>



Determination is made as to such REO Property; or (ii) such REO Property is
removed from REMIC 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 Master 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.

          "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-LTP), with the rate on each such REMIC I Regular
Interest (other than REMIC I Regular Interest I-LTZZ) 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 shall be multiplied by a fraction, the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 30.

          "Master Servicer": New Century Mortgage Corporation, or any successor
master servicer appointed as herein provided, in its capacity as Master Servicer
hereunder.

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

          "Master Servicer Prepayment Charge Payment Amount": The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 2.05 or Section 3.01.

          "Master Servicer Remittance Date": With respect to any Distribution
Date, by 1:00 p.m. New York time on the Business Day preceding the related
Distribution Date.

          "Master Servicer Termination Test": With respect to any Distribution
Date, the Master Servicer Termination Test will be failed if the Cumulative Loss
Percentage exceeds 7.25%.

          "Maximum Cap Rate": For any Distribution Date, a per annum rate equal
to the product of (x) the weighted average of the Expense Adjusted Maximum
Mortgage Rates of the


                                      -14-

<PAGE>



Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs 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 Overcollateralized Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on 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 for such Distribution Date, with the rate on each 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
subject to a cap equal to the related Formula Rate; provided, however, each cap
shall be multiplied by a fraction, the numerator of which is the actual number
of 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 Certificate": Any Class M-1 Certificate, Class M-2
Certificate, Class M- 3 Certificate or Class M-4 Certificate.

          "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 Master 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 security 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 and assigned to the
Trustee and


                                      -15-

<PAGE>



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 in the Mortgage Loan Schedule.

          "Mortgage Loan Purchase Agreement": The agreement between 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;

          (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;


                                      -16-

<PAGE>



          (xvi) the Scheduled Principal Balance of the Mortgage Loan as of the
     close of business on the Cut-off Date;

          (xvii) with respect to each Adjustable-Rate Mortgage Loan, the
     Adjustment Dates;

          (xviii) with respect to each Adjustable-Rate Mortgage Loan, the Gross
     Margin;

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

          (xx) with respect to each Adjustable-Rate Mortgage Loan, the Maximum
     Mortgage Rate;

          (xxi) with respect to each Adjustable-Rate Mortgage Loan, the Minimum
     Mortgage Rate;

          (xxii) the Mortgage Rate at origination;

          (xxiii) with respect to each Adjustable-Rate Mortgage Loan, the
     Periodic Rate Cap and the maximum first Adjustment Date Mortgage Rate
     adjustment;

          (xxiv) a code indicating the documentation program (i.e., Full
     Documentation, Limited Documentation, Stated Income Documentation);

          (xxv) the first Adjustment Date immediately following the origination
     date;

          (xxvi) the risk grade;

          (xxvii) the Value of the Mortgaged Property;

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

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

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

          (xxxi) the rounding code (i. e., nearest 0.125%, next highest 0.125%);
     and

          (xxxii) the program code.

          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


                                      -17-

<PAGE>



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 (i) with respect to
each fixed-rate Mortgage Loan shall remain constant at the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date and (ii) 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 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 Principal Remittance 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.



                                      -18-

<PAGE>



          "Net WAC 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 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. With respect to each REMIC I Regular
Interest and any Distribution Date, a rate per annum equal to 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.

          "Net WAC Rate Carryover Reserve Account": The account established and
maintained pursuant to Section 3.28.

          "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 accrued on such Class
of Certificates for such Distribution Date 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 Pass-Through 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.

          "Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Master Servicer, will not or, in the case of
a proposed P&I 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 Master 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.

          "Notional Amount": With respect to the Class CE Certificates and any
Distribution Date, the Uncertificated Balance of the REMIC I Regular Interests
for such Distribution Date.

          "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 Master


                                      -19-

<PAGE>



Servicer, the Originator, 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 Formula 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 Trustee 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 Trustee 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 Trustee, after consultation with
the Depositor, shall select an alternative comparable index (over which the
Trustee 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 Master Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any Trust 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": New Century Mortgage Corporation, or its successor in
interest, in its capacity as originator under the Mortgage Loan Purchase
Agreement.

          "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Overcollateralization Target
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date (calculated for this purpose only,
after taking into account the distributions to be made of the Principal
Remittance Amount 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


                                      -20-

<PAGE>



Certificate Interest payable on the Class CE Certificates on 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 Principal Remittance Amount.

          "Overcollateralization Target Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $9,872,115, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
4.00% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (y) $2,468,026, (iii) on or after the
Stepdown Date and if a Trigger Event is in effect, the Overcollateralization
Target Amount for the immediately preceding Distribution Date.

          "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
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) 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).

          "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 (H) 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:

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

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

          (C) the REMIC I Remittance Rate for REMIC I Regular Interest I-LTM1
     minus


                                      -21-

<PAGE>



     the Marker Rate, applied to an amount equal to the Uncertificated Balance
     of REMIC I Regular Interest I-LTM1;

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

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

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

          (G) the REMIC I Remittance Rate for REMIC I Regular Interest I-LTZZ
     minus the Marker Rate, applied to an amount equal to the Uncertificated
     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 Residual 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 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 $50,000 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 $50,000 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 Residual Certificate, the undivided percentage ownership in
such Class evidenced by such Certificate, as set forth on the face of such
Certificate. The Residual 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


                                      -22-

<PAGE>



acquired at a purchase price of not greater than par, regardless of whether
issued by the Depositor, the Master Servicer, the Trustee or any of their
respective Affiliates:

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

          (ii) demand and time deposits in, certificates of deposit of, or
     bankers' acceptances 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; and

          (viii) if previously confirmed in writing to the Trustee, any other
     demand, money market or time deposit, or any other obligation, security or
     investment, as may be acceptable to the Rating Agencies as a permitted
     investment of funds backing securities having ratings equivalent to its
     highest initial rating of the Class A Certificates;

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 Residual Certificate other
than a Disqualified Organization or Non-United States Person.

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



                                      -23-

<PAGE>



          "P&I Advance": As to any Mortgage Loan or REO Property, any advance
made by the Master Servicer in respect of any Distribution Date pursuant to
Section 4.03.

          "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 Master 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

          (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
Master 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


                                      -24-

<PAGE>



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 Master 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 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 during the
     related Prepayment Period, net of any portion thereof that represents a
     recovery of principal for which an advance was made by the Master Servicer
     pursuant to Section 4.03 in respect of a preceding Distribution Date; and

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

          (v) 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.

          "Principal Remittance Amount": With respect to any Distribution Date,
the sum of the amounts set forth in clauses (i) through (iii) of the definition
of Principal Distribution Amount.

          "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),
Section 3.16(e) or Section 9.01, and as confirmed by an Officers' Certificate
from the Master Servicer to the Trustee,


                                      -25-

<PAGE>



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 Master 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 Master 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 P&I 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
P&I Advances (including Nonrecoverable P&I 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 Master Servicer or the Trustee in respect of the breach or
defect giving rise to the purchase obligation.

          "Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted 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 Scheduled 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 at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (xi) [reserved] and (xii) 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


                                      -26-

<PAGE>



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 (xii) 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": Fitch, 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 and the Master 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 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 Master 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


                                      -27-

<PAGE>



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 P&I 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 Master Servicer in respect of such REO Property or the related Mortgage
Loan for which the Master 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 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.

          "Reference Banks": Deutsche Bank AG, Barclay's 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 Trustee,
after consultation with the Depositor, which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London and (ii) not controlling, under the
control of or under common control with the Depositor or any Affiliate thereof.

          "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.



                                      -28-

<PAGE>



          "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
the primary trust 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 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 Master Servicer Prepayment Charge Payment Amount), the
Distribution Account (other than any amounts representing any Master 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 the Net WAC Rate Carryover
Reserve Account, all payments and other collections of principal and interest
due on the Mortgage Loans on or before the Cut-off Date and all Prepayment
Charges payable in connection with Principal Prepayments 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
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-LTP, 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 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 the denominator of which is the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA,
REMIC I Regular Interest I-LTM1, REMIC I Regular


                                      -29-

<PAGE>



Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTZZ.

          "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.

          "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.


                                      -30-

<PAGE>



          "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-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 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 Master Servicer 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 Remittance Rate": With respect to each REMIC I Regular
Interest and any Distribution Date, the Net WAC Pass-Through Rate.

          "REMIC I Required Overcollateralized Amount": 1% of the
Overcollateralization Target 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 Class R-I Interests pursuant to Section 2.08, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.

          "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
Trustee on a magnetic disk or tape prepared by the Master Servicer pursuant to
Section 4.03 with such additions, deletions and modifications as agreed to by
the Trustee and the Master 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 Master Servicer in respect of an REO Property pursuant to
Section 3.23.


                                      -31-

<PAGE>




          "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 Master Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect 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 Master 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 attached hereto.

          "Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee 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 Trustee, after consultation with the Depositor, 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
Trustee can determine no such arithmetic mean, the lowest one- month U.S. dollar
lending rate which New York City banks selected by the Trustee, after
consultation with the Depositor, 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 or mobile home (as defined in 42 United States Code, Section
5402(6)).

          "Residual Certificate": The Class R Certificates.



                                      -32-

<PAGE>



          "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, any vice
president, managing director, director, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer, any
associate, any trust officer or assistant trust officer or any other officer of
the Trustee having direct responsibility over this Agreement or otherwise
engaged in 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 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.

          "Scheduled Principal Balance": With respect to any Mortgage Loan: (a)
as of the Cut- off Date, the outstanding principal balance of such Mortgage Loan
as of such date, net of the principal portion of all unpaid Monthly Payments, if
any, due on or before such date; (b) as of any Due Date subsequent to the
Cut-off Date up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such Mortgage Loan, the Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the Cut-off Date, whether or not received, (ii) all Principal
Prepayments received before such Due Date but after the Cut-off Date, (iii) the
principal portion of all Liquidation Proceeds and Insurance Proceeds received
before such Due Date but after the Cut-off Date, net of any portion thereof that
represents principal due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) on a Due Date occurring on or before the
date on which such proceeds were received and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation occurring before such
Due Date, but only to the extent such Realized Loss represents a reduction in
the portion of principal of such Mortgage Loan not yet due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With respect to any REO Property: (a) as of any Due Date subsequent to the date
of its acquisition on behalf of the Trust Fund up to and including the Due Date
in the calendar month in which a Liquidation Event occurs with respect to such
REO Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of such REO Property for all
previously ended calendar months; and (b) as of any Due Date subsequent to the
occurrence of a Liquidation Event with respect to such REO Property, zero.

          "Seller": NC Capital Corporation 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


                                      -33-

<PAGE>



for the Class A Certificates.

          "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 Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master 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, Section 3.16 and Section 3.23. The Master
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 Master 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 Master Servicer to the Trustee and the Depositor on the Closing Date, as
such list may from time to time be amended.

          "Single Certificate": With respect to any Class of Certificates (other
than the Class P Certificates and the Residual 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 Residual Certificates, a
hypothetical Certificate of such Class evidencing a 100% Percentage Interest in
such Class.

          "Startup Day": With respect to each Trust REMIC, 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 Scheduled 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 or advanced by
the Master Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, (ii) all Principal


                                      -34-

<PAGE>



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 Master 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 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
advanced by the Master Servicer and 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.

          "Stepdown Date": The later to occur of (a) the Distribution Date
occurring in February 2006 and (b) 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 on the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 40.00%.

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

          "Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.

          "Sub-Servicing Agreement": The written contract between the Master
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 Delinquency Percentage exceeds 40.00% of the then current
Credit Enhancement Percentage; 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 2006 through January 2007         3.00%
              February 2007 through January 2008         4.00%
              February 2008 through January 2009         5.00%
              February 2009 through January 2010         6.00%
              February 2010 and thereafter               7.00%

          "Trust Fund": Collectively, all of the assets of the Trust REMICs, 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": Deutsche Bank National Trust Company, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein.


                                      -36-

<PAGE>



          "Trustee Fee": The amount payable to the Trustee on each Distribution
Date pursuant to Section 8.05 as compensation for all services rendered by it in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties of the Trustee hereunder, which amount shall equal
the Trustee Fee Rate accrued for one month on the aggregate Scheduled Principal
Balance of the Mortgage Loans and any REO Properties as of the first day of the
related Due Period (or, in the case of the initial Distribution Date, as of the
Cut-off Date), calculated on the basis of a 360-day year consisting of twelve
30-day months.

          "Trustee Fee Rate": 0.006% per annum.

          "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 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 Balance of REMIC I Regular Interest I-LTZZ shall be increased by
interest deferrals as provided in Section 4.01(a)(1)(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 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



                                      -37-
<PAGE>


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 treated as a corporation or
partnership for United States federal income tax purposes) created or organized
in, or under the laws of, the United States, any state thereof, or the District
of Columbia (except in the case of a partnership, to the extent provided in
Treasury 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 the income of
which from sources without the United States is includible 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, 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 authority
to control all substantial decisions of the trust. The term "United States"
shall have the meaning set forth in Section 7701 of the Code or successor
provisions.

          "Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
Originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of Fannie Mae and Freddie Mac
and (b) the value thereof as determined by a review appraisal conducted by the
Originator in accordance with the Originator's underwriting guidelines, and (ii)
the purchase price paid for the related Mortgaged Property by the Mortgagor with
the proceeds of the Mortgage Loan; provided, however, (A) in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (1) the value determined by an appraisal made for the
Originator of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by an appraiser who met the minimum requirements of
Fannie Mae and Freddie Mac and (2) the value thereof as determined by a review
appraisal conducted by the Originator in accordance with the Originator's
underwriting guidelines, and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
Originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the Originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more prior
to origination.

          "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 Residual Certificates. The Voting
Rights allocated to each Class of Certificates shall be allocated among Holders
of each such Class in accordance with their respective Percentage Interests as
of the most



                                      -38-
<PAGE>


recent Record Date.

          SECTION 1.02. Allocation of Certain Interest Shortfalls.

          For purposes of calculating the amount of Accrued Certificate Interest
and the amount 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 Master 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 and Net WAC Rate
Carryover Amounts 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
Master 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.





                                      -39-
<PAGE>



                                   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 Master 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 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 the following form "Pay to
     the order of Deutsche Bank National Trust Company, 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.


                                      -40-

<PAGE>



          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 a
photocopy of such Mortgage Note, if available, with a lost note affidavit
substantially in the form of Exhibit I 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 and the Rating Agencies by the
Depositor 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.

          The Trustee, at the expense of the Seller, 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 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 or cause each original Assignment to be
executed in the following form: "Deutsche Bank National Trust Company, as
Trustee under the applicable agreement." In the event that any such Assignment
is lost or returned unrecorded because of a defect therein, the Seller 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 Seller is unable to pay the cost of
recording the Assignments, such expense will be paid by the Trustee and shall be
reimbursable to the Trustee as an Extraordinary Trust Fund Expense.
Notwithstanding the foregoing, the Trustee shall not be responsible for
determining whether any Assignment delivered by the Depositor hereunder is in
recordable form.

          Notwithstanding the foregoing, however, for administrative convenience
and facilitation of servicing and to reduce closing costs, the Assignments shall
not be required to be submitted for recording (except with respect to any
Mortgage Loan located in Maryland) unless the


                                      -41-

<PAGE>



Trustee or the Depositor receives notice that such failure to record would
result in a withdrawal or a downgrading by any Rating Agency of the rating on
any Class of Certificates; PROVIDED, HOWEVER, the Trustee shall submit or cause
to be submitted each Assignment for recording (at the expense of the Seller) in
the manner described above, at no expense to the Trust Fund or the Trustee, upon
the earliest to occur of: (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights, (ii) the occurrence of a Master
Servicer Event of Termination, (iii) the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Master Servicer, (iv) the occurrence of a
servicing transfer as described in Section 7.02 hereof, (v) with respect to any
one Assignment, the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the related Mortgage and (vi) any Mortgage Loan
that is 90 days or more Delinquent. Upon (a) receipt of written notice by the
Trustee that recording of the Assignments is required pursuant to one or more of
the conditions (excluding condition (vi) above) set forth in the preceding
sentence or (b) upon the occurrence of condition (vi) in the preceding sentence,
the Depositor shall be required to deliver such Assignments or shall cause such
Assignments to be delivered within 30 days following receipt of such notice.

          All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of the Seller,
the Depositor or the Master 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 Master Servicer.

          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, of 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 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.

          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),(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


                                      -42-

<PAGE>



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 Master Servicer and the Trustee 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 Master 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 Master Servicer and the Trustee.
In addition, upon the discovery by the Depositor, the Master Servicer or the
Trustee of a breach of any of the representations and warranties made by the
Seller in the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
which materially adversely affects such Mortgage Loan or the interests of the
related 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 Master Servicer for servicing purposes.

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

          (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 Seller 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 therein of the
Certificateholders, the Trustee shall promptly notify the Seller and the Master
Servicer of such defect, missing document or breach and request that the Seller
deliver such missing document or cure such defect or breach within 60 days from
the date the Seller was notified of such missing document, defect or breach, and
if the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Master Servicer, to the
extent it is not the Seller or an Affiliate of the Seller, and otherwise the
Trustee, in accordance with Section 3.02(b), shall enforce the obligations of
the Seller 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 Seller was notified (subject to Section 2.03(c)) of such missing
document, defect or breach, if and to the extent that the Seller is obligated to
do so under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the Master Servicer for deposit
in the Collection Account and the Trustee, upon receipt of written certification
from the Master Servicer of such deposit, shall release to the Seller the
related Mortgage File and


                                      -43-

<PAGE>



the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Seller shall furnish to it and
as shall be necessary to vest in the Seller any Mortgage Loan released pursuant
hereto. The Trustee shall not 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 Seller 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 Seller 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. The Trustee will be reimbursed for expenses reasonably
incurred in connection with any breach or defect giving rise to the purchase
obligation under this Section 2.03 pursuant to Section 3.11(a)(viii).

          With respect to the representations and warranties made by the Seller
in the Mortgage Loan Purchase Agreement, the Trustee shall not be charged with
knowledge of any breach of any such representation or warranty by the Seller
unless a Responsible Officer of the Trustee at the Corporate Trust Office
obtains actual knowledge of such breach or the Trustee receives written notice
of such breach from the Depositor, the Master Servicer or 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 Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller 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, shall review such documents as
specified in Section 2.02 and deliver to the Depositor and the Master Servicer,
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 Master Servicer
and the Trustee 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 substitution are not part of
REMIC I and will be retained by the Seller. 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 Seller 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


                                      -44-

<PAGE>



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. 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 Master
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 Scheduled Principal Balance thereof as of the date of substitution, together
with one month's interest on such Scheduled Principal Balance at the applicable
Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances
(including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances)
related thereto. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Master 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 Master Servicer of such deposit, shall release to the
Seller 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 Seller shall deliver to it and as shall be necessary to vest
therein any Deleted Mortgage Loan released pursuant hereto.

          In addition, the Seller shall obtain at its own expense and deliver to
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 Master Servicer
or the Trustee 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 Seller 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 shall reconvey to the Seller
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty.

