<PAGE>

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

                          LONG BEACH SECURITIES CORP.,
                                    Depositor


                          LONG BEACH MORTGAGE COMPANY,
                                 Master Servicer


                     FEDERAL HOME LOAN MORTGAGE CORPORATION,
              Guarantor (with respect to the Class A-1 Certificates
                         and the Class S-1 Certificates)
                                       and


                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                     Trustee


                         POOLING AND SERVICING AGREEMENT
                            Dated as of July 1, 2001


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


                      Long Beach Mortgage Loan Trust 2001-2

                    Asset-Backed Certificates, Series 2001-2

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

<PAGE>


                                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                              <C>
ARTICLE I DEFINITIONS ............................................................................................5
   Section 1.01   Defined Terms...................................................................................5
   Section 1.02   Accounting.....................................................................................57
   Section 1.03   Allocation of Certain Interest Shortfalls......................................................58
   Section 1.04   Rights of the NIMS Insurer and the Guarantor...................................................59

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.......................................61
   Section 2.01   Conveyance of Mortgage Loans...................................................................61
   Section 2.02   Acceptance of REMIC 1 by the Trustee...........................................................63
   Section 2.03   Cure, Repurchase or Substitution of Mortgage Loans by the Seller; Remedies for
                     Breaches by Depositor or Master Servicer; Remedies for Breaches Relating to
                     Prepayment Charges..........................................................................64
   Section 2.04   Representations, Warranties and Covenants of the Master Servicer...............................67
   Section 2.05   Representations and Warranties of the Depositor................................................70
   Section 2.06   Issuance of Certificates.......................................................................72
   Section 2.07   Conveyance of REMIC Regular Interests and Acceptance of REMIC 1 by the Trustee;
                     Issuance of Certificates....................................................................72

ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...................................................74
   Section 3.01   Master Servicer to Act as Master Servicer......................................................74
   Section 3.02   Sub-Servicing Agreements Between the Master Servicer and Sub-Servicers.........................76
   Section 3.03   Successor Sub-Servicers........................................................................77
   Section 3.04   Liability of the Master Servicer...............................................................78
   Section 3.05   No Contractual Relationship Between Sub-Servicers and the Trustee or
                     Certificateholders..........................................................................78
   Section 3.06   Assumption or Termination of Sub-Servicing Agreements by Trustee...............................78
   Section 3.07   Collection of Certain Mortgage Loan Payments...................................................79
   Section 3.08   Sub-Servicing Accounts.........................................................................79
   Section 3.09   Collection of Taxes, Assessments and Similar Items; Servicing Accounts.........................80
   Section 3.10   Collection Account and Distribution Account....................................................81
   Section 3.11   Withdrawals from the Collection Account and Distribution Account...............................83
   Section 3.12   Investment of Funds in the Collection Account and the Distribution Account.....................85
   Section 3.13   [Reserved].....................................................................................86

                                                            i
<PAGE>

   Section 3.14   Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.................86
   Section 3.15   Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................88
   Section 3.16   Realization Upon Defaulted Mortgage Loans......................................................89
   Section 3.17   Trustee to Cooperate; Release of Mortgage Files................................................91
   Section 3.18   Servicing Compensation.........................................................................92
   Section 3.19   Reports to the Trustee; Collection Account Statements..........................................93
   Section 3.20   Statement as to Compliance.....................................................................94
   Section 3.21   Independent Public Accountants' Servicing Report...............................................94
   Section 3.22   Access to Certain Documentation................................................................95
   Section 3.23   Title, Management and Disposition of REO Property..............................................96
   Section 3.24   Obligations of the Master Servicer in Respect of Prepayment Interest Shortfalls................99
   Section 3.25   Obligations of the Master Servicer in Respect of Mortgage Rates and Monthly
                     Payments...................................................................................100
   Section 3.26   Reserve Fund..................................................................................100
   Section 3.27   Advance Facility..............................................................................101

ARTICLE IV FLOW OF FUNDS .......................................................................................103
   Section 4.01   Distributions.................................................................................103
   Section 4.02   Preference Claims.............................................................................110
   Section 4.03   Statements....................................................................................110
   Section 4.04   Remittance Reports; Advances..................................................................114
   Section 4.05   Distributions on the REMIC Regular Interests..................................................116
   Section 4.06   Allocation of Realized Losses.................................................................120
   Section 4.07   Compliance with Withholding Requirements......................................................122
   Section 4.08   Commission Reporting..........................................................................122
   Section 4.09   The Guarantee.................................................................................122
   Section 4.10   The Trustee Remittance Report.................................................................122
   Section 4.11   Loan Data Remittance Report...................................................................124

ARTICLE V THE CERTIFICATES .....................................................................................125
   Section 5.01   The Certificates..............................................................................125
   Section 5.02   Registration of Transfer and Exchange of Certificates.........................................127
   Section 5.03   Mutilated, Destroyed, Lost or Stolen Certificates.............................................131
   Section 5.04   Persons Deemed Owners.........................................................................131

ARTICLE VI THE MASTER SERVICER AND THE DEPOSITOR................................................................133
   Section 6.01   Liability of the Master Servicer and the Depositor............................................133
   Section 6.02   Merger or Consolidation of the Depositor or the Master Servicer...............................133
   Section 6.03   Limitation on Liability of the Depositor, the Master Servicer and Others......................133

                                                            ii
<PAGE>

   Section 6.04   Limitation on Resignation of Master Servicer..................................................135
   Section 6.05   Rights of the Depositor in Respect of the Master Servicer.....................................135