          SECTION 2.04. Reserved

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


                                      -45-

<PAGE>



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

          (i) The Master Servicer is a corporation duly organized and validly
     existing under the laws of the State of California and is duly authorized
     and qualified to transact any and all business contemplated by this
     Agreement to be conducted by the Master 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 Master 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 Master 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 and the Trustee, constitutes a legal, valid
     and binding obligation of the Master 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 Master
     Servicer, the servicing of the Mortgage Loans by the Master Servicer
     hereunder, the consummation by the Master 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 Master
     Servicer and will not (A) result in a breach of any term or provision of
     the charter or by-laws of the Master 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 Master
     Servicer is a party or by which it may be bound, or any statute, order or
     regulation applicable to the Master Servicer of any court, regulatory body,
     administrative agency or governmental body having jurisdiction over the
     Master Servicer; and the Master 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
     Master Servicer's knowledge, would in the future materially and adversely
     affect, (x) the ability of the Master Servicer to perform its obligations
     under this Agreement or (y) the business, operations, financial condition,
     properties or assets of the Master Servicer taken as a whole;

          (iv) The Master Servicer is a HUD approved servicer. No event has
     occurred, including but not limited to a change in insurance coverage, that
     would make the Master Servicer unable to comply with HUD eligibility
     requirements or that would require notification to HUD;


                                      -46-

<PAGE>



          (v) The Master 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) [Reserved];

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

          (viii) There are no actions or proceedings against, or investigations
     known to it of, the Master 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 Master Servicer of its obligations under, or
     validity or enforceability of, this Agreement;

          (ix) No consent, approval, authorization or order of any court or
     governmental agency or body is required for the execution, delivery and
     performance by the Master Servicer of, or compliance by the Master 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;

          (x) The information set forth in the Prepayment Charge Schedule
     (including the prepayment charge summary attached thereto) is complete,
     true and correct in all material respects on the date or dates when such
     information is furnished and each Prepayment Charge is permissible and
     enforceable in accordance with its terms (except to the extent that the
     enforceability thereof may be limited by bankruptcy, insolvency,
     moratorium, receivership and other similar laws relating to creditors'
     rights generally or the collectability thereof may be limited due to
     acceleration in connection with a foreclosure) under applicable state law;
     and

          (xi) The Master Servicer will not waive any Prepayment Charge unless
     it is waived in accordance with the standard set forth in Section 3.01.

          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 Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Master Servicer 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 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 Trustee. Subject to Section 7.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of the Master Servicer set
forth in this Section 2.05 to cure breaches shall constitute the sole remedy
against the Master Servicer available to the Certificateholders, the Depositor
and the


                                      -47-

<PAGE>



Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.
Notwithstanding the foregoing, (a) within 90 days of the earlier of discovery by
the Master Servicer or receipt of notice by the Master Servicer of the breach of
the representation of the Master Servicer set forth in Section 2.05(x) above
which materially and adversely affects the interests of the Holders of the Class
P Certificates in any Prepayment Charge, the Master Servicer shall remedy such
breach as follows: the Seller must pay the amount of the scheduled Prepayment
Charge, for the benefit of the Holders of the Class P Certificates, by
depositing such amount into the Collection Account, net of any amount previously
collected by the Master Servicer or paid by the Master Servicer, for the benefit
of the Holders of the Class P Certificates, in respect of such Prepayment Charge
and (b) within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of the representation or
covenant of the Master Servicer set forth in Section 2.05(xi) above, which
breach materially and adversely affects the interests of the Holders of the
Class P Certificates in any Prepayment Charge, the Master Servicer must pay the
amount of such waived Prepayment Charge, for the benefit of the holders of the
Class P Certificates, by depositing such amount into the Collection Account.

          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
Trustee, 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


                                      -48-

<PAGE>



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
Trustee has executed, authenticated and delivered to or upon the order of the
Depositor, the Class R Certificates in authorized denominations.





                                      -49-

<PAGE>



                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

          SECTION 3.01. Master Servicer to Act as Master Servicer.

          The Master 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 Master 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 mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

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

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

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

          (iv) the Master Servicer's or any Sub-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 Master Servicer (a)
shall seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes and (b) shall waive (or permit a Sub-Servicer to
waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans and (ii)
either (A) such waiver would, in the reasonable judgement of the Master
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan and, if such waiver is made
in connection with a refinancing of the related Mortgage Loan, such refinancing
is related to a default or a reasonably foreseeable default or (B) such waiver
is made in connection with a refinancing of the related Mortgage Loan unrelated
to a default or a reasonably foreseeable default where (x) the related mortgagor
has stated to the Master Servicer or an applicable Sub-Servicer an intention to
refinance the related Mortgage Loan and (y) the Master Servicer has concluded in
its reasonable judgement that the waiver of such Prepayment Charge would induce
such mortgagor to refinance with the Master Servicer or (iii) collection of the
related Prepayment Charge would violate applicable law. If a Prepayment Charge
is waived as permitted by meeting both of the standards described in clauses (i)
and (ii)(B) above, then the Master Servicer is required to pay the amount of
such waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account together
with and at the time that the amount prepaid on the related Mortgage Loan is
required to be deposited into the Collection Account. Notwithstanding any other
provisions of this Agreement, any payments made


                                      -50-

<PAGE>



by the Master Servicer in respect of any waived Prepayment Charges pursuant to
clauses (i) and (ii)(B) shall be deemed to be paid outside of the Trust Fund.

          Subject only to the above-described servicing standards and the terms
of this Agreement and of the respective Mortgage Loans, the Master Servicer
shall have full power and authority, acting alone or through Sub-Servicers as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Master Servicer
in its own name or in the name of a Sub-Servicer is hereby authorized and
empowered by the Trustee when the Master Servicer believes it appropriate in its
best judgment in accordance with the servicing standards set forth above, to
execute and deliver, on behalf of the Trust Fund, the Certificateholders and the
Trustee or any of them, and upon written notice to the Trustee, 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 and Certificateholders. The Master 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 Master 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 Master Servicer, and furnish to the
Master Servicer and any Sub-Servicer any special or limited powers of attorney
and other documents necessary or appropriate to enable the Master Servicer or
any Sub-Servicer to carry out their servicing and administrative duties
hereunder and the Trustee shall not be liable for the actions of the Master
Servicer or any Sub-Servicers under such powers of attorney.

          Subject to Section 3.09 hereof, in accordance with the standards of
the preceding paragraph, the Master Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Master Servicer or by Sub-Servicers in effecting
the timely payment of taxes and assessments on a Mortgaged Property 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.

          Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (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 Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury


                                      -51-

<PAGE>



regulations promulgated thereunder) and (B) cause any Trust REMIC to fail to
qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.

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

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

          (a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub- Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates. The
Trustee is hereby authorized to acknowledge, at the request of the Master
Servicer, any Sub-Servicing Agreement that, based on an Officers' Certificate of
the Master Servicer delivered to the Trustee (upon which the Trustee can
conclusively rely), meets the requirements applicable to Sub-Servicing
Agreements set forth in this Agreement and that is otherwise permitted under
this Agreement.

          Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub- Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub- Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub- Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights; provided, further, that the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights shall not be required (i) to cure
any ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a
Sub-Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Master Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Master Servicer shall deliver
to the Trustee copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and


                                      -52-

<PAGE>



delivery of such instruments.

          (b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement and of the Originator and the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation of a Sub-Servicer to
make advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or any obligation of the Originator or the Seller 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). Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements, and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller and the Originator shall be effected by the Master Servicer
to the extent it is not the Originator, the Seller or an Affiliate of the
Seller, and otherwise by the Trustee in accordance with the foregoing provisions
of this paragraph.

          SECTION 3.03. Successor Sub-Servicers.

          The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall 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 Trustee (if the Trustee is acting
as Master Servicer) without fee, in accordance with the terms of this Agreement,
in the event that the Master Servicer (or the Trustee, if it is then acting as
Master Servicer) shall, for any reason, no longer be the Master Servicer
(including termination due to a Master Servicer Event of Default).

          SECTION 3.04. Liability of the Master Servicer.

          Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such


                                      -53-

<PAGE>



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 Master Servicer
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.

          SECTION 3.05. No Contractual Relationship Between Sub-Servicers, the
                        Trustee or the Certificateholders.

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

          SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
                        the Trustee.

          In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of the occurrence of a Master Servicer
Event of Default), the Trustee, its designee or other successor master servicer
shall thereupon assume all of the rights and obligations of the Master Servicer
under each Sub-Servicing Agreement that the Master Servicer may have entered
into, unless the Trustee, such designee or other successor master servicer
elects to terminate any Sub-Servicing Agreement in accordance with its terms as
provided in Section 3.03. Upon such assumption, the Trustee, its designee or the
successor master servicer for the Trustee appointed pursuant to Section 7.02
shall be deemed, subject to Section 3.03, to have assumed all of the Master
Servicer's interest therein and to have replaced the Master Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the Master
Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trustee, its designee or any successor Master Servicer
shall be deemed to have assumed any liability or obligation of the Master
Servicer that arose before it ceased to be the Master Servicer.

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

          The Servicing Fee payable to the Trustee or other successor master
servicer shall be payable from payments received on the Mortgage Loans in the
amount and in the manner set forth in this Agreement.


                                      -54-

<PAGE>



          SECTION 3.07. Collection of Certain Mortgage Loan Payments.

          The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, 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 Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any 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, however, that any extension pursuant to clause
(ii) above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event of
any such arrangement pursuant to clause (ii) above, the Master Servicer shall
make timely advances on such Mortgage Loan during such extension pursuant to
Section 4.03 and in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangement. Notwithstanding
the foregoing, in the event that any Mortgage Loan is in default or, in the
judgment of the Master Servicer, such default is reasonably foreseeable, the
Master Servicer, consistent with the standards set forth in Section 3.01, may
also waive, modify or vary any term of such Mortgage Loan (including
modifications that would 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.

          SECTION 3.08. Sub-Servicing Accounts.

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

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

          The Master Servicer shall establish and maintain, or cause to be
established and


                                      -55-

<PAGE>



maintained, 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, 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 Master Servicer
shall deposit in the clearing account in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Master Servicer's receipt thereof, all Escrow Payments collected on account
of the Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the receipt of
such Escrow Payments, 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 payment of taxes, assessments,
hazard insurance premiums, and comparable items in a manner and at a time that
assures that the lien priority of the Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that avoids the loss
of the Mortgaged Property due to a tax sale or the foreclosure as a result of a
tax lien); (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) 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 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 Master 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 Master Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in the 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.

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

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

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


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<PAGE>




          (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 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 Master Servicer
     pursuant to the second paragraph of Section 3.14(a) in respect of any
     blanket policy deductibles;

          (vi) all proceeds of any Mortgage Loan repurchased or purchased in
     accordance with Section 2.03, Section 3.16 or Section 9.01;

          (vii) all amounts required to be deposited in connection with
     shortfalls in principal amount of Qualified Substitute Mortgage Loans
     pursuant to Section 2.03; and

          (viii) all Prepayment Charges collected by the Master Servicer in
     connection with the Principal Prepayment of any of the Mortgage Loans.

          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,
modification or assumption fees, or insufficient funds charges need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer as additional compensation. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.

          (b) On behalf of the Trust Fund, 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 Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account by 1:00 p.m. New York time (i) on the Master 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 Master Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advancing
Person pursuant to Section 3.26 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


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<PAGE>



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 Master Servicer shall,
by 1:00 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 Master
Servicer, the Trustee, the Originator, the Seller or any Sub-Servicer 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 Master Servicer shall give notice to the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. The Trustee shall give notice to the Master Servicer 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 Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request in writing that the
Trustee withdraw such amount from the Distribution Account and remit to it any
such amount, any provision herein to the contrary notwithstanding. In addition,
the Master Servicer shall deliver to the Trustee from time to time for deposit,
and the Trustee shall so deposit, in the Distribution Account:

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

          (ii) any amounts required to be deposited pursuant to Section 3.23(d)
     or (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; and

          (iv) any amounts required to be deposited pursuant to Section 3.24 in
     connection with any Prepayment Interest Shortfall.

          (e) [Reserved].

          (f) The Master Servicer shall deposit in the Collection Account or
Distribution Account, as the case may be, any amounts required to be deposited
pursuant to Section 3.12(b) in connection with losses realized on Permitted
Investments with respect to funds held in the Collection Account or Distribution
Account, respectively.



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

          (a) The Master 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 Trustee 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 Master Servicer for
     P&I 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 P&I Advances were made in
     accordance with the provisions of Section 4.03;

          (iii) subject to Section 3.16(d), to pay the Master Servicer or any
     Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed Servicing
     Advances with respect to each Mortgage Loan, but only to the extent of any
     Late Collections, Liquidation Proceeds and Insurance Proceeds received with
     respect to such Mortgage Loan and (c) any Nonrecoverable Servicing Advances
     with respect to the final liquidation of a Mortgage Loan, but only to the
     extent that Late Collections, Liquidation Proceeds and Insurance Proceeds
     received with respect to such Mortgage Loan are insufficient to reimburse
     the Master Servicer or any Sub- Servicer for Servicing Advances;

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

          (v) to pay to the Master Servicer, the Depositor, the Originator or
     the Seller, as the case may be, with respect to each Mortgage Loan that has
     previously been purchased or replaced pursuant to Section 2.03 or Section
     3.16(c) all amounts received thereon subsequent to the date of purchase or
     substitution, as the case may be;

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

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

          (viii) to reimburse the Master Servicer or the Trustee for expenses
     reasonably incurred in connection with any breach or defect giving rise to
     the purchase obligation under Section 2.03 of this Agreement, including any
     expenses arising out of the enforcement of the purchase obligation;



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<PAGE>



          (ix) to pay, or to reimburse the Master Servicer for Servicing
     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 Master 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), (iv), (v), (vi), (viii) and (ix) above.
The Master Servicer shall provide written notification to the Trustee, on or
prior to the next succeeding Master Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclauses (vi) and (vii)
above; provided that an Officers' Certificate in the form described under
Section 4.03(d) shall suffice for such written notification to the Trustee in
respect of clause (vi) hereof.

          (b) The Trustee 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 amounts to which it is entitled pursuant to
     Section 8.05 or for Extraordinary Trust Fund Expenses;

          (iii) to reimburse itself pursuant to Section 7.02;

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

          (v) to pay to an Advancing Person reimbursements for P&I Advances
     and/or Servicing Advances pursuant to Section 3.26; and

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

          SECTION 3.12. Investment of Funds in the Collection Account and the
                        Distribution Account.

          (a) The Master Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account") to invest the funds in such 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 Trustee 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
Trustee is the obligor thereon. Amounts in the Distribution Account may be held
uninvested. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee for the benefit of the Certificateholders. The
Trustee shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account and any income and gain


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<PAGE>



realized thereon) over each such investment, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the party with investment discretion
over such Investment Account shall:

          (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 Trustee 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 and any REO Account held by or on behalf of
the Master Servicer, shall be for the benefit of the Master Servicer and shall
be subject to its withdrawal in accordance with Section 3.11 or Section 3.23, as
applicable, or withdrawal by the Trustee in accordance with Section 3.11 or
Section 3.25, as applicable. The Master Servicer shall deposit in the Collection
Account or any REO Account, as applicable, the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon realization of such loss. All income in the nature of
interest from the investment of funds in the Distribution Account shall be for
the benefit of the Trustee. The Trustee shall remit from its own funds for
deposit into the Distribution Account the amount of any loss incurred on
Permitted Investments in the Distribution Account, if amounts on deposit in the
Distribution Account are invested in Permitted Investments by the Trustee in the
absence of direction from another party.

          (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 other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.

          (d) The Trustee or its Affiliates are permitted to receive additional
compensation that could be deemed to be in the Trustee's economic self-interest
for (i) serving as investment adviser, administrator, shareholder servicing
agent, custodian or sub-custodian with respect to certain of the Permitted
Investments, (ii) using Affiliates to effect transactions in certain Permitted
Investments and (iii) effecting transactions in certain Permitted Investments.
Such compensation shall not be considered an amount that is reimbursable or
payable to the Trustee pursuant to Section 3.11 or 3.12 or otherwise payable in
respect of Extraordinary Trust Fund Expenses.

          SECTION 3.13. [Reserved].



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

          (a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the 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 that 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 Master Servicer shall also cause to be
maintained fire insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property, plus accrued interest at the Mortgage Rate and related Servicing
Advances. The Master 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 Master 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 Master 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 Master 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 and flood insurance has been made available, the Master 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 Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master 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


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<PAGE>



administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.

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

          SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
                        Agreements.

          The Master 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 Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any such rights if prohibited
by law from doing so. If the Master 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
Master 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 Master Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Originator and has a credit risk rating at least equal to that
of the original Mortgagor. In connection with any assumption or substitution,
the Master Servicer shall apply the Originator's underwriting standards and
follow such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Master 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


                                      -63-

<PAGE>



applicable hazard insurance policy. Any fee collected by the Master Servicer in
respect of an assumption, modification or substitution of liability agreement
shall be retained by the Master 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 Master Servicer shall notify the Trustee that
any such substitution, modification or assumption agreement has been completed
by forwarding to the Trustee (with a copy to the Trustee) the executed original
of such substitution, modification 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 Master 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 Master 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 Master Servicer shall exercise its discretion, consistent with
customary servicing procedures and the terms of this Agreement, with respect to
the enforcement and servicing of defaulted Mortgage Loans in such manner as will
maximize the receipt of principal and interest with respect thereto, including
but not limited to the sale of such Mortgage Loan to a third party, the
modification of such Mortgage Loan, or foreclosure upon the related Mortgaged
Property and disposition thereof.

          In furtherance of the foregoing, the Master 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 Master 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 Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master 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 Master 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 Master Servicer shall not, on behalf of the Trust


                                      -64-

<PAGE>



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 Trustee, the Trust Fund 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
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Master Servicer has
also previously determined, based on its reasonable judgment and a report
prepared by an Independent 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 Master Servicer, subject to the Master
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 Master 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 Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.03(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (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 Master Servicer may at its option purchase from REMIC I any
Mortgage Loan or related REO Property that is 90 days or more delinquent, which
the Master Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee, in form and substance satisfactory to the


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Trustee prior to purchase), at a price equal to the Purchase Price; provided,
however, that the Master Servicer shall purchase any such Mortgage Loans or
related REO Properties on the basis of delinquency, purchasing the most
delinquent Mortgage Loans or related REO Properties first; provided, further,
that such limitation shall not apply to the purchase of any Collection Advisor
Mortgage Loans. The Purchase Price for any Mortgage Loan or related REO Property
purchased hereunder shall be deposited in the Collection Account, and the
Trustee, upon receipt of written certification from the Master Servicer of such
deposit, shall release or cause to be released to the Master 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 Master Servicer
shall furnish and as shall be necessary to vest in the Master Servicer title to
any Mortgage Loan or related REO Property released pursuant hereto.

          (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
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I 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 Master 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 Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).

          (e) Furthermore, the Holder of the Class R Certificates will have the
option to purchase, at any one time, 1.0% (and in any case, at least 5 Mortgage
Loans) of the Mortgage Loans, by aggregate principal balance of the Mortgage
Loans as of such date, at a purchase price equal to the greater of (A) the
aggregate Purchase Price of such Mortgage Loans and (B) the aggregate fair
market value of such Mortgage Loans. The Mortgage Loans that may be purchased by
the Master Servicer pursuant to this paragraph will be selected by the Master
Servicer in its sole discretion. If at any time the Master Servicer exercises
such option, it shall immediately notify or cause to be notified the Trustee by
a certification in the form of Exhibit E (which certification shall include a
statement to the effect that all amounts 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 Files to the Master Servicer. Any tax on
"prohibited transactions" (as defined in Section 860F(a)(2) of the Code) imposed
on any REMIC created hereunder related to the exercise of the option provided by
this paragraph (e) shall in no event be payable by the Trustee.

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

          (a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer will immediately
notify or cause to be notified the Trustee by a


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<PAGE>



certification in the form of Exhibit E (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 Master 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.

          (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Master Servicer and delivery to the Trustee
of a Request for Release in the form of Exhibit E, release the related Mortgage
File to the Master Servicer, and the Trustee shall, at the direction of the
Master Servicer, execute such documents as shall be necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee when the need therefor by the Master 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 Master
Servicer has delivered, or caused to be delivered, to the Trustee an additional
Request for Release certifying as to such liquidation or action or proceedings.
Upon the request of the Trustee, the Master Servicer shall provide notice to the
Trustee of the name and address of the Person to which such Mortgage File or
such document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation that are required to be deposited into the Collection
Account have been so deposited, or that such Mortgage Loan has become an REO
Property, any outstanding Requests for Release with respect to such Mortgage
Loan shall be released by the Trustee to the Master Servicer or its designee.

          (c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer or the Sub-Servicer, as the
case may be, 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.

          SECTION 3.18. Servicing Compensation.



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<PAGE>



          As compensation for the activities of the Master Servicer hereunder,
the Master 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 Master 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. 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 Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.

          Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Master Servicer only to the extent such fees or charges are received by the
Master Servicer. The Master 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 and
Section 3.24. The Master Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder (including premiums
for the insurance required by Section 3.14, to the extent such premiums are not
paid by the related Mortgagors or by a Sub-Servicer, servicing compensation of
each Sub-Servicer, and to the extent provided herein in Section 8.05, the
expenses of the Trustee) and shall not be entitled to reimbursement therefor
except as specifically provided herein.