ARTICLE VII DEFAULT ............................................................................................137
   Section 7.01   Master Servicer Events of Default.............................................................137
   Section 7.02   Trustee to Act; Appointment of Successor......................................................139
   Section 7.03   Notification to Certificateholders............................................................141
   Section 7.04   Waiver of Master Servicer Events of Default...................................................142

ARTICLE VIII THE TRUSTEE .......................................................................................143
   Section 8.01   Duties of Trustee.............................................................................143
   Section 8.02   Certain Matters Affecting the Trustee.........................................................144
   Section 8.03   Trustee not Liable for Certificates or Mortgage Loans.........................................145
   Section 8.04   Trustee May own Certificates..................................................................146
   Section 8.05   Trustee's Fees and Expenses...................................................................146
   Section 8.06   Eligibility Requirements for Trustee..........................................................147
   Section 8.07   Resignation or Removal of Trustee.............................................................147
   Section 8.08   Successor Trustee.............................................................................148
   Section 8.09   Merger or Consolidation of Trustee............................................................149
   Section 8.10   Appointment of Co-Trustee or Separate Trustee.................................................149
   Section 8.11   Appointment of Custodians.....................................................................150
   Section 8.12   Appointment of Office or Agency...............................................................151
   Section 8.13   Representations and Warranties of the Trustee.................................................151
   Section 8.14   Trustee Procedures............................................................................152

ARTICLE IX TERMINATION .........................................................................................153
   Section 9.01   Termination Upon Purchase or Liquidation of All Mortgage Loans................................153
   Section 9.02   Additional Termination Requirements...........................................................155

ARTICLE X REMIC PROVISIONS 157
   Section 10.01     REMIC Administration.......................................................................157
   Section 10.02     Prohibited Transactions and Activities.....................................................160
   Section 10.03     Trustee, Master Servicer and Depositor Indemnification.....................................160

ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................162
   Section 11.01     Amendment..................................................................................162
   Section 11.02     Recordation of Agreement; Counterparts.....................................................163
   Section 11.03     Limitation on Rights of Certificateholders.................................................163
   Section 11.04     Governing Law; Jurisdiction................................................................164
   Section 11.05     Notices....................................................................................164
   Section 11.06     Severability of Provisions.................................................................165

                                                            iii
<PAGE>

   Section 11.07     Notice to the Rating Agencies and the NIMS Insurer.........................................165
   Section 11.08     Article and Section References.............................................................166
   Section 11.09     NIMS Insurer's Rights......................................................................166
   Section 11.10     Grant of Security Interest.................................................................167
</TABLE>



                                     iv

<PAGE>

         This POOLING AND SERVICING AGREEMENT is dated as of July 1, 2001 (the
"Agreement"), among LONG BEACH SECURITIES CORP., as depositor (the "Depositor"),
LONG BEACH MORTGAGE COMPANY, as master servicer (the "Master Servicer"), FEDERAL
HOME LOAN MORTGAGE CORPORATION, as guarantor of the Class A-1 Certificates and
the Class S-1 Certificates (the "Guarantor"), and BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as trustee (the "Trustee").

                             PRELIMINARY STATEMENT:

         The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of eleven classes of
certificates, designated as (i) the Class A-1F Certificates, (ii) the Class A-1V
Certificates, (iii) the Class A-2 Certificates, (iv) the Class S-1 Certificates,
(v) the Class S-2 Certificates, (vi) the Class M-1 Certificates, (vii) the Class
M-2 Certificates, (viii) the Class M-3 Certificates, (ix) the Class P
Certificates, (x) the Class C Certificates and (xi) the Class R Certificates.

                                     REMIC 1

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (exclusive of the Reserve Fund and
Master Servicer Prepayment Charge Payment Amounts) a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC 1." The Class R-1
Interest will represent the sole class of "residual interests" in REMIC 1 for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law. The following table irrevocably sets forth the designation, the
Uncertificated REMIC 1 Pass-Through Rate, the initial Uncertificated Principal
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 1
Regular Interests. None of the REMIC 1 Regular Interests will be certificated.

                             Uncertificated REMIC 1

                                      Initial Uncertificated      Assumed Final
Designation     Pass-Through Rate        Principal Balance       Maturity Date1
-----------     -----------------        -----------------       --------------
   LT1A-1           Variable2             $1,013,034,329.20         July 2031
   LT1A-2           Variable2               $421,884,131.52         July 2031
   LT1B-1           Variable2               $112,559,000.00         July 2031
   LT1B-2           Variable2                $46,876,000.00         July 2031
   LT1P-1           Variable2                       $100.00         July 2031
   LT1P-2           Variable2                       $100.00         July 2031

------------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month 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 1 Regular Interest.

         (2) Calculated in accordance with the definition of "Uncertificated
REMIC 1 Pass-Through Rate" herein.

                                       1
<PAGE>

                                     REMIC 2

         As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 2". The Class R-2 Interest represents the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Uncertificated REMIC
2 Pass-Through Rate, the initial Uncertificated Principal 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 2 Regular Interests. None
of the REMIC 2 Regular Interests will be certificated.