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

          Not later than twenty days after each Distribution Date, the Master
Servicer shall forward to the Trustee and the Depositor the most current
available bank statement for the Collection Account. Copies of such statement
shall be provided by the Trustee to any Certificateholder and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Master Servicer to the Trustee.

          In addition, on each Distribution Date, the Master Servicer shall
forward to the Rating Agencies, the Trustee and the Collection Advisor a report
setting forth (i) the percentage of Mortgage Loans that are 30 or more days
delinquent, in foreclosure, have been converted to REO Properties or have been
discharged by reason of bankruptcy, (ii) the number and aggregate principal
balance of Mortgage Loans that are Collection Advisor Mortgage Loans, (iii) the
number and aggregate principal balance of Mortgage Loans serviced by the Master
Servicer and the Collection Advisor and (iv) the Collection Advisor Delinquency
Triggers.

          SECTION 3.20. Statement as to Compliance.

          Not later than March 15th of each calendar year commencing in 2004,
the Master Servicer will deliver to the Trustee and the Depositor an Officers'
Certificate (upon which the


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<PAGE>



Trustee can conclusively rely in connection with its obligations under Section
4.06) stating, as to each signatory thereof, that (i) a review of the activities
of the Master Servicer during the preceding year and of performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Master 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 Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.

          SECTION 3.21. Independent Public Accountants' Servicing Report.

          Not later than March 15th of each calendar year commencing in 2004,
the Master Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Master Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer which includes an
assertion that the Master Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by Sub-
Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Master
Servicer shall, at its own expense, furnish a copy of such report to the Trustee
and each Rating Agency. Copies of such statement shall be provided by the
Trustee to any Certificateholder upon request, provided that such statement is
delivered by the Master Servicer to the Trustee.

          SECTION 3.22. Access to Certain Documentation.

          The Master 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 Certificateholder, access to the
documentation in the Master Servicer's possession 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 Master Servicer designated by it. In addition,
access to the documentation in the Master Servicer's possession regarding the
Mortgage Loans will be provided to any Certificateholder, the Trustee and to any
Person identified to the Master Servicer as a prospective transferee of a
Certificate; provided, however, that providing access to such Person will not
violate any applicable laws, upon reasonable request during normal business
hours at the offices of the Master Servicer designated by it at the expense of
the Person requesting such access.



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<PAGE>



          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, in trust for the benefit of the
Certificateholders. The Master Servicer, on behalf of REMIC I, shall either sell
any REO Property prior to the end of the third taxable year after REMIC I
acquires ownership of such REO Property for purposes of Section 860G(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 Master Servicer shall have
delivered to the Trustee an Opinion of Counsel, addressed to 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 of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause any Trust REMIC to fail to qualify
as a REMIC under Federal law at any time that any Certificates are outstanding.
The Master 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 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 Master 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, or
cause to be established and maintained, with respect to REO Properties, an
account held in trust for the Trustee for the benefit of the Certificateholders
(the "REO Account"), which shall be an Eligible Account. The Master Servicer
shall be permitted to allow the Collection Account to serve as the REO Account,
subject to separate ledgers for each REO Property. The Master Servicer shall be
entitled to retain or withdraw any interest income paid on funds deposited in
the REO Account.

          (c) The Master Servicer shall have the sole discretion to determine
whether an immediate sale of an REO Property or continued management of such REO
Property is in the best interests of the Certificateholders. In furtherance of
the foregoing, the Master 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 Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:

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


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<PAGE>



          (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 Master Servicer shall
advance from its own funds such amount as is necessary for such purposes if, but
only if, the Master Servicer would make such advances if the Master Servicer
owned the REO Property and if in the Master Servicer's judgment, the payment of
such amounts will be recoverable from the rental or sale of the REO Property.

          Notwithstanding the foregoing, neither the Master Servicer nor the
Trustee shall:

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

          (iii) authorize 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) authorize 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 Master Servicer has obtained an Opinion of
Counsel, provided to 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 Master Servicer may take such actions as are specified in
such Opinion of Counsel.

                The Master 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;

          (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 Master Servicer as soon as practicable,
     but


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<PAGE>



     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 Master Servicer of any of its duties and
     obligations to the Trustee on behalf of the Certificateholders with respect
     to the operation and management of any such REO Property; and

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

          The Master 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 Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.

          (d) In addition to the withdrawals permitted under Section 3.23(c),
the Master Servicer may from time to time make withdrawals from the REO Account
for any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing
Fees in respect of the related Mortgage Loan; and (ii) to reimburse itself or
any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances made in
respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master 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 Master Servicer at such price and
upon such terms and conditions as the Master 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 Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master 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).


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<PAGE>



          (g) The Master 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 Master Servicer in Respect of
                        Prepayment Interest Shortfalls.

          The Master Servicer shall deliver to the Trustee for deposit into the
Distribution Account by 1:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount equal to the lesser of (i) the
aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from full or partial Principal Prepayments during the related
Prepayment Period and (ii) the aggregate Servicing Fee for the related
Prepayment Period. Any amounts paid by the Master Servicer pursuant to this
Section 3.24 shall not be reimbursed by REMIC I.

          SECTION 3.25. Obligations of the Master 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 Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee 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 Trustee, the Depositor and
any successor master servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the foregoing, this Section 3.25 shall not limit the ability of the Master
Servicer to seek recovery of any such amounts from the related Mortgagor under
the terms of the related Mortgage Note, as permitted by law.

          SECTION 3.26. Advance Facility.

          (a) Either (i) the Master Servicer or (ii) the Trustee, on behalf of
the Trust Fund, with the consent of the Master Servicer, is hereby authorized to
enter into a facility with any Person which provides that such Person (an
"Advancing Person") may fund P&I Advances and/or Servicing Advances to the Trust
Fund under this Agreement, although no such facility shall reduce or otherwise
affect the Master Servicer's obligation to fund such P&I Advances and/or
Servicing Advances. If the Master Servicer enters into such an Advance Facility
pursuant to this Section 3.26, upon reasonable request of the Advancing Person,
the Trustee shall execute a letter of acknowledgment, confirming its receipt of
notice of the existence of such Advance Facility. If the Trustee enters into
such an Advance Facility pursuant to this Section 3.26, the Master Servicer
shall also be a party to such Advance Facility. To the extent that an Advancing
Person funds any P&I Advance or any Servicing Advance and provides the Trustee
with notice acknowledged by the Master Servicer that such Advancing Person is
entitled to reimbursement, such Advancing Person


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<PAGE>



shall be entitled to receive reimbursement pursuant to this Agreement for such
amount to the extent provided in Section 3.26(b). Such notice from the Advancing
Person must specify the amount of the reimbursement, the Section of this
Agreement that permits the applicable P&I Advance or Servicing Advance to be
reimbursed and the section(s) of the Advance Facility that entitle the Advancing
Person to request reimbursement from the Trustee, rather than the Master
Servicer, and include the Master Servicer's acknowledgment thereto or proof of
an Event of Default under the Advance Facility. The Trustee 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
3.26. An Advancing Person whose obligations hereunder are limited to the funding
of P&I Advances and/or Servicing Advances shall not be required to meet the
qualifications of a Master Servicer or a Sub- Servicer pursuant to Section 3.02
hereof and will not be deemed to be a Sub-Servicer under this Agreement.

          (b) If an advancing facility is entered into, then the Master Servicer
shall not be permitted to reimburse itself therefor under Section 3.11(a)(ii),
Section 3.11(a)(iii) and Section 3.11(a)(vi) prior to the remittance to the
Trust Fund, but instead the Master Servicer shall include such amounts in the
applicable remittance to the Trustee made pursuant to Section 3.11(a). The
Trustee is hereby authorized to pay to the Advancing Person, reimbursements for
P&I Advances and Servicing Advances from the Distribution Account to the same
extent the Master Servicer would have been permitted to reimburse itself for
such P&I Advances and/or Servicing Advances in accordance with 3.11(a)(ii),
Section 3.11(a)(iii) and Section 3.11(a)(vi), as the case may be, had the Master
Servicer itself funded such P&I Advance or Servicing Advance. The Trustee is
hereby authorized to pay directly to the Advancing Person such portion of the
Servicing Fee as the parties to any advancing facility agree in writing.

          (c) All P&I Advances and Servicing Advances made pursuant to the terms
of this Agreement shall be deemed made and shall be reimbursed on a "first
in-first out" (FIFO) basis.

          (d) Any amendment to this Section 3.26 or to any other provision of
this Agreement that may be necessary or appropriate to effect the terms of an
Advance Facility as described generally in this Section 3.26, including
amendments to add provisions relating to a successor master servicer, may be
entered into by the Trustee and the Master Servicer without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement.

          SECTION 3.27. [Reserved].

          SECTION 3.28 Net WAC Rate Carryover Reserve Account.

          (a) No later than the Closing Date, the Trustee shall establish and
maintain with itself, as agent for the Trustee, a separate, segregated trust
account titled, "Net WAC Rate Carryover Reserve Account, Deutsche Bank National
Trust Company, as Trustee, in trust for the registered holders of New Century
Mortgage Securities, Inc., New Century Home Equity Loan Trust, Series 2003-1,
Asset Backed Pass-Through Certificates." On the Closing Date, the Depositor will
deposit, or cause to be deposited, into the Net WAC Rate Carryover Reserve
Account $1,000.



                                      -74-

<PAGE>



          (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 Trustee has been directed by the Class CE Certificateholders
to, and therefore will, deposit into the Net WAC Rate Carryover Reserve Account
the amounts described in Section 4.01(a)(4), rather than distributing such
amounts to the Class CE Certificateholders. On each such Distribution Date, the
Trustee 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 Trustee shall deposit
into the Net WAC Rate Carryover Reserve Account 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 Net WAC Rate Carryover Reserve Account, 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 Net WAC Rate Carryover
Reserve Account and all amounts deposited into the Net WAC Rate Carryover
Reserve Account (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 Net WAC Rate Carryover Reserve Account will be released by the
Trust Fund and distributed to the Class CE Certificateholders or their
designees. The Net WAC Rate Carryover Reserve Account will be part of the Trust
Fund but not part of any 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 Trustee, and the Trustee hereby is
directed, to deposit into the Net WAC Rate Carryover Reserve Account 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 Trustee shall direct any depository
institution maintaining the Net WAC Rate Carryover Reserve Account 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 Trustee 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 Trustee 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 Net WAC
Rate Carryover Reserve Account is received by the Trustee, the Trustee shall
invest the funds in Deutsche Cash


                                      -75-

<PAGE>



Management Fund 541 so long as it is a Permitted Investment or as otherwise
directed in writing by the Depositor on behalf of the Holders of a majority
Percentage Interest in the Class CE Certificates. All income and gain earned
upon such investment shall be deposited into the Net WAC Rate Carryover Reserve
Account.

          (f) For federal tax return and information reporting, the right of the
Class A Certificateholders and the Mezzanine Certificateholders to receive
payments from the Net WAC Rate Carryover Reserve Account in respect of any Net
Wac Rate Carryover Amount shall be assigned a value of zero.




                                      -76-

<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 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, 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 Overcollateralized
     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 and such amounts 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, 98.00% 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, 1.00% 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;

               (c) to the Holders of REMIC I Regular Interest I-LTZZ, 1.00% 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


                                      -77-

<PAGE>



          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 98.00% and 2.00% 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 Trustee 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 Trustee 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:

          (A) 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;

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

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

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



                                      -78-

<PAGE>



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

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

          (B) 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;

          (i) 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;

          (ii) 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;

          (iii) 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;

          (iv) 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

          (v) 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 shall
be distributed by the Trustee 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
     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;

          (ii) 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;

          (iii) 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;



                                      -79-

<PAGE>



          (iv) 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;

          (v) 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;

          (vi) to the Holders of the Class A Certificates, in an amount equal to
     the aggregate of any Prepayment Interest Shortfalls and any Relief Act
     Interest Shortfall on the Mortgage Loans allocated to such Certificates;

          (vii) to the Holders of the Class M-1 Certificates, in an amount equal
     to the aggregate of any Prepayment Interest Shortfalls and any Relief Act
     Interest Shortfall on the Mortgage Loans allocated to such Certificates;

          (viii) to the Holders of the Class M-2 Certificates, in an amount
     equal to the aggregate of any Prepayment Interest Shortfalls and any Relief
     Act Interest Shortfall on the Mortgage Loans allocated to such
     Certificates;

          (ix) to the Holders of the Class M-3 Certificates, in an amount equal
     to the aggregate of any Prepayment Interest Shortfalls and any Relief Act
     Interest Shortfall on the Mortgage Loans allocated to such Certificates;

          (x) to the Holders of the Class M-4 Certificates, in an amount equal
     to the aggregate of any Prepayment Interest Shortfalls and any Relief Act
     Interest Shortfall on the Mortgage Loans allocated to such Certificates;

          (xi) to the Net WAC Rate Carryover Reserve Account, the amount
     required by Section 3.28(b);

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

          (xiii) 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.

          (b) On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Trustee will FIRST,
withdraw from the Net WAC Rate Carryover Reserve Account all income from the
investment of funds in the Net WAC Rate Carryover Reserve Account and distribute
such amount to the Holders of the Class CE Certificates, and SECOND, withdraw
from the Net WAC Rate Carryover Reserve Account, to the extent of amounts
remaining on deposit therein, the amount of any Net WAC Rate Carryover Amount
with respect to the Class


                                      -80-

<PAGE>



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.

          On each Distribution Date, the Trustee shall withdraw any amounts then
on deposit in the Distribution Account that represent Prepayment Charges
collected by the Master Servicer in connection with the Principal Prepayment of
any of the Mortgage Loans or any Master 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
shall 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 Trustee in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date, 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
Certificate shall be made in like manner, but only upon presentment and
surrender of such Certificate at the office of the Trustee maintained for such
purpose pursuant to Section 8.12 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 Trustee, the Depositor
or the Master 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 Trustee or the Master 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 Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next


                                      -81-

<PAGE>



Distribution Date, the Trustee 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 Trustee 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
     Trustee 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 Trustee 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
Trustee 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 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 the Trust Fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Salomon Smith Barney Inc., in accordance
with its wiring instructions, 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 Trustee 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 Trustee shall be held in an
Eligible Account and shall be held uninvested.

          (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.



                                      -82-

<PAGE>



          On each Distribution Date, the Trustee shall prepare and make
available via its website to 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 Master Servicer
     during the related Due Period and such other customary information as the
     Trustee deems necessary or desirable, or which a Certificateholder
     reasonably requests, to enable Certificateholders to prepare their tax
     returns;

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

          (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


                                      -83-

<PAGE>



     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, 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 Master
     Servicer pursuant to Section 3.24;

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

          (xviii) the Overcollateralization Target 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; and

          (xxii) 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.


                                      -84-

<PAGE>



          The Trustee shall make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, the Master Servicer, the Trustee and
the Rating Agencies via the Trustee's internet website. The Trustee's internet
website shall initially be located at https://www.corporatetrust.db.com/invr and
assistance in using the website can be obtained by calling the Trustee's
customer service desk at 1- 800-735-7777. Parties that are unable to use the
above distribution options are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such. The
Trustee shall have the right to change the way such statements are distributed
in order to make such distribution more convenient and/or more accessible to the
above parties and the Trustee shall provide timely and adequate notification to
all above parties regarding any such changes.

          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 Trustee 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 Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.

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

          The Trustee 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 Trustee's duties are limited to the extent that the
Trustee receives timely reports as required from the Master Servicer.

          On each Distribution Date the Trustee 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 Trustee and Bloomberg.

          SECTION 4.03. Remittance Reports; P&I Advances.

          (a) On the Business Day following each Determination Date, the Master
Servicer shall deliver to the Trustee by telecopy (or by such other means as the
Master Servicer 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 Master Servicer shall forward to the Trustee by overnight


                                      -85-

<PAGE>



mail a computer readable magnetic tape or electronically transmit (in a format
acceptable to the Trustee) 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 P&I
Advances to be made by the Master Servicer in respect of the related
Distribution Date, the aggregate amount of P&I Advances outstanding after giving
effect to such P&I Advances, and the aggregate amount of Nonrecoverable P&I
Advances in respect of such Distribution Date and (ii) such other information
with respect to the Mortgage Loans as the Trustee 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 Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Master Servicer.

          (b) The amount of P&I Advances to be made by the Master Servicer for
any Distribution Date shall equal, subject to Section 4.03(d), the sum of (i)
the aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans, which Monthly Payments were delinquent as of the close of
business on the related Determination Date and (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which REO Property an REO Disposition did not occur
during the related Prepayment Period, an amount equal to the excess, if any, of
the REO Imputed Interest on such REO Property for the most recently ended
calendar month, over the net income from such REO Property transferred to the
Distribution Account pursuant to Section 3.23 for distribution on such
Distribution Date.

          By 1:00 p.m. New York time on the Master Servicer Remittance Date, the
Master Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an amount equal to the aggregate amount of
P&I Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related 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 the Collection Account that amounts held for future distribution have
been, as permitted by this Section 4.03, used by the Master Servicer in
discharge of any such P&I Advance) or (iii) in the form of any combination of
(i) and (ii) aggregating the total amount of P&I Advances to be made by the
Master Servicer with respect to the Mortgage Loans and REO Properties. Any
amounts held for future distribution and so used shall be appropriately
reflected in the Master Servicer's records and replaced by the Master Servicer
by deposit in the Collection Account on or before any future Master Servicer
Remittance Date to the extent that the Available Distribution Amount for the
related Distribution Date (determined without regard to P&I Advances to be made
on the Master 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 P&I Advances. The Trustee will provide notice to the
Master Servicer by telecopy by the close of business on the third Business Day
prior to the Distribution Date in the event that the amount remitted by the
Master Servicer to the Trustee on such date is less than the P&I Advances
required to be made by the Master Servicer for the related Distribution Date.

          (c) The obligation of the Master Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and,


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<PAGE>



with respect to any Mortgage Loan or REO Property, shall continue until 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 P&I Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the Master Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor and the
Trustee.

          SECTION 4.04. Allocation of Realized Losses.

          (a) Prior to each Determination Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in 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 Master 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 Master Servicer shall be
evidenced by an Officers' Certificate delivered to the Trustee by the Master
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 Trustee on each Distribution Date as follows: first, to the Accrued
Certificate Interest for the Class CE Certificates for the related Interest
Accrual Period; 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


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<PAGE>



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)(xii). 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 Trustee 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 Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any


                                      -88-

<PAGE>



Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate the amount withheld to such Certificateholders.

          SECTION 4.06. Exchange Commission; Additional Information.

          (a) The Trustee shall reasonably cooperate with the Depositor in
connection with the Trust's satisfying the reporting requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Trustee
shall prepare on behalf of the Trust any Forms 8-K and 10-K customary for
similar securities as required by the Exchange Act and the Rules and Regulations
of the Securities and Exchange Commission thereunder, and the Depositor shall
sign (or shall cause another entity acceptable to the Securities and Exchange
Commission to sign) and the Trustee shall file (via the Securities and Exchange
Commission's Electronic Data Gathering and Retrieval System) such forms on
behalf of the Depositor (or such other entity). The Depositor hereby grants to
the Trustee a limited power of attorney to execute any Form 8-K and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until the earlier of (i) receipt by the Trustee from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust.
Notwithstanding anything herein to the contrary, the Depositor, and not the
Trustee, shall be responsible for executing each Form 10-K filed on behalf of
the Trust.

          (b) Each Form 8-K shall be filed by the Trustee within 15 days after
each Distribution Date, with a copy of the statement to the Certificateholders
for such Distribution Date as an exhibit thereto. Prior to March 30th of each
year (or such earlier date as may be required by the Exchange Act and the Rules
and Regulations of the Securities and Exchange Commission), the Trustee shall
file a Form 10-K, in substance as required by applicable law or applicable
Securities and Exchange Commission staff's interpretations. Such Form 10-K shall
include as exhibits the Master Servicer's annual statement of compliance
described under Section 3.20 and the accountant's report described under Section
3.21, in each case to the extent they have been timely delivered to the Trustee.
If they are not so timely delivered, the Trustee shall file an amended Form 10-K
including such documents as exhibits reasonably promptly after they are
delivered to the Trustee. The Trustee shall have no liability with respect to
any failure to properly prepare or file such periodic reports resulting from or
relating to the Trustee's inability or failure to obtain any information not
resulting from its own negligence or willful misconduct. The Form 10-K shall
also include a certification in the form attached hereto as Exhibit J-1 (the
"Certification"), which shall be signed by the senior officer of the Depositor
in charge of securitization.