              Uncertificated REMIC 2    Initial Uncertificated     Assumed Final
Designation      Pass-Through Rate         Principal Balance      Maturity Date1
-----------      -----------------         -----------------      --------------
   LT2A-1            Variable(2)           $1,103,081,462.62        July 2031
   LT2B-1            Variable(2)               $2,450,000.00        July 2031
   LT2C-1            Variable(2)               $6,779,870.00        July 2031
   LT2D-1            Variable(2)                 $703,493.95        July 2031
   LT2E-1            Variable(2)                 $647,212.74        July 2031
   LT2F-1            Variable(2)                 $478,376.17        July 2031
   LT2G-1            Variable(2)              $11,452,913.72        July 2031
   LT2A-2            Variable(2)             $459,384,928.89        July 2031
   LT2B-2            Variable(2)               $3,843,830.00        July 2031
   LT2C-2            Variable(2)                 $292,976.05        July 2031
   LT2D-2            Variable(2)                 $269,537.26        July 2031
   LT2E-2            Variable(2)                 $199,223.83        July 2031
   LT2F-2            Variable(2)               $4,769,635.49        July 2031
  LT2S-1A            Variable(3)                     N/A6           July 2031
  LT2S-1B            Variable(4)                     N/A6           July 2031
  LT2S-1C            Variable(5)                     N/A6           July 2031
  LT2S-2A            Variable(3)                     N/A7           July 2031
  LT2S-2B            Variable(4)                     N/A7           July 2031
  LT2S-2C            Variable(5)                     N/A7           July 2031
   LT2P-1            Variable(2)                     $100.00        July 2031
   LT2P-2            Variable(2)                     $100.00        July 2031

-------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month 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 2 Regular Interest.

         (2) Calculated in accordance with the definition of "Uncertificated
REMIC 2 Pass-Through Rate" herein.

         (3) 2.50% per annum for the first 30 Distribution Dates and 0.00% per
annum thereafter.

         (4) 1.00% per annum for the first 20 Distribution Dates and 0.00% per
annum thereafter.

         (5) 1.00% per annum for the first 10 Distribution Dates and 0.00% per
annum thereafter.

                                       2
<PAGE>

         (6) REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B
and REMIC 2 Regular Interest LT2S-1C will not have Uncertificated Principal
Balances, but will accrue interest on their respective Uncertificated Notional
Amounts outstanding from time to time which, in each case, shall equal the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1B-1.

         (7) REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B
and REMIC 2 Regular Interest LT2S-2C will not have Uncertificated Principal
Balances, but will accrue interest on their respective Uncertificated Notional
Amounts outstanding from time to time which in each case shall equal the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1B-2.

                                       3
<PAGE>

                                     REMIC 3

         As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 2 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3." The Class R-3 Interest represents the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions.

         The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more of the "regular interests" in
REMIC 3 created hereunder:

                      Original Class
                   Certificate Principal    Pass-Through      Assumed Final
Class Designation         Balance               Rate         Maturity Date1
-----------------         -------               ----         --------------
Class A-1V              $677,987,000.00       Variable(2)       July 2031
Class A-1F              $245,000,000.00        4.741%(2)        July 2031
Class A-2               $384,383,000.00       Variable(2)       July 2031
Class M-1                $99,647,000.00       Variable(2)       July 2031
Class M-2                $91,675,000.00       Variable(2)       July 2031
Class M-3                $67,760,000.00       Variable(2)       July 2031
Class S-1                       N/A3            N/A(3)          July 2031
Class S-2                       N/A4            N/A(3)          July 2031
Class C                  $27,901,460.725      Variable(2)       July 2031
Class P                         $200.00         N/A(7)          July 2031

-------------------
         (1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates that represents
one or more of the "regular interests" in REMIC 3.

         (2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.

         (3) The Class S-1 Certificates will receive all amounts distributed to
REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B and REMIC 2
Regular Interest LT2S-1C.

         (4) The Class S-2 Certificates will receive all amounts distributed to
REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2
Regular Interest LT2S-2C.

         (5) The Class C Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates outstanding
from time to time which shall equal the aggregate of the Uncertificated
Principal Balances of the REMIC 2 Regular Interests. The Class C Certificates
will not accrue interest on their Class Certificate Principal Balance.

         (7) The Class P Certificates will not accrue interest.

                                       4
<PAGE>

                                    ARTICLE I
                                   DEFINITIONS

Section 1.01 Defined Terms.

         Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A-1V Certificates, Class A-2
Certificates and Mezzanine Certificates shall be made on the basis of the actual
number of days elapsed on the basis of a 360-day year and all other calculations
of interest described herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. The Class P Certificates and the Class R
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest.

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

         "Account":  Either of the Collection Account and Distribution Account.

         "Accrual Period": With respect to the Class A-1F Certificates, the
Class S Certificates, Class C Certificates, REMIC 1 Regular Interests and REMIC
2 Regular Interests and each Distribution Date, the calendar month prior to the
month of such Distribution Date. With respect to the Class A-1V Certificates,
Class A-2 Certificates, Mezzanine Certificates and each Distribution Date, the
period commencing on the immediately preceding Distribution Date (or in the case
of the first such Accrual Period, commencing on the Closing Date) and ending on
the day immediately preceding such Distribution Date.

         "Adjustable Rate Mortgage Loan": A Mortgage Loan which provides for an
adjustable Mortgage Rate payable with respect thereto.

         "Adjusted Net 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 Maximum Mortgage Rate for such Mortgage Loan (if such
Mortgage Loan is an Adjustable Rate Mortgage Loan) or the Mortgage Rate for such
Mortgage Loan (if such Mortgage Loan is a Fixed Rate Mortgage Loan), in either
such case as of the first day of the month preceding the month in which the
Distribution Date occurs, minus the Servicing Fee Rate.

         "Adjusted 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 Mortgage Rate for such Mortgage Loan as of the first day
of the month preceding the month in which the Distribution Date occurs, minus
the Servicing Fee Rate.

         "Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each adjustment date, on 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.

                                       5
<PAGE>

         "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
4.04.

         "Advancing Person": As defined in Section 3.27 hereof.

         "Adverse REMIC Event":  As defined in Section 10.01(f) hereof.