          (c) In addition, the Trustee shall sign a certification (in the form
attached hereto as Exhibit J-2) for the benefit of the Depositor and its
officers, directors and Affiliates regarding certain aspects of the
Certification (provided, however, that the Trustee shall not undertake an
analysis of the accountant's report attached as an exhibit to the Form 10-K).
The Trustee's certification shall be delivered to the Depositor by no later than
March 18th of each year (or if such day is not a Business Day, the immediately
preceding Business Day) and the Depositor shall deliver the Certification to the
Trustee for filing no later than March 20th of each year (or if such day is not
a Business Day, the immediately preceding Business Day).

          In addition, the Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures,


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<PAGE>



reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach of the Trustee's obligations
under this Section 4.06(c) or the Trustee's negligence, bad faith or willful
misconduct in connection therewith. The Depositor shall indemnify and hold
harmless the Trustee and its officers, directors and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising out
of or based upon a breach of the Depositor's obligations under this Section 4.06
or the Depositor's negligence, bad faith or willful misconduct in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor or the Trustee, as applicable, then
the other party, in connection with a breach of its respective obligations under
this Section 4.06 with respect to the Depositor or Section 4.06(c) with respect
to the Trustee or its respective negligence, bad faith or willful misconduct in
connection therewith, agrees that it shall contribute to the amount paid or
payable by the other party as a result of the losses, claims, damages or
liabilities of the other party in such proportion as is appropriate to reflect
the relative fault and the relative benefit of the Depositor on the one hand and
the Trustee on the other.

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

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

          (f) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 4.06 comply with the reporting requirements under the Exchange Act,
the Trustee hereby agrees that it will reasonably cooperate to amend the
provisions of this Section 4.06 (in accordance with Section 11.01) in order to
comply with such amended reporting requirements and such amendment of this
Section 4.06. Any such amendment may result in the reduction of the reports
filed by the Depositor under the Exchange Act. Notwithstanding the foregoing,
the Trustee shall not be obligated to enter into any amendment pursuant to this
Section that adversely affects its obligations and immunities under this
Agreement.




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<PAGE>



                                    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-8. 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, authenticated
and delivered by the Trustee upon the written order of the Depositor. The
Certificates shall be executed by manual or facsimile signature on behalf of the
Trustee by an authorized signatory. Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Trustee shall bind the Trustee 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 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 Trustee
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 Trustee 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 as such, the Book- Entry Custodian shall, appoint, by a written
instrument delivered to the Depositor, the Master Servicer and, if the Trustee
is not the Book-Entry Custodian, the Trustee, any other transfer agent


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<PAGE>



(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 Trustee resigns or is removed in accordance with the terms hereof, the
Trustee, the successor Trustee 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 Trustee, the Master 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 Trustee 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 Trustee 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, and with the consent of
the Trustee (such consent not to be unreasonably withheld), advises the Trustee
in writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Master 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 Trustee 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
Trustee 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 Trustee 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 Trustee 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 Master Servicer 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
the Trustee, to the extent applicable with respect to such Definitive
Certificates, and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.



                                      -92-

<PAGE>



          SECTION 5.02. Registration of Transfer and Exchange of Certificates.

          (a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee 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 Trustee 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
Residual 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 Class CE Certificate, Class P Certificate or
Residual 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 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 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 (which Opinion of Counsel shall not be an expense of
the Trust Fund or of the Depositor, the Trustee, the Master 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. Neither the Depositor nor 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 Trustee, the
Depositor and the Master 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"), as certified by such transferee in the form of Exhibit G,
unless the Depositor, the Trustee and the Master Servicer are provided with an
Opinion of Counsel which establishes to the satisfaction of the Depositor, the
Trustee and the Master Servicer that the purchase of such Certificates is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Depositor, the Master Servicer, the Trustee or the Trust
Fund to any obligation or liability (including obligations or liabilities under
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 Master Servicer, the Trustee or the Trust Fund. 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


                                      -93-

<PAGE>



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 Trustee shall be entitled to conclusively rely
upon a representation (which, upon the request of the Trustee, 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, Moody's or S&P 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
Master Servicer, 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 Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee 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
Residual Certificate are expressly subject to the following provisions:

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

               (B) In connection with any proposed Transfer of any Ownership
          Interest in a Residual Certificate, the Trustee shall require delivery
          to it, and shall not register the Transfer of any Residual 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 Trustee, representing and warranting, among other things, that
          such Transferee is a Permitted Transferee, that it is not acquiring
          its Ownership Interest in the Residual Certificate


                                      -94-

<PAGE>



          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 Residual 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 Trustee 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 Residual
          Certificate to such proposed Transferee shall be effected.

               (D) Each Person holding or acquiring any Ownership Interest in a
          Residual 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 Residual 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 Trustee 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
          Residual Certificate, by purchasing an Ownership Interest in such
          Certificate, agrees to give the Trustee 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 Residual Certificate, if it is,
          or is holding an Ownership Interest in a Residual Certificate on
          behalf of, a "pass-through interest holder."

          (ii) The Trustee will register the Transfer of any Residual
     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 Trustee as a condition to such registration. In addition,
     no Transfer of a Residual Certificate shall be made unless the Trustee
     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
     Residual 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 thereof retroactive to
     the date of registration of such Transfer of such Residual Certificate. The
     Trustee shall be under no liability to any Person for any registration of
     Transfer of a Residual Certificate that is in fact not permitted by 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
          Residual Certificate in violation of the restrictions in this Section
          5.02(d) and to the extent that


                                      -95-

<PAGE>



          the retroactive restoration of the rights of the holder of such
          Residual Certificate as described in clause (iii)(A) above shall be
          invalid, illegal or unenforceable, then the Trustee shall have the
          right, but not the obligation, without notice to the holder or any
          prior holder of such Residual Certificate, to sell such Residual
          Certificate to a purchaser selected by the Trustee on such terms as
          the Trustee may choose. Such purported Transferee shall promptly
          endorse and deliver each Residual Certificate in accordance with the
          instructions of the Trustee. Such purchaser may be the Trustee itself
          or any Affiliate of the Trustee. The proceeds of such sale, net of the
          commissions (which may include commissions payable to the Trustee or
          its Affiliates), expenses and taxes due, if any, will be remitted by
          the Trustee 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 Trustee, and the Trustee shall not be liable to any
          Person having an Ownership Interest in a Residual Certificate as a
          result of its exercise of such discretion.

          (iv) The Trustee 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 Residual 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 Residual 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 Residual 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 Trustee.

          (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 Trustee 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 Trustee, 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 Residual
          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 Residual 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
Trustee maintained for such purpose


                                      -96-

<PAGE>



pursuant to Section 8.12, the Trustee shall execute, 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 Trustee maintained for such purpose
pursuant to Section 8.12. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver, the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing. In addition, with
respect to each Class R Certificate, the Holder thereof may exchange, in the
manner described above, such Class R Certificate for two separate Certificates,
each representing such Holder's respective Percentage Interest in the Class R-1
Interest and the Class R-2 Interest, respectively, in each case that was
evidenced by the Class R Certificate being exchanged.

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

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

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

          If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, 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 Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 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 Master Servicer, 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


                                      -97-

<PAGE>



purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Master Servicer, 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 Trustee 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 Trustee, the Depositor promptly shall inform the Trustee of such event and
shall deliver to the Trustee ten copies of the private placement memorandum or
disclosure document, as revised, amended or supplemented. The Trustee 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 Trustee 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 Trustee; 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
Trustee since the Closing Date pursuant to Section 10.01(h), (D) any and all
Officers' Certificates delivered to the Trustee by the Master Servicer since the
Closing Date to evidence the Master Servicer's determination that any P&I
Advance or Servicing Advance was, or if made, would be, a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance, respectively, and (E) any and all
Officers' Certificates delivered to the Trustee by the Master 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 Trustee upon request at the
expense of the Person requesting the same.




                                      -98-

<PAGE>



                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

          SECTION 6.01. Liability of the Depositor and the Master Servicer.

          The Depositor and the Master 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
Master Servicer and undertaken hereunder by the Depositor and the Master
Servicer herein.

          SECTION 6.02. Merger or Consolidation of the Depositor or the Master
                        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
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation. The
Depositor and the Master 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 Master 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 Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master 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 Master 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 Master
                        Servicer and Others.

          None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master 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 Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of


                                      -99-

<PAGE>



willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Master Servicer and any director, officer, employee or agent of the
Depositor or the Master 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 Master Servicer and
any director, officer, employee or agent of the Depositor or the Master 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 negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder. Neither the
Depositor nor the Master 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; provided, however, that each of the
Depositor and the Master 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, 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 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 Master 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 Master Servicer.

          The Master 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 Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee. No resignation of the Master
Servicer shall become effective until the Trustee or a successor servicer shall
have assumed the Master 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 Master 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 Master Servicer hereunder. The foregoing prohibition on
assignment shall not prohibit the Master Servicer from designating a
Sub-Servicer as payee of any indemnification amount payable to the Master
Servicer hereunder; provided, however, that as provided in Section 3.06 hereof,
no Sub-Servicer shall be a third-party beneficiary hereunder and the parties
hereto shall not be required to recognize any Sub-Servicer as an indemnitee
under this Agreement. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a successor master


                                      -100-

<PAGE>



servicer, the entire amount of the Servicing Fee and other compensation payable
to the Master Servicer pursuant hereto shall thereafter be payable to such
successor master servicer.

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

          The Master Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub-Servicer shall afford) the Depositor and the
Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer (and any such Sub-Servicer) in respect
of the Master Servicer's rights and obligations hereunder and access to officers
of the Master Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor
and the Trustee its (and any such Sub-Servicer's) most recent financial
statements and such other information relating to the Master 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 and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
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, the
Trustee or the Trust Fund, and in any case, the Depositor or the Trustee as the
case may be, (iii) disclosure of any and all information that is or becomes
publicly known, or information obtained by the Trustee from sources other than
the Depositor or the Master Servicer, (iv) disclosure as required pursuant to
this Agreement or (v) disclosure of any and all information(A) in any
preliminary or final offering circular, registration statement or contract or
other document pertaining to the transactions contemplated by the Agreement
approved in advance by the Depositor or the Master Servicer or (B) to any
affiliate, independent or internal auditor, agent, employee or attorney of the
Trustee having a need to know the same, provided that the Trustee advises such
recipient of the confidential nature of the information being disclosed, 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 Master Servicer under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Master Servicer under this Agreement or exercise the rights of the Master
Servicer under this Agreement; provided that the Master 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 Master
Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.

          SECTION 6.06. Collection Advisor.

          On any Determination Date on which the Collection Advisor Delinquency
Trigger is in effect, the Master Servicer shall be required to transfer
servicing of the Collection Advisor Mortgage Loans to the Collection Advisor
pursuant to the terms of the Collection Advisory Agreement. The Collection
Advisor Mortgage Loans shall be serviced by the Collection Advisor until (a) the
Collection Advisor Mortgage Loans have been current for a period of not less
than six months, (b) the Distribution Date on which the Delinquency Percentage
falls below the Collection Advisor Delinquency Trigger or (c) the purchase of
any Collection Advisor Mortgage Loans by the


                                      -101-

<PAGE>



Master Servicer pursuant to Section 3.16(c); provided, however, notwithstanding
the foregoing, the Collection Advisor will service any Collection Advisor
Mortgage Loan for a period of not less than six months. Upon the occurrence of
(a) or (b) above, servicing of the Collection Advisor Mortgage Loans will be
transferred back to the Master Servicer. All fees of the Collection Advisor will
be paid pursuant to an arrangement between the Master Servicer and the
Collection Advisor and will not be payable from the assets of the Trust Fund.
The Master Servicer may, in its sole discretion, terminate the Collection
Advisor pursuant to the terms of the Collection Advisory Agreement at any time
after the Master Servicer receives a servicer rating of RPS3 or better by Fitch.

          Upon any termination of the Collection Advisor or resignation of the
Collection Advisor pursuant to the terms of the Collection Advisory Agreement,
the Master Servicer shall (i) immediately appoint a successor collection advisor
who shall be rated at least RPS2 by Fitch and who shall be obligated to perform
the same or substantially similar functions as the predecessor collection
advisor and (ii) give notice of such termination and resignation to the Trustee
and Rating Agencies.

          Neither the Collection Advisor, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the Master Servicer under the Collection
Advisory Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Collection Advisor or any such person against
liability that would otherwise be imposed by reason of willful malfeasance or
bad faith in its performance of its duties. The Collection Advisor and any
director, officer, employee, or agent of the Collection Advisor may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person respecting any matters arising hereunder, and may rely in good faith
upon the accuracy of information furnished by the Master Servicer pursuant to
the Collection Advisory Agreement in the performance of its duties thereunder
and hereunder.



                                      -102-

<PAGE>



                                   ARTICLE VII

                                     DEFAULT

          SECTION 7.01. Master Servicer Events of Default.

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

          (i) any failure by the Master Servicer to remit to the Trustee for
     distribution to the Certificateholders any payment (other than a P&I
     Advance required to be made from its own funds on any Master 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 Master Servicer by the Depositor or the Trustee (in which case notice
     shall be provided by telecopy), or to the Master Servicer, the Depositor
     and the Trustee by the Holders of Certificates entitled to at least 25% of
     the Voting Rights; or

          (ii) any failure on the part of the Master Servicer duly to observe or
     perform in any material respect any other of the covenants or agreements on
     the part of the Master Servicer contained in this Agreement, or the breach
     by the Master 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 Master Servicer by the Depositor,
     the Trustee or to the Master Servicer, the Depositor and the Trustee 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 of the Master
     Servicer; 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 Master Servicer and such decree or
     order shall have remained in force undischarged or unstayed for a period of
     90 days; or

          (iv) the Master 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



                                      -103-

<PAGE>



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

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

          (vii) any failure of the Master Servicer to make any P&I Advance on
     any Master 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 Master
     Servicer Remittance Date; or

          (viii) on or after February 15, 2003, any failure on the part of the
     Master Servicer to execute the Collection Advisory Agreement with the
     Collection Advisor or any failure on the part of the Master Servicer duly
     to observe or perform in any material respect any of the covenants or
     agreements of the Master Servicer contained in the Collection Advisory
     Agreement, which continues unremedied for a period of 15 days.

          If a Master 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 Master 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 Master Servicer and the Depositor, terminate all of the
rights and obligations of the Master Servicer in its capacity as Master Servicer
under this Agreement, to the extent permitted by law, and in and to the Mortgage
Loans and the proceeds thereof. If a Master Servicer Event of Default described
in clause (vii) or (viii) hereof shall occur, the Trustee shall, by notice in
writing to the Master Servicer and the Depositor, terminate all of the rights
and obligations of the Master Servicer in its capacity as Master Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master 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 Trustee pursuant to and
under this Section, and, without limitation, the Trustee is hereby authorized
and empowered, as attorney-in-fact or otherwise, to execute and deliver, on
behalf of and at the expense of the Master 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 Master Servicer agrees promptly (and in any
event no later than ten Business Days subsequent to such notice) to provide the
Trustee with all documents and records requested by it to enable it to assume
the Master Servicer's functions under this Agreement, and to cooperate with the
Trustee in effecting the termination of the Master Servicer's responsibilities
and rights under this Agreement, including, without limitation, the transfer
within one Business Day to the Trustee for administration by it of all cash
amounts which at the time shall be or should have been credited by the Master
Servicer to the Collection Account held by or on behalf of the Master Servicer,
the Distribution Account or any REO Account or Servicing Account held by or on
behalf of the Master Servicer or thereafter be


                                      -104-

<PAGE>



received with respect to the Mortgage Loans or any REO Property serviced by the
Master Servicer (provided, however, that the Master 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 P&I 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, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default 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 Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, the Trust Fund or
this Agreement.

          SECTION 7.02. Trustee to Act; Appointment of Successor.

          (a)(1) On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master 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 Trustee (except for any representations or warranties of the Master
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 Master Servicer's obligations to make P&I Advances
pursuant to Section 4.03; provided, however, that if the Trustee is prohibited
by law or regulation from obligating itself to make advances regarding
delinquent mortgage loans, then the Trustee shall not be obligated to make P&I
Advances pursuant to Section 4.03; and provided further, that any failure to
perform such duties or responsibilities caused by the Master Servicer's failure
to provide information required by Section 7.01 shall not be considered a
default by the Trustee as successor to the Master Servicer hereunder. As
compensation therefor, the Trustee shall be entitled to the Servicing Fee and
all funds relating to the Mortgage Loans to which the Master 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 Trustee 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 Trustee, promptly appoint or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution
acceptable to each Rating Agency and having a net worth of not less than
$15,000,000, as the successor to the Master Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer under this Agreement.

          The Trustee or other successor master servicer shall be entitled to be
reimbursed by the Master Servicer (or by the Trust Fund if the Master Servicer
is unable to fulfill its obligations hereunder) for all costs associated with
the transfer of servicing from the predecessor master servicer, including
without limitation, any costs or expenses associated with the complete transfer
of all servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee to
service the Mortgage Loans properly and effectively.




                                      -105-

<PAGE>



          (2) No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Master Servicer as such hereunder. The Depositor, the Trustee 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 Master
Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided.

          SECTION 7.03. Notification to Certificateholders.

          (a) Upon any termination of the Master Servicer pursuant to Section
7.01 above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trustee 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 constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Master Servicer Event of Default shall
have been cured or waived.

          SECTION 7.04. Waiver of Master 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 Master Servicer Event
of Default hereunder may waive such default or Master Servicer Event of Default;
provided, however, that a default or Master 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 Master Servicer
Event of Default, such default or Master 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 Master
Servicer Event of Default or impair any right consequent thereon except to the
extent expressly so waived.



                                      -106-

<PAGE>



                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

          SECTION 8.01. Duties of Trustee.

          The Trustee, prior to the occurrence of a Master Servicer Event of
Default and after the curing of all Master 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 Master Servicer Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

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

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

          (i) Prior to the occurrence of a Master Servicer Event of Default, and
     after the curing of all such Master Servicer Events of Default which may
     have occurred, the duties and obligations of the Trustee shall be
     determined solely by the express provisions of this Agreement, the Trustee
     shall not be liable except for the performance of 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 and, in the absence of bad faith on the part of the Trustee, the
     Trustee may conclusively rely, as to the truth of the statements and the
     correctness of the opinions expressed therein, upon any certificates or
     opinions furnished to the Trustee that conform to the requirements of this
     Agreement;

          (ii) The Trustee shall not be personally liable for an error of
     judgment made in good faith by a Responsible Officer or Responsible
     Officers of the Trustee unless it shall be proved that the Trustee was
     negligent in ascertaining the pertinent facts; and

          (iii) The Trustee shall not be personally liable with respect to any
     action taken, suffered or omitted to be taken by it in good faith in
     accordance with the direction of the Holders of Certificates 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 the Trustee or
     exercising any trust or power conferred upon it, under this Agreement.



                                      -107-

<PAGE>



          SECTION 8.02. Certain Matters Affecting the Trustee.