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

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

         "Allocated Realized Loss Amount": With respect to any Distribution Date
and any Class of Mezzanine Certificates, the sum of (i) any Realized Losses
allocated to such Class of Certificates on any Distribution Date and (ii) the
amount of any Allocated Realized Loss Amount for such Class of Certificates
remaining unpaid from the previous Distribution Date.

         "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 or record the sale of the Mortgage.

         "Available Funds": With respect to any Distribution Date, an amount
equal to the excess of (i) the sum of (a) the aggregate of the Monthly Payments
on the Mortgage Loans due on the related Due Date and received on or prior to
the related Determination Date, (b) Liquidation Proceeds, Insurance Proceeds,
Principal Prepayments and other unscheduled recoveries of principal and interest
in respect of the Mortgage Loans during the related Prepayment Period (other
than any Prepayment Charges collected by the Master Servicer in connection with
the full or partial prepayment of any of the Mortgage Loans and any Master
Servicer Prepayment Charge Payment Amount), (c) the aggregate of any amounts
received in respect of an REO Property acquired in respect of a Mortgage Loan
withdrawn from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the Collection
Account by the Master Servicer in respect of related Prepayment Interest
Shortfalls on the Mortgage Loans for such Distribution Date, (e) the aggregate
of any Advances made by the Master Servicer or the Trustee for such Distribution
Date with respect to the Mortgage Loans, (f) the aggregate of any related
advances made by or on behalf of the Trustee for such Distribution Date with
respect to the Mortgage Loans pursuant to Section 7.02(b), and (g) the aggregate
of any amounts constituting proceeds of repurchases or substitutions of the
Mortgage Loans occurring during the related Prepayment Period over (ii) the sum
of (a) amounts reimbursable or payable to the Depositor, the Master Servicer,
the Trustee, the Seller, the Guarantor, the NIMS

                                       6
<PAGE>

Insurer or any Sub-Servicer pursuant to Section 3.11 or Section 3.12 in respect
of the Mortgage Loans or otherwise payable in respect of Extraordinary Trust
Fund Expenses, (b) amounts deposited in the Collection Account or the
Distribution Account pursuant to clauses (i)(a) through (g) above, as the case
may be, in error, (c) Stayed Funds, (d) any indemnification payments or expense
reimbursements made by the Trust Fund pursuant to Section 8.05 and (e) amounts
reimbursable to the Trustee for an advance made pursuant to Section 7.02(b)
which advance the Trustee has determined to be nonrecoverable from the Stayed
Funds in respect of which it was made.

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

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

         "Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A-2 Certificates, the Class S-2 Certificates and the Mezzanine
Certificates shall be Book-Entry Certificates.

         "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 the Guarantor or banking or savings institutions in the State of Delaware,
the State of New York, the State of Maryland, the State of California, the State
of Minnesota, the Commonwealth of Pennsylvania 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.

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

         "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, the NIMS Insurer and the
Guarantor 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

                                       7
<PAGE>

members thereof, except as otherwise specified herein; provided, however, that
the Trustee, the NIMS Insurer and the Guarantor 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 Margin": With respect to the Class A-1V Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.12%
per annum and (B) after the Optional Termination Date, 0.24% per annum. With
respect to the Class A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.28% per annum and (B) after the Optional
Termination Date, 0.56% per annum. With respect to the Class M-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.56%
per annum and (B) after the Optional Termination Date, 0.84% per annum. With
respect to the Class M-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.95% per annum and (B) after the Optional
Termination Date, 1.425% per annum. With respect to the Class M-3 Certificates
on each Distribution Date (A) on or prior to the Optional Termination Date,
1.95% per annum and (B) after the Optional Termination Date, 2.925% per annum.

         "Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.

         "Certificate Principal Balance": With respect to any Class A
Certificates, Mezzanine Certificates or Class P Certificates immediately prior
to any Distribution Date, will be an amount equal to the Initial Certificate
Principal Balance thereof reduced by the sum of all amounts actually distributed
in respect of principal of such Class and, in the case of a Mezzanine
Certificate, Realized Losses allocated thereto on all prior Distribution Dates.
With respect to the Class C Certificates as of any date of determination, an
amount equal to the excess, if any, of (A) the then aggregate Uncertificated
Principal Balances of the REMIC 2 Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificate. The Class S Certificates will not have
a Certificate Principal Balance.

         "Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.

         "Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.

         "Class A Certificate": Any Class A-l Certificate or Class A-2
Certificate.

         "Class A Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Class A-1 Principal Distribution Amount and
the Class A-2 Principal Distribution Amount.

         "Class A-1 Adjusted Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, and an amount equal to the sum of the Class A-1 Principal
Distribution Amount and the Cross-Collateralization Support Amount, if any, for
such Distribution Date.

         "Class A-1 Certificate": Any Class A-1F Certificate or Class A-1V
Certificate.

         "Class A-1 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
I Principal Remittance Amount for such Distribution Date, and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

                                       8
<PAGE>

         "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Class A-1 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 64.00% and (ii) the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period (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 (B) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period (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) minus $5,627,967.

         "Class A-1 Shortfall Amount": See definition of Cross-Collateralization
Support Amount.

         "Class A-1F Certificate": Any one of the Class A-1F Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class A-1V Certificate": Any one of the Class A-1V Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class A-2 Adjusted Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the Class A-2 Principal Distribution Amount
less the Cross-Collateralization Support Amount, if any, for such Distribution
Date.

         "Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-3, executed, authenticated and

                                       9
<PAGE>

delivered by the Trustee, representing the right to distributions as set forth
herein and therein and evidencing a Regular Interest in REMIC 3.

         "Class A-2 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
II Principal Remittance Amount for such Distribution Date and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.

         "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Class A-2 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 64.00% and (ii) the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the last day of the
related Due Period (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 (B) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period (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) minus $2,343,801.