          (a) Except as otherwise provided in Section 8.01:

          (i) The Trustee may request and conclusively rely upon and shall be
     fully 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) The Trustee 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) The Trustee shall not 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 security or indemnity reasonably satisfactory to it
     against the costs, expenses and liabilities which may be incurred therein
     or thereby; nothing contained herein shall, however, relieve the Trustee of
     the obligation, upon the occurrence of a Master 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) The Trustee shall not 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 Master Servicer Event of Default
     hereunder and after the curing of all Master Servicer Events of Default
     which may have occurred, the Trustee shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     consent, order, approval, bond or other paper or document, unless requested
     in writing to do so by the Holders of Certificates entitled to at least 25%
     of the Voting Rights; provided, however, that if the payment within a
     reasonable time to the Trustee 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 not reasonably assured to the Trustee by such
     Certificateholders, the Trustee may require reasonable indemnity against
     such expense or liability from such Certificateholders as a condition to
     taking any such action;

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


                                      -108-

<PAGE>



          (vii) The Trustee shall have no obligation to invest and reinvest any
     cash held in the absence of timely and specific written investment
     direction from the Master Servicer or the Depositor. In no event shall the
     Trustee be liable for the selection of investments or for investment losses
     incurred thereon. The Trustee shall have no liability in respect of losses
     incurred as a result of the liquidation of any investment incurred as a
     result of the liquidation of any investment prior to its stated maturity or
     the failure of the Master Servicer or the Depositor to provide timely
     written investment direction.

          (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, 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 shall be brought in the name of the Trustee for the
benefit of all the Holders of such Certificates, subject to the provisions of
this Agreement.

          SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.

          The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the authentication of the Certificate Registrar on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.13) shall be taken as
the statements of the Depositor and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement (other than as specifically set forth
with respect to such party in Section 8.13) or of the Certificates (other than
the signature of the Trustee and authentication of the Certificate Registrar on
the Certificates) or of any Mortgage Loan or related document. The Trustee shall
not 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 Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer, other than any funds held by or on behalf of the Trustee
and any amounts held by or on behalf of the Trustee in accordance with Section
3.10.

          SECTION 8.04. Trustee May Own Certificates.

          The Trustee 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.

          SECTION 8.05. Trustee's Fees and Expenses.

          (a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee. The Trustee, or any
director, officer, employee or agent of the Trustee shall be indemnified by
REMIC I and held harmless against any loss, liability or expense (not including
expenses, disbursements and advances incurred or made by the Trustee including
the compensation and the expenses and disbursements of its agents and counsel,
in the ordinary course of the Trustee's performance in accordance with the
provisions of this Agreement) incurred by the Trustee in connection with any
Master Servicer Event of Default (not including expenses, disbursements and
advances incurred or made by the Trustee in its capacity as successor master
servicer), default, claim or legal action or any pending or threatened claim or
legal action


                                      -109-

<PAGE>



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 a breach of the Master Servicer's obligations and
duties under this Agreement and the Mortgage Loans (for which the Master
Servicer shall indemnify pursuant to Section 8.05(b)), (ii) for the expenses of
preparing and filing Tax Returns pursuant to Section 10.01(d) or (iii) any loss,
liability or expense incurred by reason of its willful misfeasance, bad faith or
negligence in the performance of its duties hereunder or by reason of reckless
disregard of its respective obligations and duties hereunder. Any amounts
payable to the Trustee, or any director, officer, employee or agent of the
Trustee in respect of the indemnification provided by this paragraph (a), or
pursuant to any other right of reimbursement from the Trust Fund that the
Trustee, or any director, officer, employee or agent of the Trustee, may have
hereunder in its capacity as such, may be withdrawn by the Trustee from the
Distribution Account at any time.

          (b) The Master Servicer and the Trustee have entered into a fee letter
governing the terms of reimbursement of certain expenses of the Trustee not
otherwise reimbursable to the Trustee from the Trust Fund as set forth above.
Furthermore, the Master Servicer agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense resulting from the
negligence or willful misconduct of the Master Servicer in the performance of
its duties hereunder or a breach of the Master Servicer's obligations and duties
under this Agreement. Such indemnity shall survive the termination or discharge
of this Agreement and the resignation or removal of the Trustee. Any payment
hereunder made by the Master Servicer to the Trustee shall be from the Master
Servicer's own funds, without reimbursement from the Trust Fund therefor.

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

          The provisions of this Section 8.05 shall survive the termination of
this Agreement or the earlier resignation or removal of the Trustee.

          SECTION 8.06. Eligibility Requirements for Trustee.

          The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Seller, the Master Servicer or 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 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
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.



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<PAGE>



          SECTION 8.07. Resignation and Removal of the Trustee.

          The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor, the Master
Servicer and the Certificateholders. Upon receiving such notice of resignation
of the Trustee, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders, the Trustee and the Master Servicer by
the Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation or removal, the Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

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

          The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Depositor.

          Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.

          SECTION 8.08. Successor Trustee.

          Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a custodian,
which custodian shall become the agent of any successor trustee hereunder), and
the Depositor and the predecessor trustee shall execute and deliver such
instruments and do such other things as may


                                      -111-

<PAGE>



reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations.

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

          Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
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, the successor trustee
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 the Trustee 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
shall be a party, or any corporation or association succeeding to the business
of the Trustee shall be the successor of the Trustee 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 Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of 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 Master Servicer and the
Trustee may consider necessary or desirable. Any such co-trustee or separate
trustee shall be subject to the written approval of the Master Servicer. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case a Master Servicer Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 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


                                      -112-

<PAGE>



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 the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations (including
the holding of title to 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 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 and a copy thereof given to the
Depositor and the Master Servicer.

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

          SECTION 8.11. Reserved.

          SECTION 8.12. Appointment of Office or Agency.

          The Trustee will designate an office or agency in the City of 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 Trustee in respect of the Certificates and this Agreement may be
delivered. As of the Closing Date, the Trustee designates the office of its
agent located c/o DTC Transfer Agent Services, 55 Water Street, Jeanette Park
Entrance, New York, NY 10041 for such purposes.

          SECTION 8.13. Representations and Warranties of the Trustee.

          The Trustee hereby represents and warrants, solely as to itself, to
the Master Servicer and the Depositor, 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.

          (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 charter or bylaws.



                                      -113-

<PAGE>



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






                                      -114-

<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 Master Servicer and
the Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to make remittances to the
Trustee and the Trustee 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 aggregate fair market value of all of the
assets of REMIC I (as determined 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 Certificateholders pursuant to Section 9.01(c) by (i) the
Terminator and (ii) if the Class A Certificates or a Class of Mezzanine
Certificates will not receive all amounts owed to it as a result of the
termination, an Independent appraiser mutually agreed upon by the Terminator and
the Trustee on behalf of the Certificateholders; provided, however, such option
may only be exercised if (a) the Termination Price is sufficient to pay all
interest accrued on, as well as amounts necessary to retire the principal
balance of, each class of notes issued pursuant to the Indenture and (b) the
fair market value of the assets of REMIC I described above is at least equal to
the Stated Principal Balance of the Mortgage Loans (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) and the appraised value of the REO Properties. If
the determination of the fair market value of the Mortgage Loans and REO
Properties shall be required to be made by the Terminator and an Independent
appraiser as provided above, (A) such appraisal shall be obtained at no expense
to the Trustee and (B) the Trustee may conclusively rely on, and shall be
protected in relying on, such appraisal.

          (b) The Master 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


                                      -115-

<PAGE>



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
Residual Certificates, the Holder of the Residual 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 Trustee 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 earlier than the 15th day and not later
than the 25th day of the month next preceding the month of the final
distribution on the 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 and the
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trustee 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 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
Certificates at the office of the Trustee. 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
Trustee 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
Certificates an amount in immediately available funds equal to the
above-described purchase price. The Trustee shall remit to the Master Servicer
from such funds deposited in the Distribution Account (i) any amounts which the
Master 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 Trustee to the Master 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 Trustee by a Servicing Officer of the making of such final deposit, the
Trustee 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.

          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 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


                                      -116-

<PAGE>



     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 Trustee shall distribute or credit, or cause to be
     distributed or credited, to the Holders of the Residual Certificates all
     cash on hand in the Trust Fund (other than cash retained to meet claims),
     and the Trust Fund 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 Master
Servicer without the right of reimbursement from the Trust Fund), the Trustee
shall prepare or cause to be prepared documentation required, if any, 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.


                                      -117-

<PAGE>



                                    ARTICLE X

                                REMIC PROVISIONS

          SECTION 10.01. REMIC Administration.

          (a) The Trustee 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 Trustee 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, each of the Mezzanine Certificates, the Class CE Certificates
and the Class P Certificates (other than the right to receive amounts from the
Net WAC Rate Carryover Reserve Account, if any) 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. The Trustee shall not 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 Trustee 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
any Trust REMIC that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel required to be obtained hereunder. The Trustee, 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 each Class of Residual
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 the Trust REMICs created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Trustee or an Affiliate as its agent to perform all of the duties of the tax
matters person for the Trust Fund.

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

          (e) The Trustee 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 state or local


                                      -118-

<PAGE>



taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trustee shall provide (i) to
any Transferor of a Residual Certificate such information as is necessary for
the application of any tax relating to the transfer of a Residual 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 Trustee, within ten (10)
days after the Closing Date, all information or data that the Trustee 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 shall take such action and shall cause each 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
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 any
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 has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to take such action but in no event
at the expense of 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 Master Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee 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
Master 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 Master Servicer
will consult with the Trustee 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 Master Servicer shall not take any such action or cause
any Trust REMIC to take any such action as to which the Trustee has advised it
in writing that an Adverse REMIC Event could occur; provided that the Master
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 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. At all times as
may be required by the Code, the Trustee 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, to the extent such obligations are within the Trustee's
control and not otherwise inconsistent with the terms of this Agreement.



                                      -119-

<PAGE>



          (g) In the event that any tax is imposed on "prohibited transactions"
of any 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 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, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or (iii) against amounts on deposit in the Distribution Account and shall be
paid by withdrawal therefrom.

          (h) On or before April 15th of each calendar year, commencing April
15, 2004, the Trustee shall deliver to each Rating Agency an Officers'
Certificate of the Trustee stating the Trustee's compliance with this Article X.

          (i) The Trustee 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, neither the Master Servicer nor the
Trustee 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
the related REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.

          (k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor knowingly permit either 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 Master Servicer 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), acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), sell
or dispose of any investments in the Collection Account or the Distribution
Account for gain, or 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 (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)


                                      -120-

<PAGE>



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. Master Servicer and Trustee Indemnification.

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

          (b) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor 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 or the Trustee, as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X.




                                      -121-

<PAGE>



                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

          SECTION 11.01. Amendment.

          This Agreement may be amended from time to time by the Depositor, the
Master Servicer and the Trustee 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 actions
shall not,adversely affect in any material respect the interests of any
Certificateholder, as evidenced by either (i) an Opinion of Counsel delivered to
the Master Servicer and the Trustee or (ii) confirmation from the Rating
Agencies that such amendment will not result in the reduction or withdrawal of
the rating of any outstanding Class of Certificates.

          This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee 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 (as
evidenced by either (i) an Opinion of Counsel delivered to the Trustee or (ii)
written notice to the Depositor, the Master Servicer and the Trustee from the
Rating Agencies that such action will not result in the reduction or withdrawal
of the rating of any outstanding Class of Certificates with respect to which it
is a Rating Agency) 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 Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.

          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 or Rating Agency confirmation shall be required to
address the effect of any such amendment on any such consenting
Certificateholder.

          Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment (i) 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


                                      -122-

<PAGE>



REMIC at any time that any Certificates are outstanding and (ii) is authorized
or permitted hereunder.

          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 authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee 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.

          Notwithstanding the foregoing, any modification of the provisions of
Section 5.02(d) shall be made in accordance with the provisions thereof and
without the consent of the Certificateholders.

          The Trustee 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
Master Servicer at the expense of the Certificateholders, but only upon
direction of the Certificateholders 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.



                                      -123-

<PAGE>



          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 a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, 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, 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
and the Trustee 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 and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without the
conflicts of laws provisions thereof

          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, 18400 Von Karman, Suite 1000, Irvine, California 92612, Attention:
Kevin Cloyd (telecopy number: (949) 440-7033), or such other address or telecopy
number as may hereafter be furnished to the Master Servicer and the Trustee in
writing by the Depositor, (b) in the case of the Master Servicer, 18400 Von
Karman, Suite 1000, Irvine, California 92612, Attention: Kevin Cloyd (telecopy
number: (949) 440-7033), or such other address or telecopy number as may
hereafter be furnished to the Trustee and the Depositor in writing by the Master
Servicer and (c) in the case of the Trustee, Deutsche Bank National Trust
Company, 1761 East St. Andrew Place, Santa Ana, California 92705-4934,
Attention: Trust Administration-NC0301 (telecopy number: (714) 247-



                                      -124-
<PAGE>


6009), or such other address or telecopy number as may hereafter be furnished to
the Master Servicer 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 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 Trustee 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 Master Servicer Event of Default that has not
     been cured or waived;

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

          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; and

          7. Any event that would result in the inability of the Trustee, as
     successor master servicer, to make advances regarding delinquent Mortgage
     Loans.

          In addition, the Trustee shall promptly furnish to each Rating Agency
copies of each report to Certificateholders described in Section 4.02 and the
Master 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



                                      -125-

<PAGE>



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

          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 Fitch
Ratings, One State Street, 32nd Floor, New York, New York 10004, to Moody's
Investors Service, 99 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


                                      -126-

<PAGE>



sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.




                                      -127-

<PAGE>



          IN WITNESS WHEREOF, the Depositor, the Master 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.


                                           NEW CENTURY MORTGAGE SECURITIES INC.,
                                           as Depositor


                                           By:  /s/ John P. Grazer
                                               ---------------------------------
                                           Name:    John P. Grazer
                                           Title:   CFO



                                           NEW CENTURY MORTGAGE CORPORATION,
                                             as Master Servicer


                                           By:   /s/John P. Grazer
                                               ---------------------------------
                                           Name:    John P. Grazer
                                           Title:   CFO / EVP



                                           DEUTSCHE BANK NATIONAL TRUST
                                           COMPANY,
                                             as Trustee


                                           By:  /s/ Ronaldo Reyes
                                               ---------------------------------
                                           Name:    Ronaldo Reyes
                                           Title:   Associate


                                           By:  /s/ James F. Noreiga
                                               ---------------------------------
                                           Name:    James F. Noreiga
                                           Title:   Associate




<PAGE>




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

          On the th day of January 2003, before me, a notary public in and for
said State, personally appeared ________________, known to me to be a
___________________ of New Century Mortgage Securities 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 2003, before me, a notary public in and for
said State, personally appeared _____________________, known to me to be
__________________ of New Century Mortgage Corporation, 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 2003, before me, a notary public in and for
said State, personally appeared _______________, known to me to be a
______________ of Deutsche Bank National Trust Company, 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

     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 2003-1                                    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, 2003
                                                 Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003       Corporation

No. __                                           Trustee: Deutsche Bank National Trust
                                                 Company

                                                 Issue Date: January 24, 2003

                                                 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 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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 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 New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-1-2

<PAGE>



          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) One-Month LIBOR plus 0.49%, 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, or One- Month LIBOR plus 0.98% per annum, in the case of any Distribution
Date thereafter and (ii) the 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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
Trustee 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                      Authorized Officer



                     CERTIFICATE OF AUTHENTICATION
                     -----------------------------

          This is one of the Class A Certificates referred to in the
within-mentioned Agreement.


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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

     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 2003-1                                   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, 2003
                                                Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003      Corporation

No. __                                          Trustee: Deutsche Bank National Trust
                                                Company

                                                Issue Date: January 24, 2003

                                                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-2-1

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 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 New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer and
the Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-2-2

<PAGE>



          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) One-Month LIBOR plus 1.05%, 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, or One- Month LIBOR plus 1.575% per annum, in the case of any Distribution
Date thereafter and (ii) the 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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-2-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee 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 Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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

     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 2003-1                                  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, 2003
                                               Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003     Corporation

No. __                                         Trustee: Deutsche Bank National Trust
                                               Company

                                               Issue Date: January 24, 2003

                                               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-3-1

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 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 New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer and
the Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-3-2

<PAGE>



          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) One-Month LIBOR plus2.05%, 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, or
One- Month LIBOR plus 3.075% per annum, in the case of any Distribution Date
thereafter and (ii) the 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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-3-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                      Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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

     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 2003-1                                   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, 2003
                                                Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003      Corporation

No. __                                          Trustee: Deutsche Bank National Trust
                                                Company

                                                Issue Date: January 24, 2003

                                                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-4-1

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 M-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-3 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer and
the Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-4-2

<PAGE>



          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) One-Month LIBOR plus 3.50%, 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, or One- Month LIBOR plus 5.25% per annum, in the case of any Distribution
Date thereafter and (ii) the 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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-4-3

<PAGE>



made for any such registration of transfer or exchange of Certificates, but the
Trustee 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 aasumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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

     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 2003-1                                   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, 2003
                                                Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003      Corporation

No. __                                          Trustee: Deutsche Bank National Trust
                                                Company

                                                Issue Date: January 24, 2003

                                                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-5-1

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 M-4 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class M-4 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer and
the Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee 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)


                                      A-5-2

<PAGE>



One-Month LIBOR plus 3.50%, 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, or One- Month LIBOR plus 5.25% per annum,
in the case of any Distribution Date thereafter and (ii) the 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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 made for any such registration of transfer or exchange
of Certificates, but the Trustee may require


                                      A-5-3

<PAGE>



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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                      Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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 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 2003-1                                   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, 2003
                                                Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003      Corporation

No. __                                          Trustee: Deutsche Bank National Trust
                                                Company
Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date:           Issue Date: January 24, 2003
$_______

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.


                                      A-6-2

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among New
Century Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement), the Master Servicer and
the Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-6-3

<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 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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 or
the Master 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. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of


                                      A-6-4

<PAGE>



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 Depositor and the Master
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 Trustee 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                     Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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 2003-1                                 Aggregate Certificate Principal Balance of the
                                              Class P Certificates as of the Issue Date:
Pass-Through Rate: Variable                   $____________

Cut-off Date and date of Pooling and          Denomination: $______________
Servicing Agreement: January 1, 2003
                                              Master Servicer: New Century Mortgage
First Distribution Date: February 25, 2003    Corporation

No. __                                        Trustee: Deutsche Bank National Trust
                                              Company

                                              Issue Date: January 24, 2003
</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-7-1

<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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.



                                      A-7-2

<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 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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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 or
the Master 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. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of


                                      A-7-3

<PAGE>



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 Depositor and the Master
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 Trustee 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee 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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



                                      A-7-4

<PAGE>



          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                      Authorized Officer



                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class P Certificates referred to in the within-mentioned
Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                      Authorized Signatory





                                      A-7-5

<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-7-6

<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-7-7

<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 2003-1                                 Aggregate Percentage Interest of the Class R
                                              Certificates as of the Issue Date: 100.00%
Pass-Through Rate: Variable
                                              Master Servicer: New Century Mortgage
Cut-off Date and date of Pooling and          Corporation
Servicing Agreement: January 1, 2003
                                              Trustee: Deutsche Bank National Trust
First Distribution Date: February 25, 2003    Company

No. __                                        Issue Date: January 24, 2003
</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

                      NEW CENTURY MORTGAGE SECURITIES, INC.

     THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN NEW CENTURY MORTGAGE SECURITIES, INC., THE MASTER SERVICER, THE
     TRUSTEE 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 R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC I created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among New Century
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, 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 Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date 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 Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee 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


                                      A-8-3

<PAGE>



"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 Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee 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 Trustee 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 Trustee 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 or
the Master 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. Neither the Depositor nor 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


                                      A-8-4

<PAGE>



registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor and the
Master 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 Trustee 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 Trustee (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-I 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-I 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 Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.



                                      A-8-5

<PAGE>



          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 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 assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, 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 Trustee has caused this Certificate to be duly
executed.

Dated: January __, 2003


                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            By:_________________________________
                                                        Authorized Officer



                          CERTIFICATE OF AUTHENTICATION

         This is one of the Class R Certificates referred to in the
within-mentioned Agreement.



                                            DEUTSCHE BANK NATIONAL TRUST COMPANY
                                            as Trustee

                                            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 B
                                    ---------

                                   [Reserved]





                                       B-1

<PAGE>



                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                               [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

          Re:  Pooling and Servicing Agreement, dated as of January 1, 2003,
               among New Century Mortgage Securities, Inc., New Century Mortgage
               Corporation and Deutsche Bank National Trust Company, Asset
               Backed Pass-Through Certificates, Series 2003-1
               -----------------------------------------------------------------

Ladies and Gentlemen:


          Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated
as of January 1, 2003, among New Century Mortgage Securities, Inc. as Depositor,
New Centlury Mortgage Corporation, as master servicer and Deutsche Bank National
Trust Company as trustee, we hereby acknowledge 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),(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.

          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


                                      C-1-1

<PAGE>



Mortgage File included any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.

                                              DEUTSCHE BANK NATIONAL TRUST
COMPANY

                                              By:______________________________
                                              Name:
                                              Title:





                                      C-1-2

<PAGE>




                                  EXHIBIT C-2
                                  -----------

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                              [Date]

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

          Re:  Pooling and Servicing Agreement, dated as of January 1, 2003,
               among New Century Mortgage Securities, Inc., New Century Mortgage
               Corporation and Deutsche Bank National Trust Company, Asset
               Backed Pass-Through Certificates, Series 2003-1
               -----------------------------------------------------------------

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 ______________ 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


                                      C-2-3

<PAGE>



          (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.

          Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                            DEUTSCHE BANK NATIONAL TRUST
COMPANY

                                            By:________________________________
                                            Name:
                                            Title:






                                      C-2-4

<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, 2003, between NC Capital Corporation, a California corporation (the
"Seller") and New Century Mortgage Securities, 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
2003-1 (the "Certificates"). The Certificates will consist of eight classes of
certificates. The Class M-4 Certificates, the Class CE Certificates, the Class P
Certificates and the Class R Certificates (collectively, the "NC Capital
Certificates") will be delivered to the Seller as partial consideration for the
Mortgage Loans as further described below. The Certificates will be issued
pursuant to a Pooling and Servicing Agreement for Series 2003-1, dated as of
January 1, 2003 (the "Pooling and Servicing Agreement"), among the Purchaser as
depositor, New Century Mortgage Corporation as master servicer (the "Master
Servicer") and Deutsche Bank National Trust Company as trustee (the "Trustee").
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 24, 2003 (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, 2003, (the
"Cut-off Date") of approximately $493,605,115 (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, (i) pay to or upon the order of
the Seller in immediately



<PAGE>



available funds an amount (the "Purchase Price") equal to the net sale proceeds
of the Class A Certificates, the Class M-1 Certificates, the Class M-2
Certificates and the Class M-3 Certificates and (ii) will have delivered the NC
Capital Certificates to the Seller.

          (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 the following form "Pay to
     the order of Deutsche Bank National Trust Company, 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;



                                       -2-

<PAGE>



          (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 Seller promptly shall (within sixty Business Days following the
later of the Closing Date and the date of the receipt by the Seller 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 or the Trustee 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 each original Assignment in the following form:
"Deutsche Bank National Trust Company, as Trustee under the applicable
agreement." In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller promptly shall prepare 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 I 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.

          Notwithstanding the foregoing, however, for administrative convenience
and facilitation of servicing and to reduce closing costs, the Assignments shall
not be required to be submitted for recording (except with respect to any
Mortgage Loan located in Maryland) unless such failure to record would result in
a withdrawal or a downgrading by any Rating Agency of the rating on any Class of
Certificates; PROVIDED, HOWEVER, each Assignment shall be submitted for
recording by the Seller in the manner described above, at no expense to the
Purchaser, upon the earliest to occur of: (i) reasonable direction by Holders of
Certificates entitled to at least 25% of the Voting Rights, (ii) the occurrence
of a Master Servicer Event of Termination, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Master Servicer, (iv) the occurrence
of a servicing transfer as described in Section 7.02 of the Pooling and
Servicing Agreement, (v) with respect to any one Assignment, the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage and (vi) any Mortgage Loan that is 90 days or more


                                       -3-

<PAGE>



Delinquent. Upon (a) receipt of written notice that recording of the Assignments
is required pursuant to one or more of the conditions set forth in the preceding
sentence or (b) upon the occurrence of condition (vi) in the preceding sentence,
the Seller shall be required to deliver such Assignments within 30 days
following receipt of such notice.

          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 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 4(b)(vi) above, the Seller shall deliver or cause
to be delivered to the Purchaser, promptly after receipt thereof, the original
lender's title insurance policy. The Seller 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.

          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 AGREEMENT. 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, 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 under this Agreement will be promptly
reimbursed by the Seller.

          (e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller 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


                                       -4-

<PAGE>



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 SELLER

          The Seller hereby represents and warrants to 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 California 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
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.

          (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 California,
for the execution, delivery and performance by the Seller of,


                                       -5-

<PAGE>



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 a 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 a 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 of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or any similar statutory
provisions.

          (xi) [intentionally omitted]

          (xii) 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


                                       -6-

<PAGE>



compensation in connection with the sale of the Mortgage Loans (except that an
entity that previously financed the Seller's ownership of the Mortgage Loans may
be entitled to a fee to release its security interest in the Mortgage Loans,
which fee shall have been paid and which security interest shall have been
released on or prior to the Closing Date).

          (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.

          SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO
                     THE MORTGAGE LOANS.

          REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE LOANS. 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, including
the field concerning any related Prepayment Charge, is complete, true and
correct as of the Cut-off Date;

          (ii) [intentionally omitted]

          (iii) Except with respect to [__]% of the Mortgage Loans, by aggregate
principal balance of the mortgage loans as of the Cut-off Date, (a) all payments
required to be made on or before the first day of the month prior to the month
of the Closing Date, with respect to such Mortgage Loan under the terms of the
Mortgage Note have been made; (b) neither the Seller nor the Originator has
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 (c) as of December 31, 2002, the payment required under any
Mortgage Loan will not and has not been 30 or more days delinquent more than
once during the last twelve months;

          (iv) There are no delinquent taxes, ground rents, water charges, sewer
rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;

          (v) To the best knowledge of the Seller, the terms of the Mortgage
Note and the Mortgage have not been impaired, 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; 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 by the Seller or the Originator or any other
person in the chain of title from the Originator to the Seller to the Purchaser,
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 the terms of which are reflected in the Mortgage
Loan Schedule;


                                       -7-

<PAGE>



          (vi) The Mortgage Note and the Mortgage are not subject to any 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 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;

          (vii) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Pooling and Servicing Agreement. 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 upon origination of the Mortgage
Loan, the Mortgaged Property was 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. 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 the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;

          (viii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the origination and servicing of the Mortgage Loan have been
complied with. Any and all statements or acknowledgments required to be made by
the Mortgagor relating to such requirements are and will remain in the Mortgage
File;

          (ix) The Mortgage has not been satisfied, canceled, 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;

          (x) 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 appraised 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 use, enjoyment, value or
marketability of the 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 Seller had full right to contribute and assign the same to the Purchaser.
The Mortgaged Property was


                                       -8-

<PAGE>



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;

          (xi) 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;

          (xii) 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 who is a
party to the Mortgage Note and the Mortgage is in an individual capacity or
family trust that is guaranteed by a natural person;

          (xiii) 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;

          (xiv) As of the Closing Date and prior to the sale of the Mortgage
Loan to the Purchaser, the Seller was the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to transfer and
sell the Mortgage Loan to the Purchaser free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest;

          (xv) 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;

          (xvi) The Mortgage Loan is covered by an ALTA lender's title insurance
policy, and with respect to each adjustable-rate Mortgage Loan, an adjustable
rate mortgage endorsement in an amount at least equal to the balance of the
Mortgage Loan as of the Cut-off Date, such endorsement substantially in the form
of ALTA Form 6.0 or 6.1, acceptable to Fannie Mae or 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 (x)(a) and (b) 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 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 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


                                       -9-

<PAGE>



policy, and no prior holder of the related Mortgage, including the Originator
and the Seller, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy;

          (xvii) Other than as specified in paragraph (iii) above, there is no
default, breach, violation or event of acceleration existing under the Mortgage
or the Mortgage Note and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and neither the Originator nor the
Seller has waived any default, breach, violation or event of acceleration;

          (xviii) 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;

          (xix) All improvements which were considered in determining the
appraised 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. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;

          (xx) The Mortgage Loan was (i) originated by the Originator or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD or (ii)
acquired by the Originator directly through loan brokers or correspondents such
that (a) the Mortgage Loan was originated in conformity with the Originator's
underwriting guidelines, (b) the Originator approved the Mortgage Loan prior to
funding and (c) the Originator provided the funds used to originate the Mortgage
Loan and acquired the Mortgage Loan on the date of origination thereof;

          (xxi) Principal payments on the Mortgage Loan commenced no more than
two months after the proceeds of the Mortgage Loan were disbursed. The Mortgage
Loan bears interest at the Mortgage Rate. With respect to the adjustable-rate
Mortgage Loans, the Mortgage Note is payable on the first day of each month in
Monthly Payments which are changed on each Adjustment Date to an amount which
will amortize the Stated Principal Balance of the Mortgage Loan over its
remaining term at the Mortgage Rate. Interest on the Mortgage Loan is calculated
on the basis of a 360-day year consisting of twelve 30-day months. The Mortgage
Note does not permit negative amortization. No Adjustable-Rate Mortgage Loan
permits the Mortgagor to convert the Mortgage Rate thereon to a fixed Mortgage
Rate;

          (xxii) The origination and collection practices used by the Originator
and Master Servicer with respect to each Mortgage Note and Mortgage have been in
all respects legal, proper, prudent 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, if any, all such payments are in the possession of, or under the
control of, the Master Servicer 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


                                      -10-

<PAGE>



or other charges or payments due the Master Servicer have been capitalized under
any Mortgage or the related Mortgage Note;

          (xxiii) The Mortgaged Property is free of damage and waste and there
is no proceeding pending for the total or partial condemnation thereof;

          (xxiv) 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. Since the date of origination of the Mortgage Loan, the
Mortgaged Property has not been subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has 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. To the best
of the Seller's knowledge, the Mortgagor has not notified the Originator or the
Master Servicer of any relief requested or allowed to the Mortgagor under the
Soldiers and Sailors Civil Relief Act of 1940 and, to the best of the Seller's
knowledge, no such request has been made or allowance granted.

          (xxv) The related Mortgaged Property is not a leasehold estate or, if
such Mortgaged Property is a leasehold estate, the remaining term of such lease
is at least ten (10) years greater than the remaining term of the related
Mortgage Note;

          (xxvi) 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 (x) above;

          (xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the Mortgage Loan
application, by a qualified appraiser, approved by the Originator or the Seller,
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;

          (xxviii) 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 Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;

          (xxix) 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 Originator, the Seller, 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 Loans are not graduated payment mortgage loans and the
Mortgage Loans do not have shared appreciation or other contingent interest
features;


                                      -11-

<PAGE>



          (xxx) With respect to the adjustable-rate Mortgage Loans, 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 adjustable rate mortgage loans; and if the Mortgage Loan is a Refinanced
Mortgage Loan, the Mortgagor has received all disclosure and rescission
materials required by applicable law with respect to the making of a Refinanced
Mortgage Loan, and evidence of such receipt is and will remain in the Mortgage
File;

          (xxxi) 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;

          (xxxii) The Mortgage Note, the Mortgage, the Assignment and any other
documents required to be delivered with respect to each Mortgage Loan pursuant
to the Pooling and Servicing Agreement, have been delivered to the Trustee all
in compliance with the specific requirements of the Pooling and Servicing
Agreement;

          (xxxiii) The Mortgaged Property is lawfully occupied under applicable
law; all inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;

          (xxxiv) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including, without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

          (xxxv) Each Assignment is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located;

          (xxxvi) 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;

          (xxxvii) No Mortgage Loan has a balloon payment feature;

          (xxxviii) 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 Fannie Mae's eligibility requirements;



                                      -12-

<PAGE>



          (xxxix) Neither the Originator nor any affiliate of the Originator has
made a mortgage on any Mortgaged Property other than the Mortgage Loan;

          (xl) [intentionally omitted]

          (xli) The Mortgage Loan was not intentionally selected by the Seller
in a manner intended to adversely affect the interest of the Purchaser;

          (xlii) [Reserved];

          (xliii) The Mortgaged Property consists of a parcel of real property
of not more than ten acres with a single family residence erected thereon, or a
two to four-family dwelling, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned unit
development. The Mortgaged Property is improved with a Residential Dwelling.
Without limiting the foregoing, the Mortgaged Property does NOT consist of any
of the following property types: (a) co-operative units, (b) log homes, (c)
earthen homes, (d) underground homes, (e) mobile homes and (f) manufactured
homes (as defined in the Fannie Mae Originator-Servicer's Guide), except when
the appraisal indicates that the home is of comparable construction to a stick
or beam construction home, is readily marketable, has been permanently affixed
to the site and is not in a mobile home "park." The Mortgaged Property is either
a fee simple estate or a long-term residential lease. If the Mortgage Loan is
secured by a long-term residential lease, unless otherwise specifically
disclosed in the Mortgage Loan Schedule, (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the lease
without the lessor's consent (or the lessor's consent has been obtained and such
consent is the Mortgage File) and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not (x) allow the termination thereof
upon the lessee's default without the holder of the Mortgage being entitled to
receive written notice of, and opportunity to cure, such default or (y) prohibit
the holder of the Mortgage from being insured under the hazard insurance policy
relating to the Mortgaged Property; (C) the original term of such lease is not
less than 15 years; (D) the term of such lease does not terminate earlier than
ten years after the maturity date of the Mortgage Note; and (E) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates for
residential properties is an accepted practice;

          (xliv) At the time of origination, the Loan-To-Value Ratio of the
Mortgage Loan will not be greater than 95.00%;

          (xlv) The Mortgage, and if required by applicable law the related
Mortgage Note, contains a provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
Mortgagee, at the option of the Mortgagee;

          (xlvi) The Mortgage Loan either contains a customary due-on-sale
clause or may be assumed by a creditworthy purchaser of the related Mortgaged
Property;



                                      -13-

<PAGE>



          (xlvii) As of any Adjustment Date for any adjustable-rate Mortgage
Loan, the Index applicable to the determination of the Mortgage Rate on such
Mortgage Loan will be the average of the interbank offered rates for six-month
or one-month United States dollar deposits in the London market, generally as
published in THE WALL STREET JOURNAL and as most recently available as of either
(i) the first business day 45 days prior to such Adjustment Date or (ii) the
first business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note;

          (xlviii) Each Mortgage Loan is a "qualified mortgage loan" within the
meaning of Section 860G(a)(3) of the Code;

          (xlix) The Originator 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
Originator unable to comply with HUD eligibility requirements or that would
require notification to HUD.

          (l) None of the Mortgage Loans are classified as "high cost" loans
under the Home Ownership and Equity Protection Act of 1994 as amended ("HOEPA")
and/or under any comparable state or local statutes or regulations;

          (li) No proceeds from any Mortgage Loan were used to purchase single
premium credit insurance policies as part of the origination of, or as a
condition to closing, such Mortgage Loan;

          (lii) The Master Servicer has fully furnished and will continue to
fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company or their successors (the "Credit Repositories") on a
monthly basis;

          (liii) No Mortgage Loan originated on or after October 1, 2002 will
impose a Prepayment Charge for a term in excess of three years. No other
Mortgage Loan will impose a Prepayment Charge for a term in excess of five
years; and

          (liv) There is no Mortgage Loan secured by a Mortgaged Property
located in Georgia.

          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
Purchaser to review or examine 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. With respect to the representations
and warranties contained herein as to which the Seller has no knowledge, if it
is discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed to
be made, and such inaccuracy materially and adversely affects


                                      -14-

<PAGE>



the value of the related Mortgage Loan or the interest therein of the Purchaser
or the Purchaser's assignee, transferee or designee, then notwithstanding the
lack of knowledge by the Seller with respect to the substance of such
representation and warranty being inaccurate at the time the representation and
warranty was made, the Seller shall take such action described in the following
paragraph in respect of such Mortgage Loan.

          Upon discovery by the Purchaser or any assignee, transferee or
designee of the Purchaser of any materially defective document in, or that a
document was not transferred by 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 Certificateholders, the Purchaser or the Purchaser's assignee, transferee or
designee, the party discovering such breach shall give prompt written notice to
the Seller; provided, that a breach of the representations and warranties made
in Section 6(l) through (liv) shall be deemed to materially and adversely
affects the value of any Mortgage Loan or the interest therein of the
Certificateholders. Within sixty (60) days of its discovery or its receipt of
notice of any such missing documentation that was not transferred by the Seller
as described above, or of materially defective documentation, or of any such
breach of a representation and warranty, the Seller promptly shall deliver such
missing document or cure such defect or breach in all material respects or, in
the event the Seller cannot deliver such missing document or cannot cure such
defect or breach, the Seller 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 Seller 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 Seller 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.

          (b) It is understood and agreed that the obligations of 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 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:

          (a)  All of the representations and warranties of the Seller under
               this Agreement shall be true and correct in all material respects
               as of the date as of which they


                                      -15-

<PAGE>



               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;

          (d)  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; 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 and the NC Capital Certificates.

          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 Officers' Certificate of the Seller, dated the Closing Date,
               in form satisfactory to and upon which the Purchaser and Salomon
               Smith Barney Inc. and Morgan Stanley & Co. Incorporated (the
               "Underwriters") 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 California;

          (b)  An Opinion of Counsel of the Seller, dated the Closing Date, in
               form satisfactory to and addressed to the Originator, the
               Purchaser and the Underwriters;

          (c)  Such opinions of counsel as the Rating Agencies or the Trustee
               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;

          (d)  An Officers' Certificate of the Master Servicer, dated the
               Closing Date, in form satisfactory to and upon which the
               Originator, the Purchaser and the Underwriters may rely, and
               attached thereto copies of the certificate of


                                      -16-

<PAGE>



               incorporation, by-laws and certificate of good standing of the
               Master Servicer issued by the Office of Thrift Supervision;

          (e)  An Officers' Certificate of the Master Servicer, dated the
               Closing Date, in form satisfactory to and upon which the
               Originator, the Purchaser and the Underwriters may rely, stating
               that on the Closing Date the representations and warranties of
               the Master Servicer contained in the Pooling and Servicing
               Agreement will be true and correct and no event has occurred with
               respect to the Master Servicer that would constitute an Event of
               Default thereunder;

          (f)  An Opinion of Counsel of the Master Servicer, dated the Closing
               Date, in form satisfactory to and addressed to the Originator,
               the Purchaser and the Underwriters;

          (g)  (i) A letter from KPMG L.L.P., 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
               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) and "The Mortgage Pool" agrees with the
               records of the Seller and the information contained under the
               caption "The Originator" agrees with the records of the
               Originator; and

          (h)  Such further information, certificates, opinions and documents as
               the Purchaser or the Underwriters may reasonably request.

          SECTION 10. COSTS. 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) 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 Seller's
accountants and attorneys, the costs and expenses incurred in connection with
producing the Master Servicer's or any Subservicer's loan loss, foreclosure and
delinquency experience, and the costs and expenses incurred in connection with
obtaining the documents referred to in Sections 9, 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, the fees and expenses of the Purchaser's counsel in connection with the
preparation of all documents relating to the securitization of the Mortgage
Loans, the filing fee charged by the Securities and Exchange Commission for
registration of the Certificates 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].



                                      -17-

<PAGE>



          SECTION 12. INDEMNIFICATION. 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 (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 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 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 captions
"Summary--The Mortgage Loans," "Risk Factors" (to the extent of information
concerning the Mortgage Loans contained therein), "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 or in the Pooling and
Servicing Agreement, on which the Purchaser has relied, being, or alleged to be,
untrue or incorrect or (c) any updated collateral information provided by any
Underwriter 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. 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


                                      -18-

<PAGE>



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
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 redelivery 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 18400 Von Karman, Suite 1000, Irvine, California
92612, fax (949) 440-7033, or such other address as may hereafter be furnished
to the Seller in writing by the Purchaser and if to the Seller, addressed to the
Seller at 18400 Von Karman, Suite 1000, Irvine, California 92612, fax (949)
440-7033, or to such other address as the Seller may designate in writing to the
Purchaser.

          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 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 hereafter made by the
Purchaser or on its behalf, and that the representations, warranties and


                                      -19-

<PAGE>



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.

          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 (INCLUDING 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 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


                                      -20-

<PAGE>


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.

          IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed by their respective officers thereunto duly authorized as of
the date first above written.