         "Class C Certificate": Any one of the Class C Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-9, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-6, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate 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 aggregate 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) 76.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (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 (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (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) minus
the Overcollateralization Floor.

                                       10
<PAGE>

         "Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-7, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate 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 aggregate 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 aggregate Certificate Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 88.00% and (ii) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (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 (B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (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) minus the Overcollateralization Floor.

         "Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-8, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate 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 aggregate 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 aggregate 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 aggregate 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) 96.50% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (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 (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(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) minus the
Overcollateralization Floor.

                                       11
<PAGE>

         "Class P Certificate": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-10, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-11, executed, authenticated and delivered by the Trustee, evidencing
the ownership of the Class R-1 Interest, the Class R-2 Interest and the Class
R-3 Interest.

         "Class R-1 Interest": The Residual Interest in REMIC 1.

         "Class R-2 Interest": The Residual Interest in REMIC 2.

         "Class R-3 Interest": The Residual Interest in REMIC 3.

         "Class S Certificate": Any Class S-1 Certificate or Class S-2
Certificate.

         "Class S-1 Certificate": Any one of the Class S-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-4, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Class S-2 Certificate": Any one of the Class S-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-5, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.

         "Close of Business": As used herein, with respect to any Business Day,
5:00 p.m. (New York time).

         "Closing Date": July 20, 2001.

         "Code": The Internal Revenue Code of 1986, as amended.

         "Collection Account": The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.10(a), which shall be entitled
"Bankers Trust Company of California, N.A., as Trustee, in trust for registered
Holders of Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2," which must be an Eligible Account.

         "Commission": The Securities and Exchange Commission.

         "Compensating Interest": As defined in Section 3.24.

         "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

                                       12
<PAGE>

administered, which office at the date of the execution of this instrument is
located at 1761 East St. Andrew Place, Santa Ana, California 92705, 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 Certificates": With respect to (i) REMIC 2 Regular
Interest LT2B-1, (ii) REMIC 2 Regular Interest LT2C-1, (iii) REMIC 2 Regular
Interest LT2B-2, (iv) REMIC 2 Regular Interest LT2D-1 and REMIC 2 Regular
Interest LT2C-2, (v) REMIC 2 Regular Interest LT2E-1 and REMIC 2 Regular
Interest LT2D-2, (vi) REMIC 2 Regular Interest LT2F-1 and REMIC 2 Regular
Interest LT2E-2, and (vii) REMIC 2 Regular Interest LT2P-1 and REMIC 2 Regular
Interest LT2P-2, (i) the Class A-1F Certificates, (ii) the Class A-1V
Certificates (iii) the Class A-2 Certificates (iv) the Class M-1 Certificates,
(v) the Class M-2 Certificates, (vi) the Class M-3 Certificates, and (vii) the
Class P Certificates, respectively.

         "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (x) the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class C Certificates, and the denominator of which is (y) the aggregate
Stated Principal Balance of the Mortgage Loans, calculated prior to taking into
account payments of principal on the Mortgage Loans due on the related Due Date
or received during the related Prepayment Period and distribution of the
Principal Distribution Amount to the Holders of the Certificates then entitled
to distributions of principal on such Distribution Date.

         "Cross-Collateralization Support Amount": For any Distribution Date on
which the aggregate Certificate Principal Balance of the Class A-1 Certificates
would be greater than the Stated Principal Balance of the Group I Mortgage
Loans, calculated after giving effect to the distribution of the Principal
Distribution Amount to the Holders of the Class A-1 Certificates then entitled
to distributions of principal on such Distribution Date, but assuming for this
calculation that the Cross-Collateralization Support Amount was zero (the "Class
A-1 Shortfall Amount"), an amount equal to the lesser of (i) the resulting Class
A-1 Shortfall Amount and (ii) the Group II Principal Distribution Amount (with
respect to any Distribution Date (1) prior to the Stepdown Date or (2) on which
a Trigger Event is in effect) or the Class A-2 Principal Distribution Amount
(with respect to any Distribution Date (1) on or after the Stepdown Date and (2)
on which a Trigger Event is not in effect).

         "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.

         "Custodial Agreement": An agreement that may be entered into or an
agreement assigned to the Trustee with respect to the Mortgage Loans.

                                       13
<PAGE>

         "Custodian": A custodian, which shall not be the Depositor, the Master
Servicer, the Seller or any affiliate of any of them, appointed pursuant to a
Custodial Agreement.

         "Cut-off Date": With respect to each Mortgage Loan, July 1, 2001.

         "Cut-off Date Aggregate Principal Balance": The aggregate of the
Cut-off Date Principal Balances of the Mortgage Loans.

         "Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date of such Mortgage
Loan (or as of the applicable date of substitution with respect to a Qualified
Substitute Mortgage Loan), after giving effect to scheduled payments due on or
before the Cut-off Date, whether or not received.

         "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.

         "Deficiency Amount": With respect to any Distribution Date, the sum of
(i) the Guaranteed Interest Distribution Amount and (ii) the Guaranteed
Principal Distribution Amount.

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

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

         "Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.

         "Delinquency Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the aggregate Principal Balance of Mortgage Loans
Delinquent 60 days or more by (y) the aggregate Principal Balance of the
Mortgage Loans, in each case, as of the last day of the previous calendar month.

         "Delinquent": With respect to any Mortgage Loan and related Monthly
Payment, the Monthly Payment due on a Due Date which is not made by the Close of
Business on the next scheduled Due Date for such Mortgage Loan. For example, a
Mortgage Loan is 60 or more days Delinquent if the Monthly Payment due on a Due
Date is not made by the Close of Business on the second scheduled Due Date after
such Due Date.

         "Depositor": Long Beach Securities Corp., a Delaware corporation, or
any successor in interest.

                                       14
<PAGE>

         "Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. 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.

         "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 any 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 thereon or any use of such
REO Property in a trade or business conducted by the REMIC 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: (A) "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which 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, or (iii) any organization described in Section 1381(a)(2)(C) of the Code;
(B) "electing large partnership" within the meaning of Section 775 of the Code;
or (C) other Person so designated by the Trustee based upon an Opinion of
Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof if all of its activities are subject
to income tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States," "state" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.

         "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Bankers Trust

                                       15
<PAGE>

Company of California, N.A., in trust for the registered Certificateholders of
Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates, Series 2001-2"
and which must be an Eligible Account.

         "Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in August 2001.

         "Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is 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 preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.

         "Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by Moody's, F-1 by Fitch or A-1+ by S&P (or comparable ratings if
Moody's, Fitch and S&P are not the Rating Agencies) at the time any amounts are
held on deposit therein, (ii) an account or accounts the deposits in which are
fully insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders will have a claim with respect to the funds in
such account or a perfected first priority security interest against such
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.

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

         "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,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date over (ii) the Overcollateralization Target
Amount for such Distribution Date.

         "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,

                                       16
<PAGE>

any amounts payable from the Distribution Account in respect of taxes pursuant
to Section 10.01(g)(iii), any amounts payable from the Distribution Account in
respect of any REMIC pursuant to Section 10.01(c), any amounts payable from the
Trust Fund as a trustee fee for any successor trustee and any amounts payable by
the Trustee for the recording of the assignments of mortgage pursuant to Section
2.01.

         "Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the Monthly Interest Distributable Amount for the Class
C Certificates for such Distribution Date as reduced by Realized Losses
allocated thereto with respect to such Distribution Date pursuant to Section
4.05 and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.

         "Fannie Mae": 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 or the Master Servicer pursuant to or as contemplated by Section
2.03 or 10.01), 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 Representative, of each Final Recovery
Determination made thereby.

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

         "Fixed Rate Mortgage Loan": A Mortgage Loan which provides for a fixed
Mortgage Rate payable with respect thereto.

         "Formula Rate": For any Distribution Date and the Class A-1V
Certificates, the Class A-2 Certificates and the Mezzanine Certificates, the
lesser of (i) LIBOR plus the related Certificate Margin and (ii) the Maximum Cap
Rate. For any Distribution Date and the Class A-1F Certificates, 4.741% per
annum.

         "Freddie Mac": The Federal Home Loan Mortgage Corporation, or any
successor thereto.

         "Group I Adjusted Principal Distribution Amount": With respect to any
Distribution Date, the amount equal to the sum of the Group I Principal
Distribution Amount and the Cross-Collateralization Support Amount, if any, for
such Distribution Date.

         "Group I Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or

                                       17
<PAGE>

advanced with respect to the Group I Mortgage Loans or to Compensating Interest
paid by the Master Servicer with respect to the Group I Mortgage Loans.

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

         "Group I Principal Distribution Amount": The sum of (i) (x) the Group I
Principal Remittance Amount minus (y) the amount of any Overcollateralization
Release Amount for such Distribution Date multiplied by the Class A-1 Principal
Allocation Percentage, and (ii) the Extra Principal Distribution Amount
multiplied by the Class A-1 Principal Allocation Percentage.

         "Group I Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) all scheduled payments of principal collected or advanced
on the Group I Mortgage Loans by the Master Servicer that were due during the
related Due Period, (ii) all partial and full principal prepayments of the Group
I Mortgage Loans applied by the Master Servicer during the related Prepayment
Period, (iii) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds received during the related Prepayment Period with respect to
the Group I Mortgage Loans, (iv) that portion of the Purchase Price,
representing principal of any repurchased Group I Mortgage Loan, deposited to
the Collection Account during the related Prepayment Period, (v) the principal
portion of any Substitution Adjustments deposited in the Collection Account
during the related Prepayment Period with respect to the Group I Mortgage Loans
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with this Agreement, that portion of the Termination Price
representing principal with respect to the Group I Mortgage Loans.

         "Group II Adjusted Principal Distribution Amount": With respect to any
Distribution Date, the amount equal to the Group II Principal Distribution
Amount less the Cross-Collateralization Support Amount, if any, for such
Distribution Date.

         "Group II Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group II
Mortgage Loans or to Compensating Interest paid by the Master Servicer with
respect to the Group II Mortgage Loans.

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

         "Group II Principal Distribution Amount": The sum of (i) (x) the Group
II Principal Remittance Amount minus (y) the amount of any Overcollateralization
Release Amount for such Distribution Date multiplied by the Class A-2 Principal
Allocation Percentage, and (ii) the Extra Principal Distribution Amount
multiplied by the Class A-2 Principal Allocation Percentage.

         "Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) all scheduled payments of principal collected
or advanced on the Group II Mortgage Loans by the Master Servicer that were due
during the related Due Period, (ii) all partial and full

                                       18
<PAGE>

principal prepayments of the Group II Mortgage Loans applied by the Master
Servicer during the related Prepayment Period, (iii) the principal portion of
all Net Liquidation Proceeds and Insurance Proceeds received during the related
Prepayment Period with respect to the Group II Mortgage Loans, (iv) that portion
of the Purchase Price, representing principal of any repurchased Group II
Mortgage Loan, deposited to the Collection Account during the related Prepayment
Period, (v) the principal portion of any Substitution Adjustments deposited in
the Collection Account during the related Prepayment Period with respect to the
Group II Mortgage Loans and (vi) on the Distribution Date on which the Trust is
to be terminated in accordance with this Agreement, that portion of the
Termination Price representing principal with respect to the Group II Mortgage
Loans.