                                       NEW CENTURY MORTGAGE SECURITIES, INC.


                                       By:________________________________
                                       Name:
                                       Title:



                                       NC CAPITAL CORPORATION

                                       By:________________________________
                                       Name:
                                       Title:




<PAGE>



                                    EXHIBIT E
                                    ---------

                               REQUEST FOR RELEASE
                                  (for Trustee)

LOAN INFORMATION

         Name of Mortgagor:         ______________________________

         Master Servicer
         Loan No.:                  ______________________________

TRUSTEE

         Name:                      ______________________________

         Address:                   ______________________________
                                    ______________________________

         Trustee Mortgage
         File No.:                  ______________________________


DEPOSITOR

         Name:                      NEW CENTURY MORTGAGE SECURITIES, INC.

         Address:                   ______________________________

         Certificates:              Asset-Backed Pass-Through
                                    Certificates, Series 2003-1.




                                       E-1

<PAGE>



               The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of
Asset-Backed Pass-Through Certificates, Series 2003-1, 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, 2003, among the Trustee, the
Depositor and the Master Servicer (the "Pooling and Servicing Agreement").

( )    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.

( )    ---------------------------------------------

( )    ---------------------------------------------

( )    ---------------------------------------------

( )    ---------------------------------------------



                                       E-2

<PAGE>




               The undersigned Master Servicer hereby acknowledges and agrees as
follows:

               (1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.

               (2) The Master 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 Master Servicer
assert or seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.

               (3) The Master 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 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 Master
Servicer shall at all times be earmarked for the account of the Trustee, and the
Master Servicer shall keep the Documents and any proceeds separate and distinct
from all other property in the Master Servicer's possession, custody or control.

Dated:

                                            [MASTER SERVICER]

                                            By:______________________________
                                            Name:
                                            Title:





                                       E-3

<PAGE>



                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                 [Date]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

          Re:  New Century Home Equity Loan Trust, Series 2003-1, Asset Backed
               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, 2003, among New Century Mortgage Securities, Inc. as depositor, New
Century Mortgage Corporation as master servicer and Deutsche Bank National Trust
Company as trustee (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]

Deutsche Bank National Trust Company
1761 East St. Andrews Place
Santa Ana, CA 92705-4935

          Re:  New Century Home Equity Loan Trust, Series 2003-1, Asset Backed
               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, 2003, among New Century Mortgage Securities, Inc. as
depositor, New Century Mortgage Corporation as


                                      F-1-3

<PAGE>



master servicer and Deutsche Bank National Trust Company as trustee (the
"Pooling and Servicing Agreement"), pursuant to which the Certificates were
issued.



                                      F-1-4

<PAGE>




                                            [TRANSFEREE]

                                            By:__________________________
                                            Name:
                                            Title:





                                      F-1-5

<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 Deutsche Bank National Trust Company as trustee, 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

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

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-1-6

<PAGE>



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

     ___ 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.



                                      F-1-7

<PAGE>



          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?

          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-1-8

<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 Deutsche Bank National Trust Company as trustee, 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).



                                      F-1-9

<PAGE>



          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.

          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-1-10

<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-1-11

<PAGE>



                                   EXHIBIT F-2
                                   -----------

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF ______________)
COUNTY ________________)

          __________________________, 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 New Century Home Equity Loan Trust, Series
2003-1, Asset Backed Mortgage Pass-Through Certificates, Series 2003-1, 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 which is a permitted transferee 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. The Owner will endeavor to
remain a Permitted Transferee for so long as it retains its Ownership Interest
in a Residual Certificate

          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


                                      F-2-1

<PAGE>



"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.

          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.


                                      F-2-2

<PAGE>



          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 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 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 ______________)

COUNTY OF ____________)

          __________________________, 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__

New Century Mortgage Securities, Inc.
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

Deutsche Bank National Trust Company
1761 East St. Andrew Place
Santa Ana, CA 92705-4935

New Century Mortgage Corporation
18400 Von Karman Avenue, Suite 1000
Irvine, California 92612

        Re:      New Century Home Equity Loan Trust, Series 2003-1, Asset Backed
                 Pass-Through Certificates, Class ___
                 ------------------------------------------------------
Dear Sirs:

          _______________________ (the "Transferee") intends to acquire from
_____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of New Century Home Equity Loan Trust, Series 2003-1, 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, 2003 among New Century Mortgage Securities,
Inc. as depositor (the "Depositor"), New Century Mortgage Corporation as master
servicer (the "Master Servicer") and Deutsche Bank National Trust Company as
trustee (the "Trustee"). 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 and the Master Servicer the following:



                                       G-1

<PAGE>



          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.

                                            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-_______


                      NEW CENTURY MORTGAGE SECURITIES, INC.
            (as depositor under the Pooling and Servicing Agreement,
           dated as of January 1, 2003, providing for the issuance of
             Asset Backed Pass-Through Certificates, Series 2003-1)


                      New Century Mortgage Securities, Inc.
                      -------------------------------------

             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------




                                       H-1

<PAGE>



       Delaware                                         33-0852169
----------------------------                            ---------------------
(State or Other Jurisdiction                            (I.R.S. Employer
of Incorporation)                                       Identification Number)

18400 Von Karman, Suite 1000
Irvine, California                                            92612
------------------                                            -----
(Address of Principal Executive Offices)                      (Zip Code)


Registrant's telephone number, including area code:  (949) 863-7243
                                                     --------------

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


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


                                       H-2

<PAGE>



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

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.



                                       H-3

<PAGE>



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) New Century Mortgage Corporation, as master servicer

                99.2    Annual Statement of Compliance with obligations under
                        the Pooling and Servicing Agreement or servicing
                        agreement, as applicable, of:

                        (a) New Century Mortgage Corporation, as master servicer



                                       H-4

<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: ___________

                                        New Century Mortgage Securities, Inc.,
                                        by Deutsche Bank National Trust Company
                                        as Trustee for New Century Home Equity
                                        Loan Trust, Series 2003-1, Asset Backed
                                        Pass-Through Certificates.

                                        By: ____________________________________
                                        Name:
                                        Title:
                                        Company:








                                       H-5

<PAGE>



                                    EXHIBIT I

                           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 New Century Mortgage Securities, 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;



                                       I-1

<PAGE>



     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 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


                                       I-2

<PAGE>



____________________ 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]



                                       I-3

<PAGE>



                                   EXHIBIT J-1

        FORM CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K

          Re:      New Century Mortgage Securities, Inc., Series 2003-1
                   Asset-Backed Certificates, Series 2003-1

          I, [identify the certifying individual], the senior officer of New
Century Mortgage Securities, Inc. (the "Registrant") in charge of
securitizations, certify that:

          l. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing distribution and servicing reports filed in respect of
periods included in the year covered by this annual report, of Registrant;

          2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;

          3. Based on my knowledge, the distribution information and the
servicing information required to be provided to the Trustee by the Master
Servicer under the Pooling and Servicing Agreement is included in these reports;

          4. I am responsible for reviewing the activities performed by the
Master Servicer under the Pooling and Servicing Agreement and based upon the
review required under the Pooling and Servicing Agreement, and except as
disclosed in the report, the Master Servicer has fulfilled its obligations under
the Pooling and Servicing Agreement; and

          5. I have disclosed to the Registrant's certified public accountants
all significant deficiencies relating to the Master Servicer's compliance with
the minimum servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the Pooling and Servicing Agreement.

          Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated January 1, 2003
(the "Pooling and Servicing Agreement"), among the Registrant as depositor, New
Century Mortgage Corporation as master servicer and Deutsche Bank National Trust
Company as trustee.



                                      J-1-1

<PAGE>



                                          NEW CENTURY MORTGAGE SECURITIES, INC.

                                          By:___________________________________
                                          Name:
                                          Title:
                                          Date:




                                       J-2

<PAGE>



                                   EXHIBIT J-2

                            FORM CERTIFICATION TO BE
                      PROVIDED TO DEPOSITOR BY THE TRUSTEE

          Re:      New Century Mortgage Securities, Inc., Series 2003-1
                   Asset-Backed Certificates, Series 2003-1

          I, [identify the certifying individual], a [title] of Deutsche Bank
National Trust Company, as Trustee, hereby certify to New Century Mortgage
Securities, Inc. (the "Depositor"), and its officers, directors and affiliates,
and with the knowledge and intent that they will rely upon this certification,
that:

          1. I have reviewed the annual report on Form 10-K for the fiscal year
[___], and all reports on Form 8-K containing distribution reports filed in
respect of periods included in the year covered by that annual report, of the
Depositor relating to the above-referenced trust;

          2. Based on my knowledge, the information in these distribution
reports prepared by the Trustee, taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading as of the last day of the period covered by that
annual report; and

          3. Based on my knowledge, the distribution information required to be
provided by the Trustee under the Pooling and Servicing Agreement is included in
these distribution reports.

          Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated January 1, 2003
(the "Pooling and Servicing Agreement"), among the Registrant as depositor, New
Century Mortgage Corporation as master servicer and Deutsche Bank National Trust
Company as trustee.

                                            DEUTSCHE BANK NATIONAL TRUST
                                            COMPANY, as Trustee

                                            By:_________________________________
                                            Name:
                                            Title:
                                            Date:


                                      J-2-1

<PAGE>




                                    EXHIBIT K
                                    ---------

                    [FORM OF COLLECTION ADVISORY AGREEMENT]




                                       K-1

<PAGE>

                          COLLECTION ADVISORY AGREEMENT
                          -----------------------------

     This COLLECTION ADVISORY AGREEMENT (the "AGREEMENT") is made and entered
into as of January 1, 2003, between New Century Mortgage Corporation, as master
servicer (the "COMPANY") and [________________], as collection advisor (the
"COLLECTION ADVISOR").

                              PRELIMINARY STATEMENT

     WHEREAS, the Company is the master servicer of the mortgage loans (the
"MORTGAGE LOANS") subject to the pooling and servicing agreement dated as of
January 1, 2003 among New Century Mortgage Securities, Inc., as depositor, New
Century Mortgage Corporation, as master servicer and Deutsche Bank National
Trust Company, as trustee (the "POOLING AND SERVICING AGREEMENT") attached
hereto as Exhibit A.

     WHEREAS, pursuant to the Pooling and Servicing Agreement, certain Mortgage
Loans shall be transferred to the Collection Advisor (each such Mortgage Loan, a
"COLLECTION ADVISOR MORTGAGE LOAN") for the Collection Advisor to service and
provide collection advisory services with respect to such Collection Advisor
Mortgage Loans pursuant to the terms of this Agreement.

     WHEREAS, the Company wishes to appoint [__________________] as collection
advisor pursuant to this Agreement, and [__________________] agrees to act as
collection advisor pursuant to this Agreement.

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and in consideration of the
premises and mutual agreements hereinafter set forth, the Company and the
Collection Advisor hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

Section 1.01. DEFINITIONS INCORPORATED BY REFERENCE.

     Capitalized terms used but not otherwise defined in this Agreement shall
have the respective meaning ascribed thereto as set forth in the Pooling and
Servicing Agreement.

                                   ARTICLE II

              DESIGNATION OF COLLECTION ADVISOR MORTGAGE LOANS AND
                         COLLECTION ADVISORY PROCEDURES

Section 2.01. COLLECTION ADVISOR MORTGAGE LOANS.

     (a) The Mortgage Loans identified pursuant to the Pooling and Servicing
Agreement as Collection Advisor Mortgage Loans shall be transferred to the
Collection Advisor for servicing. The Collection Advisor shall service the
Collection Advisor Mortgage Loans in accordance with the standard policies and
procedures of the Collection Advisor with respect to the servicing of subprime


                                       1
<PAGE>


mortgage loans, the terms hereof and the Pooling and Servicing Agreement. Upon
the request of the Collection Advisor, the Company shall cause the Trustee to
provide the Collection Advisor with any power of attorney with respect to the
Collection Advisor Mortgage Loans that may be required by the Collection Advisor
to permit the Collection Advisor to perform its obligations pursuant to this
Agreement.

     Following the designation of a Mortgage Loan as a Collection Advisor
Mortgage Loan by the Company as described in the Pooling and Servicing
Agreement, the Company shall transfer servicing of such Mortgage Loan to the
Collection Advisor substantially in the manner set forth herein and in Schedule
I hereto unless it cures the delinquency while in the pending service release
pool, prior to the 24th day of the month that such Mortgage Loan was designated
for release. In the instance of a delinquency cure as described in the preceding
sentence, the Company will be responsible for sending a notice canceling the
servicing transfer and advising the Collection Advisor of the withdrawal of such
Collection Advisor Mortgage Loan from the pending service release pool. The
Collection Advisor shall have no obligation to determine whether any Mortgage
Loan should be transferred to the Collection Advisor, and the Collection Advisor
shall have no liability for the failure to perform any collection advisory
services with respect to any Mortgage Loan due to the Company's failure to cause
any such Mortgage Loan to be transferred to the Collection Advisor.

     The parties hereto agree that any fees resulting from the transfer of the
servicing of a Mortgage Loan from the Company or a subservicer to the Collection
Advisor (or any successor thereto) shall be the obligation of the Company.

     (b) As of the Effective Date (as defined below) of each Collection Advisor
Mortgage Loan, the Collection Advisor shall succeed to and undertake the rights,
duties and obligations of the prior servicer pursuant to and in accordance with
the terms of the Pooling and Servicing Agreement; provided, however, the
Collection Advisor shall have no obligation to make any advances with respect to
any Mortgage Loan. The Collection Advisor shall remit collections on an
actual/actual basis and provide all loan level information as required in the
Pooling and Servicing Agreement to the Company at least one business day prior
to the date such collections and/or information is required to be delivered by
the Company to the Trustee.

     With respect to each Collection Advisor Mortgage Loan, the effective date
(the "EFFECTIVE DATE") shall be the first day of the month immediately following
the month of designation of such Collection Advisor Mortgage Loan as such,
provided that such written designation is received by the Collection Advisor on
or about the 15th calendar day of the month of designation.

     (c) The Company acknowledges that the Collection Advisor or an affiliate
may receive usual and customary real estate referral fees from real estate
brokers in connection with the listing and disposition of REO Property.

     (d) Once a Mortgage Loan becomes a Collection Advisor Mortgage Loan, the
Collection Advisor shall continue to provide collection advisory services with
respect to each such Mortgage Loan until the earliest of (i) the events
described in Section 6.06 of the Pooling and Servicing Agreement or (ii) the
purchase of a delinquent Mortgage Loan pursuant to Section 3.16(c) of the
Pooling and Servicing Agreement. The Company and the Collection Advisor shall
follow the



                                       2
<PAGE>


procedures set forth in Section 4.05 with respect to the transfer of any
Collection Advisor Mortgage Loans from the Collection Advisor to the Company,
and the Company shall be responsible for all of the costs, fees and expenses of
the Collection Advisor related to the transfer of any Collection Advisor
Mortgage Loans pursuant to this Section.

     (e) Notwithstanding any provision herein to the contrary, the Collection
Advisor shall (i) in no event be obligated to effect any cure or remedy in
connection with a deficiency in the documentation for any Collection Advisor
Mortgage Loan to the extent such deficiency existed at the time such Mortgage
Loan became a Collection Advisor Mortgage Loan or (ii) have any responsibility
for any obligations, duties, or liabilities of the Company with respect to the
servicing of a Collection Advisor Mortgage Loan that arose prior to the related
Effective Date for such Collection Advisor Mortgage Loan, other than those which
would customarily be assumed after the Effective Date.

     (f) The Company shall pay the Collection Advisor on the Closing Date an
initial fee in an amount equal to $[____] (the "Initial Fee"), which fee shall
be earned upon receipt by the Collection Advisor, for the Collection Advisor's
agreement to provide services pursuant to this Agreement. In addition, the
Company shall pay to the Collection Advisor a monthly fee in an amount equal to
$[____] per Collection Advisor Mortgage Loan on the date such Collection Advisor
Mortgage Loan is transferred to the Collection Advisor and becomes subject to
this Agreement and $[____] each month thereafter on the first day of each month
that such Collection Advisor Mortgage Loan remains subject to this Agreement
(the "Monthly Fee"). The Monthly Fee shall be payable by the Company no later
than five (5) days following receipt of an invoice from the Collection Advisor.
The Initial Fee and the Monthly Fee shall be paid by New Century Mortgage
Corporation and shall not be an expense of the Trust Fund. In addition, the
Company shall reimburse the Collection Advisor for any advances made by the
Collection Advisor with respect to any Collection Advisor Mortgage Loan no later
than five (5) days following receipt of an invoice from the Collection Advisor
with respect to any such advances.

     Notwithstanding any other provision herein to the contrary, the Collection
Advisor may terminate this Agreement and any obligations it may have hereunder
at such time upon thirty days written notice to the Company, if the Company does
not pay the Collection Advisor the Monthly Fee or the amount of any advances
made by the Collection Advisor within thirty days of the Collection Advisor
delivering an invoice to the Company for such costs, fees and expenses.

Section 2.02. TERMINATION OF COLLECTION ADVISOR FOR DEFAULT.

     The Company shall have the right, immediately upon written notice, to
terminate the Collection Advisor's right and obligation to provide collection
advisory services with respect to all of the Collection Advisor Mortgage Loans
hereunder in the event (each such event, an "EVENT OF DEFAULT") of:

          (i) any failure by the Collection Advisor to remit to the Company for
     distribution to the Certificateholders any payment required to be made
     under the terms of this Agreement or the Pooling and Servicing Agreement
     which continues unremedied for a period of one day after the date upon
     which written notice of such failure, requiring the same to be remedied,
     shall have been given to the Collection Advisor by the Company; or



                                       3
<PAGE>


          (ii) any failure on the part of the Collection Advisor duly to observe
     or perform in any material respect any other of the covenants or agreements
     on the part of the Collection Advisor contained in this Agreement
     (including any breach of the Collection Advisor's representations and
     warranties contained in Section 3.02 hereof) which materially and adversely
     affects the interests of the Certificateholders which continues unremedied
     for a period of 30 days after the date on which written notice of such
     failure, requiring the same to be remedied, shall have been given to the
     Collection Advisor by the Company; or

          (iii) a decree or order of a court or agency or supervisory authority
     having jurisdiction 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 proceedings, or
     for the winding-up or liquidation of its affairs, shall have been entered
     against the Collection Advisor and such decree or order shall have remained
     in force undischarged or unstayed for a period of 60 consecutive days; or

          (iv) the Collection Advisor 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 the Collection Advisor or of or relating to all or
     substantially all of its property; or

          (v) the Collection Advisor shall admit in writing its inability to pay
     its debts generally as they become due, file a petition to take advantage
     of or otherwise voluntarily commence a case or proceeding under any
     applicable bankruptcy, insolvency, reorganization or other similar statute,
     make an assignment for the benefit of its creditors, or voluntarily suspend
     payment of its obligations.

          If an Event of Default as described above shall occur, then, and in
     each and every such case, upon receipt of written notice from the Company,
     the Collection Advisor shall immediately remit to the Company all amounts
     in the Collection Accounts and the Escrow Accounts and all rights of the
     Collection Advisor to service the Collection Advisor Mortgage Loans shall
     terminate. Following the receipt of written notice from the Company as
     provided above, all authority and power of the Collection Advisor to
     provide collection advisory services with respect to the Collection Advisor
     Mortgage Loans shall pass to and be vested in the Company pursuant to and
     under this Section 2.02, and the Collection Advisor shall do all things
     necessary to effect a transfer of the Collection Advisor Mortgage Loans
     back to the Company. In this regard, the Company is hereby authorized and
     empowered to execute and deliver, on behalf of the Collection Advisor, as
     attorney-in-fact or otherwise, any and all documents and other instruments,
     and to do or accomplish all other acts or things necessary or appropriate
     to effect the purposes of such notice of termination, whether to complete
     the transfer and endorsement or assignment of the affected Collection
     Advisor Mortgage Loans and related documents, or otherwise. The Collection
     Advisor agrees to cooperate with the Company in implementing the
     termination of the Collection Advisor's responsibilities and rights
     hereunder to the extent required by this Section 2.02, including, without
     limitation, the transfer to the Company or its appointed agent for
     administration by it of all amounts in the possession of the Collection
     Advisor or thereafter received with respect to all of the



                                       4
<PAGE>


     Collection Advisor Mortgage Loans serviced hereunder and the transfer of
     the Collection Advisor Mortgage Loans back to the Company.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     Section 3.01. ORGANIZATIONAL AND OTHER RELATED WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties to the
Collection Advisor:

          (i) ORGANIZATION AND GOOD STANDING. The Company is an entity duly
     organized, validly existing, and in good standing under the laws of its
     state of incorporation or formation or the laws of the United States, and
     is in compliance with the laws of each state in which any property is
     located to the extent necessary to ensure the enforceability of each
     Mortgage Loan and to perform its obligations hereunder and the Pooling and
     Servicing Agreement.

          (ii) NO VIOLATION. Neither the execution and delivery by the Company
     of this Agreement, nor the consummation by it of the transactions
     contemplated hereby, nor the performance of and compliance by the Company
     with the provisions hereof or of the Pooling and Servicing Agreement, will
     conflict with or result in a breach or violation of, or constitute a
     default (or an event which, with notice or the lapse of time, or both,
     would constitute a default) under, the organizational documents (its
     articles of incorporation or charter or by-laws) of the Company, or any of
     the provisions of any law, rule, regulation, judgment, decree, demand, or
     order (of any federal, state, or local governmental or regulatory authority
     or court) binding on the Company, or any of its properties, or any of the
     provisions of any indenture, mortgage, contract, instrument, or other
     document (including, without limitation, any pooling and servicing
     agreement) to which the Company is a party or by which it is bound, or
     result in the creation or imposition of any lien, charge, or encumbrance
     upon any of their respective properties pursuant to the terms of any
     indenture, mortgage, contract, instrument, or other document. The Company
     is not otherwise in violation of any law, rule, regulation, judgment,
     decree, demand, or order (of any federal, state or local governmental or
     regulatory authority or court), which violation, in the Company's good
     faith and reasonable judgment, is likely to affect materially and adversely
     either its ability to perform its obligations hereunder or under the
     Pooling and Servicing Agreement, or the financial condition of the Company.

          (iii) AUTHORIZATION AND ENFORCEABILITY. The execution and delivery by
     the Company of this Agreement, the consummation of the transactions
     contemplated hereby, and the performance and compliance by the Company with
     the terms hereof and of the Pooling and Servicing Agreement are within the
     powers of the Company, and have been duly authorized by all necessary
     action on the part of the Company. All organizational resolutions and
     consents necessary for the Company to enter into and consummate all
     transactions contemplated hereby have been obtained. This Agreement has
     been duly executed and delivered by the Company and constitutes the legal,
     valid and binding obligation of the Company, enforceable against it in
     accordance with its terms, subject to applicable



                                       5
<PAGE>


     bankruptcy, insolvency, reorganization, moratorium, and other similar laws
     affecting creditors' rights generally, and to general principles of equity,
     regardless of whether such enforcement is considered in a proceeding in
     equity or at law. The Company has not failed to obtain any consent,
     approval, authorization, or order of, or failed to cause any registration
     or qualification with, any court or regulatory authority or other
     governmental body having jurisdiction over the Company, which consent,
     approval, authorization, order, registration, or qualification is required
     for, and the absence of which would materially adversely affect, the legal
     and valid execution, delivery, and performance of this Agreement by the
     Company.

          (iv) APPROVALS AND PERMITS. The Company possesses such certificates,
     authorizations, licenses, and permits issued by the appropriate state,
     federal, and foreign regulatory agencies or bodies necessary to conduct the
     business now operated by it, and the Company has not received any notice of
     proceedings relating to the revocation or modification of any such
     certificate, authorization, or permit which, singly or in the aggregate, if
     the subject of an unfavorable decision, ruling, or finding, would
     materially and adversely affect the conduct of the business, operations,
     financial condition, or income of the Company.

          (v) NO LITIGATION OR ADVERSE CONDITIONS. No litigation is pending or,
     to the best of the Company's knowledge, threatened against it, which, if
     determined adversely to the Company would prohibit the Company from
     entering into this Agreement or, in the good faith and reasonable judgment
     of the Company, is likely to materially and adversely affect either its
     ability to perform its obligations hereunder or under the Pooling and
     Servicing Agreement or the financial condition of the Company. The Company
     has no knowledge of any recent adverse financial condition or event with
     respect to itself that, in its good faith and reasonable judgment, is
     likely to materially and adversely affect its ability to perform its
     obligations hereunder or under the Pooling and Servicing Agreement.

          (vi) FIDELITY BOND; ERRORS AND OMISSION INSURANCE. Each officer,
     director, employee, consultant and advisor of the Company with
     responsibilities concerning the servicing and administration of the
     Mortgage Loans is covered by errors and omissions insurance and fidelity
     bond insurance in the amounts and with the coverage required under the
     Pooling and Servicing Agreement for it to maintain. Neither the Company nor
     any of its officers, directors, employees, consultants, or advisors
     involved in the servicing or administration of the Mortgage Loans has been
     refused such coverage or insurance.

     Section 3.02. ORGANIZATIONAL AND OTHER RELATED WARRANTIES OF THE COLLECTION
ADVISOR. The Collection Advisor hereby makes the following representations and
warranties to the Company:

          (i) ORGANIZATION AND GOOD STANDING. The Collection Advisor is an
     entity duly organized, validly existing, and in good standing under the
     laws of its state of incorporation or formation or the laws of the United
     States, and is in compliance with the laws of each state in which any
     property is located to the extent necessary to ensure the enforceability of
     each Mortgage Loan and to perform its obligations hereunder.



                                       6
<PAGE>


          (ii) NO VIOLATION. Neither the execution and delivery by the
     Collection Advisor of this Agreement, nor the consummation by it of the
     transactions contemplated hereby, nor the performance of and compliance by
     the Collection Advisor with the provisions hereof, will conflict with or
     result in a breach or violation of, or constitute a default (or an event
     which, with notice or the lapse of time, or both, would constitute a
     default) under, the organizational documents (its articles of incorporation
     or charter or by-laws) of the Collection Advisor, or any of the provisions
     of any law, rule, regulation, judgment, decree, demand, or order (of any
     federal, state, or local governmental or regulatory authority or court)
     binding on the Collection Advisor, or any of its properties, or any of the
     provisions of any indenture, mortgage, contract, instrument, or other
     document to which the Collection Advisor is a party or by which it is
     bound, or result in the creation or imposition of any lien, charge, or
     encumbrance upon any of their respective properties pursuant to the terms
     of any indenture, mortgage, contract, instrument, or other document. The
     Collection Advisor is not otherwise in violation of any law, rule,
     regulation, judgment, decree, demand, or order (of any federal, state or
     local governmental or regulatory authority or court), which violation, in
     the Collection Advisor's good faith and reasonable judgment, is likely to
     affect materially and adversely either its ability to perform its
     obligations hereunder, or the financial condition of the Collection
     Advisor.

          (iii) AUTHORIZATION AND ENFORCEABILITY. The execution and delivery by
     the Collection Advisor of this Agreement, the consummation of the
     transactions contemplated hereby, and the performance and compliance by the
     Collection Advisor with the terms hereof are within the powers of the
     Collection Advisor, and have been duly authorized by all necessary action
     on the part of the Collection Advisor. All organizational resolutions and
     consents necessary for the Collection Advisor to enter into and consummate
     all transactions contemplated hereby have been obtained. This Agreement has
     been duly executed and delivered by the Collection Advisor and constitutes
     the legal, valid and binding obligation of the Collection Advisor,
     enforceable against it in accordance with its terms, subject to applicable
     bankruptcy, insolvency, reorganization, moratorium, and other similar laws
     affecting creditors' rights generally, and to general principles of equity,
     regardless of whether such enforcement is considered in a proceeding in
     equity or at law. The Collection Advisor has not failed to obtain any
     consent, approval, authorization, or order of, or failed to cause any
     registration or qualification with, any court or regulatory authority or
     other governmental body having jurisdiction over the Collection Advisor,
     which consent, approval, authorization, order, registration, or
     qualification is required for, and the absence of which would materially
     adversely affect, the legal and valid execution, delivery, and performance
     of this Agreement by the Collection Advisor.

          (iv) APPROVALS AND PERMITS. The Collection Advisor possesses such
     certificates, authorizations, licenses, and permits issued by the
     appropriate state, federal, and foreign regulatory agencies or bodies
     necessary to conduct the business now operated by it, and its has not
     received any notice of proceedings relating to the revocation or
     modification of any such certificate, authorization, or permit which,
     singly or in the aggregate, if the subject of an unfavorable decision,
     ruling, or finding, would materially and adversely affect the ability of


                                       7
<PAGE>


     the Collection Advisor to service a Mortgage Loan or the interests of the
     Certificateholders therein.

          (v) NO LITIGATION OR ADVERSE CONDITIONS. No litigation is pending or,
     to the best of the Collection Advisor's knowledge, threatened against it,
     which, if determined adversely to the Collection Advisor would prohibit the
     Collection Advisor from entering into this Agreement or, in the good faith
     and reasonable judgment of the Collection Advisor, is likely to materially
     and adversely affect either its ability to perform its obligations
     hereunder or the financial condition of the Collection Advisor. The
     Collection Advisor has no knowledge of any recent adverse financial
     condition or event with respect to itself that, in its good faith and
     reasonable judgment, is likely to materially and adversely affect its
     ability to perform its obligations hereunder.

          (vi) FIDELITY BOND; ERRORS AND OMISSION INSURANCE. Each officer,
     director, employee, consultant and advisor of the Collection Advisor with
     responsibilities concerning the servicing and administration of the
     Mortgage Loans is covered by errors and omissions insurance and fidelity
     bond insurance in the amounts and with the coverage required under the
     Pooling and Servicing Agreement to be maintained by the Company as master
     servicer. Neither the Collection Advisor nor any of its officers,
     directors, employees, consultants, or advisors involved in the servicing or
     administration of the Mortgage Loans has been refused such coverage or
     insurance.

          (vii) APPROVED SELLER/SERVICER. The Collection Advisor is approved as
     a seller/servicer of single-family mortgage loans by the Department of
     Housing and Urban Development.

Section 3.03. REMEDIES FOR BREACH OF REPRESENTATION AND WARRANTY.

     Upon discovery by the Company or the Collection Advisor of a breach of any
of the representations and warranties contained in this Article III which
materially and adversely affects the value of the Collection Advisor Mortgage
Loans, the party discovering such breach shall give prompt written notice to the
other.

     Each party hereto shall indemnify the other and hold them harmless against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of such party's representations and warranties
contained in this Article III. It is understood and agreed that the obligations
to indemnify as provided in this Section 3.03 constitute the sole remedies of
the Company and the Collection Advisor respecting a breach of any other party's
representations and warranties.

                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

Section 4.01. AMENDMENT.



                                       8
<PAGE>


     This Agreement may be amended from time to time by written agreement signed
by each of the parties hereto with the consent of Fitch.

Section 4.02. COUNTERPARTS.

     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 4.03. GOVERNING LAW.

     This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

Section 4.04. NOTICES.

     All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:

     (a)    in the case of the Company,

            New Century Mortgage Corporation
            18400 Von Karman, Suite 1000
            Irvine, California 92612
            Attention:  Kevin Cloyd
            Telephone:  (949) 862-7941
            Facsimile:  (949) 440-7033

     or such other address as may hereafter be furnished to the Collection
     Advisor in writing.

     (b)    in the case of the Collection Advisor,

            [__________________]
            [__________________]
            Attention:  [___________]
            Telephone:  [___________]
            Facsimile:  [___________]

     or such other address as may hereafter be furnished to the Company in
     writing.

Section 4.05. TERMINATION; TRANSFER OF COLLECTION ADVISOR MORTGAGE LOANS.

     This Agreement shall terminate (x) at such time as the Company obtains a
servicer rating of "RPS3" or higher from Fitch and the Company notifies the
Collection Advisor and Fitch that it wishes to terminate this Agreement, or (y)
the Company exercises its right as Master Servicer to purchase all of the
Mortgage Loans in the Trust Fund pursuant to the optional termination provision


                                       9
<PAGE>


under the Pooling and Servicing Agreement, or (z) if mutually agreed to by the
parties hereto with the consent of Fitch.

     If the Collection Advisor is terminated as described in this Section 4.05,
then, upon receipt of written notice from the Company, the Collection Advisor
shall immediately remit to the Company all amounts in the Collection Accounts
and the Escrow Accounts and all rights of the Collection Advisor to service the
Collection Advisor Mortgage Loans shall terminate. Following the receipt of
written notice from the Company as provided above, all authority and power of
the Collection Advisor to provide collection advisory services with respect to
the Collection Advisor Mortgage Loans shall pass to and be vested in the
Company, and the Collection Advisor shall do all things necessary to effect a
transfer of the Collection Advisor Mortgage Loans back to the Company. In this
regard, the Company is hereby authorized and empowered to execute and deliver,
on behalf of the Collection Advisor, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the affected Collection Advisor Mortgage Loans and related documents, or
otherwise. The Collection Advisor agrees to cooperate with the Company in
implementing the termination of the Collection Advisor's responsibilities and
rights hereunder to the extent required by this Section 4.05, including, without
limitation, the transfer to the Company or its appointed agent for
administration by it of all amounts in the possession of the Collection Advisor
or thereafter received with respect to all of the Collection Advisor Mortgage
Loans serviced hereunder and the transfer of the Collection Advisor Mortgage
Loans back to the Company. The Company shall be responsible for all of the
costs, fees and expenses of the Collection Advisor related to the termination of
the Collection Advisor and the transfer of any Collection Advisor Mortgage Loans
pursuant to this Section 4.05.

Section 4.06. SEVERABILITY OF PROVISIONS.

     If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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. If the invalidity of any part, provision, representation or warranty
of this Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate in good faith to
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.

Section 4.07. SUCCESSORS AND ASSIGNS.

     This Agreement may not be assigned by any party hereto without the prior
written consent of the other party hereto. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.

Section 4.08. ARTICLE AND SECTION HEADINGS.

     The article and section headings herein are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.



                                       10
<PAGE>


Section 4.09. CONFIDENTIALITY.

     (a) In connection with the rights and obligations of each of the parties
hereunder, the Company and the Collection Advisor (for the purposes of this
Section 4.09(a), a "DISCLOSING PARTY") may find it necessary to disclose to the
other party (including its subsidiaries) or its representatives (collectively, a
"RECEIVING Party") certain confidential, non-public or proprietary information
relating to the Disclosing Party or its affiliates. "Confidential Information"
means any nonpublic information whatever its nature or form, whether obtained
orally, by observation, from written materials or otherwise, from any third
party or from the Disclosing Party or its directors, officers, employees,
affiliates, representatives (including, without limitation, financial advisors,
attorneys and accountants) or agents (collectively, a party's "REPRESENTATIVES")
that is obtained by the Receiving Party as a result of or in connection with the
performance of its rights or obligations under this Agreement, whether before or
after the date hereof, together with all analyses, compilations, forecasts,
studies or other documents prepared by a Receiving Party or its Representatives
in connection with the performance of its rights or obligations hereunder which
contain or reflect any such information. Confidential Information includes, but
is not limited to, any non-public information regarding any business or
operations plans, strategies, processes, know-how, portfolios, prospects or
objectives of the Disclosing Party; structure, products, product development,
technology, inventions, discoveries, improvements, specifications, source codes,
object code, programming and other documentation, designs, methods, devices,
systems, computer software, including due diligence system, loss mitigation
software included within RADAR, foreclosure attorney web site, distribution,
sales, services, support and marketing plans, practices, or operations of the
Disclosing Party; the prices, costs and details of the services of the
Disclosing Party; the financial condition, results of operations, financial
records and related information of the Disclosing Party; the position of the
Disclosing Party and its clients in any portfolio; the performance of any
accounts or assets of the Disclosing Party; research and development, operations
or plans of the Disclosing Party; clients and client lists (including, without
limitation, the identity of clients, names, addresses, contact persons, and the
client's business or investment status or needs) of the Disclosing Party;
information received from third parties under confidential conditions; any trade
secrets, confidential or secret designs, processes, formulae, plans, devices or
material (whether or not patented or patentable) directly or indirectly useful
in any aspect of the business of the Disclosing Party (including, without
limitation, financial, investment and trading plans, designs, products and
computer aided financial investment and trading systems, software, strategies,
programs, formulae, patterns, methods, techniques, processes and system
analyses), management organization and related information (including, without
limitation, data and other information concerning the compensation and benefits
paid to officers, directors and employees of the Disclosing Party); personnel
and compensation policies; operation policies and manuals; means of gaining
access to the Disclosing Party's computer data systems and related information;
or any other non-public financial, commercial, business, technical or other
information relating to the Disclosing Party, its clients, subsidiaries or
affiliates. The term Confidential Information will not, however, include
Confidential Information which (i) is or becomes publicly available other than
as a result of a disclosure by a Receiving Party or its Representatives in
violation of this Agreement, (ii) becomes available to a Receiving Party on a
non-confidential basis after the date hereof from a source (other than a
Disclosing Party or its Representatives ), which, to the best knowledge of a
Receiving Party after due inquiry, is not prohibited from disclosing such
information to the Receiving Party by any obligation



                                       11
<PAGE>


of confidentiality to the other party hereto, or (iii) is developed or derived
by a party hereto without the aid, application or use of Confidential
Information.

     (b) The Collection Advisor agrees that all information supplied by or on
behalf of the Company pursuant to Section 2.01, including individual account
information, is the property of the Company and agrees to use such information
only for the purposes contemplated by this Agreement and otherwise hold such
information confidential and not to disclose such information, except as
contemplated hereby or to the extent such information is made publicly available
by or on behalf of the Company or the Trustee. In addition, the Collection
Advisor acknowledges that the Federal "Privacy of Consumer Financial
Information" Regulation (12 CFR Part 40), as amended from time to time (the
"PRIVACY REGULATION"), issued pursuant to Section 504 of the Gramm-Leach-Bliley
Act (15 U.S.C. 6801 ET SEQ.) governs disclosures of nonpublic personal
information about consumers. The Collection Advisor hereby agrees that it shall
comply with the terms and provisions of the Privacy Regulation, including,
without limitation, the provisions regarding the sharing of Nonpublic Personal
Information (as defined in the Privacy Regulation) in so far as such terms and
provisions relate to Confidential Information.

Section 4.10. INDEMNIFICATION.

     The Company hereby agrees to indemnify and hold the Collection Advisor
harmless against any and all claims, losses, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and any other costs, fees
and expenses that the Collection Advisor may sustain in any way related to (i)
the failure of the Company to perform its duties and service the Mortgage Loans
in compliance with the Pooling and Servicing Agreement or (ii) any Mortgage
Loan, other than any loss, liability or expense incurred in connection with any
legal action incurred by reason of the Collection Advisor's misfeasance, bad
faith, or gross negligence or (iii) the failure of the Company to perform its
duties in compliance with this Agreement or (iv) the failure of the Company to
provide the Collection Advisor with any notices or material information related
to the Collection Advisor Mortgage Loans. The Company shall immediately notify
the Collection Advisor if a claim is made that may result in such claims,
losses, penalties, fines, forfeitures, legal fees or related costs, judgments,
or any other costs, fees and expenses, and the Company shall assume the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Collection Advisor in respect of such
claim. The provisions of this Section 4.01 shall survive the termination of this
Agreement.

Section 4.11. NO PARTNERSHIP.

     Nothing herein shall be deemed or construed to create a partnership or
joint venture between the parties hereto and the services of the Collection
Advisor shall be rendered as an independent contractor and not as an agent for
the Company.




                                       12
<PAGE>



        IN WITNESS WHEREOF, the parties hereto have caused its name to be
signed hereto by its respective officer thereunto duly authorized, all as of the
day and year first above written.

                                            NEW CENTURY MORTGAGE CORPORATION



                                            By:  _______________________________
                                                 Name:
                                                 Title:



                                             [_________________________________]



                                            By:  _______________________________
                                                 Name:
                                                 Title:

<PAGE>

                                    EXHIBIT A

                         POOLING AND SERVICING AGREEMENT




<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