         "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 Mortgage Loan.

         "Guarantee": The obligations of the Guarantor pursuant to Section 4.09.

         "Guarantee Fee": For any Distribution Date and with respect to the
Guaranteed Certificates, the fee payable to the Guarantor in respect of its
services as Guarantor that accrues at the applicable Guarantee Fee Rate for such
Guaranteed Certificates on a balance equal to the aggregate Certificate
Principal Balance of the Class A-1 Certificates immediately prior to such
Distribution Date, computed on the basis of a 360-day year and the actual number
of days elapsed in the Accrual Period.

         "Guarantee Fee Rate": The per annum rate set forth in a side letter of
the Guarantor, addressed to the Trustee, the Seller and the Master Servicer.

         "Guaranteed Certificates": The Class A-1 Certificates and the Class S-1
Certificates.

         "Guaranteed Interest Distribution Amount": For any Distribution Date
and the Guaranteed Certificates, the amount, if any, after giving effect to the
distributions of the Guarantee Fee and the Guarantor Reimbursement Amount to
Freddie Mac and the Monthly Interest Distributable Amount and any Unpaid
Interest Shortfall Amount to the Class A-1 Certificates and the Class S-1
Certificates, by which the (i) sum of (x) the Monthly Interest Distributable
Amount and the Unpaid Interest Shortfall Amount payable on the Guaranteed
Certificates for such Distribution Date and (y) the Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls allocated to the Guaranteed
Certificates for such Distribution Date exceeds (ii) the amount of interest
actually paid to the Holders of the related Classes of Guaranteed Certificates
on such Distribution Date.

         "Guaranteed Principal Distribution Amount": With respect to any
Distribution Date, the amount, if any, by which (i) the aggregate Certificate
Principal Balance of the Class A-1 Certificates (after giving effect to all
amounts distributable and allocable to principal on such Class A-1 Certificates
but prior to giving effect to any Guarantor Payment on such Distribution

                                       19
<PAGE>

Date) exceeds (ii) the aggregate Stated Principal Balance of the Group I
Mortgage Loans (after giving effect to the principal portion of Monthly Payments
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period).

         "Guarantor": Freddie Mac, or its successor in interest.

         "Guarantor Interest Reimbursement Amount": With respect to any
Distribution Date, (i) the sum of any accrued but unpaid Guarantee Fees,
including the Guarantee Fee due on such Distribution Date, and (ii) the sum of
all amounts paid by the Guarantor in respect of Guaranteed Interest Distribution
Amounts on all prior Distribution Dates to the extent not previously reimbursed.

         "Guarantor Payment": Any payment made by the Guarantor in respect of a
Guaranteed Interest Distribution Amount or Guaranteed Principal Distribution
Amount.

         "Guarantor Principal Reimbursement Amount": With respect to any
Distribution Date, the sum of all amounts paid by the Guarantor in respect of
Guaranteed Principal Distribution Amounts on all prior Distribution Dates to the
extent not previously reimbursed.

         "Guarantor Reimbursement Amount": With respect to any Distribution
Date, the sum of Guarantor Interest Reimbursement Amount and the Guarantor
Principal Reimbursement Amount with interest thereon at a rate equal to the
weighted average Pass-Through Rates of the Class A-1 Certificates plus 2%.

         "Indenture": The indenture, if any, entered into following the Closing
Date, among Long Beach NIM Trust 2001-2 as issuer, Bankers Trust Company of
California, N.A., as indenture trustee, and First Union National Bank as
co-indenture trustee, relating to the NIM Notes to be issued thereunder.

         "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 or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, trust administrator, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor or 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 or 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 any of the
REMICs created hereunder within the meaning of Section 856(d)(3) of the Code if
such REMIC were a real estate investment trust (except that the ownership tests
set forth in that Section shall be considered to be

                                       20
<PAGE>

met by any Person that owns, directly or indirectly, 35% or more of any Class of
Certificates), so long as each such REMIC does not receive or derive any income
from such Person and provided that the relationship between such Person and such
REMIC 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 with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.

         "Information Circular": The Information Circular of the Depositor dated
July 11, 2001, relating to the Guaranteed Certificates.

         "Initial Certificate Principal Balance": With respect to any Regular
Certificate (other than any Class S Certificate), the amount designated "Initial
Certificate Principal Balance" on the face thereof.

         "Initial Notional Amount": With respect to any Class S Certificate or
Class C Certificate, the amount designated "Initial Notional Amount" on the face
thereof.

         "Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the 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 Determination Date": With respect to the Class A-1V
Certificates, the Class A-2 Certificates and the Mezzanine Certificates and each
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period.

         "Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
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 on a
contractual basis for such Due Period and not previously recovered.

         "LIBOR": With respect to each Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of the
"Interest Settlement Rate" for United States dollar deposits of one-month
maturity set forth by the British Bankers' Association (the

                                       21
<PAGE>

"BBA"), as such rate appears on the Telerate Page 3750, as of 11:00 a.m. (London
time) on such Interest Determination Date. With respect to any Interest
Determination Date, if the BBA's Interest Settlement Rate does not appear on
Telerate Page 3750 as of 11:00 a.m. (London time) on such date, or if Telerate
Page 3750 is not available on such date, the Trustee will obtain such from
Reuters Monitor Money Rates Service page "LIBOR01" or Bloomberg L.P. page
"BBAM." If such rate is not published for such Interest Determination Date,
LIBOR for such date will be the most recently published Interest Settlement
Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the
Guarantor will, with the consent of the NIMS Insurer, designate an alternative
index that has performed, or that the Guarantor expects to perform, in a manner
substantially similar to the BBA's Interest Settlement Rate. The Guarantor will
select a particular index as the alternative index only if it and the NIMS
Insurer receive an Opinion of Counsel that the selection of such index will not
cause any REMIC to lose its classification as a REMIC for federal income tax
purposes.

         "LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open for conducting transactions in foreign currency and
exchange.

         "Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Mortgage Loan or disposition of the
related REO Property have been 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 the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 9.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 9.01.

         "Liquidation Proceeds": The amount (other than 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 by means of 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 3.23 or Section 9.01.

         "Loan Data Remittance Report": As defined in Section 4.11 of this
Agreement.

         "Loan-to-Value Ratio": As of any date and as to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the (x) Principal
Balance of the Mortgage Loan (if such Mortgage Loan is secured by a first lien
on the related Mortgaged Property) or the

                                       22
<PAGE>

sum of the Principal Balance of the Mortgage Loan and any other mortgage loan
secured by a senior lien on the related Mortgaged Property (if such Mortgage
Loan is secured by a junior lien on the related Mortgaged Property) and the
denominator of which is (y) the Value of the related Mortgaged Property.

         "Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss, cost or liability
resulting from the failure to deliver the original Mortgage Note) in the form of
Exhibit H hereto.

         "Marker Rate 1": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to 2 times the weighted average of the
Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest LT2B-1,
REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2
Regular Interest LT2E-1, REMIC 2 Regular Interest LT2F-1 and REMIC 2 Regular
Interest LT2G-1, with the rate on REMIC 2 Regular Interest LT2B-1 subject to a
cap equal to 4.741% with the rate on REMIC 2 Regular Interest LT2C-1 subject to
a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class
A-1V Certificates and (ii) the lower of the Net WAC Rate and the Maximum Cap
Rate applicable to the Class A-1 Certificates, with the rate on REMIC 2 Regular
Interest LT2D-1 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-1 Certificates and (ii) the lower of the Net
WAC Rate and the Maximum Cap Rate applicable to the Mezzanine Certificates, with
the rate on REMIC 2 Regular Interest LT2E-1 subject to a cap equal to the lesser
of (i) LIBOR plus the Certificate Margin of the Class M-2 Certificates and (ii)
the lower of the Net WAC Rate and the Maximum Cap Rate applicable to the
Mezzanine Certificates, with the rate on REMIC 2 Regular Interest LT2F-1 subject
to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the
Class M-3 Certificates and (ii) the lower of the Net WAC Rate and the Maximum
Cap Rate applicable to the Mezzanine Certificates, with the rate on REMIC 2
Regular Interest LT2G-1 subject to a cap of zero for the purpose of this
calculation, provided that in each case other than for REMIC 2 Regular Interest
LT2B-1, the rate used herein shall be multiplied by a fraction the numerator of
which is the actual number of days elapsed in the Accrual Period and the
denominator of which is 30.

         "Marker Rate 2": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to 2 times the weighted average of the
Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest LT2B-2,
REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2
Regular Interest LT2E-2, and REMIC 2 Regular Interest LT2F-2,

                                       23
<PAGE>

with the rate on REMIC 2 Regular Interest LT2B-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class A-2 Certificates
and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate applicable to
the Class A-2 Certificates, with the rate on REMIC 2 Regular Interest LT2C-2
subject to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of
the Class M-1 Certificates and (ii) the lower of the Net WAC Rate and the
Maximum Cap Rate applicable to the Mezzanine Certificates, with the rate on
REMIC 2 Regular Interest LT2D-2 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-2 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Mezzanine
Certificates, with the rate on REMIC 2 Regular Interest LT2E-2 subject to a cap
equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate
applicable to the Mezzanine Certificates, with the rate on REMIC 2 Regular
Interest LT2F-2 subject to a cap of zero for the purpose of this calculation,
provided that in each case the rate used herein shall be multiplied by a
fraction the numerator of which is the actual number of days in the Accrual
Period and the denominator of which is 30.

         "Master Servicer": Long Beach Mortgage Company, a Delaware corporation,
or any successor 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 (i)
payable by the Master Servicer in respect of any Prepayment Charges waived other
than in accordance with the standard set forth Section 2.04(a)(viii) or (ii)
collected from the Master Servicer in its capacity as Seller in respect of a
remedy for the breach of the representation and warranty made by the Master
Servicer in its capacity as Seller set forth in Section 2.04(a)(vii).

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

         "Master Servicer Termination Test": With respect to any Distribution
Date, the Master Servicer Termination Test will be failed with respect to the
Master Servicer if the Cumulative Loss Percentage exceeds 6.125%.

         "Maximum Cap Rate": For any Distribution Date and the Class A-1F
Certificates, a per annum rate equal to the excess, if any, of (i) the weighted
average of the Adjusted Net Maximum Mortgage Rates of the Group I Mortgage
Loans, weighted on the basis of the Stated Principal Balances thereof as of the
Due Date preceding the month of such Distribution Date, over (ii) the sum of (A)
the product of (I) the Guarantee Fee Rate and (II) the percentage equivalent of
a fraction, the numerator of which is (w) the Certificate Principal Balance of
the Class A-1 Certificates, and the denominator of which is (x) the aggregate
Principal Balance of the Group I Mortgage Loans as of the first day of the month
preceding the month of such Distribution Date,

                                       24
<PAGE>

and (B) the percentage equivalent of a fraction, the numerator of which is (y)
the Pass-Through Rate for the Class S-1 Certificates for such Distribution Date
multiplied by the S-1 Notional Amount and the denominator of which is (z) the
aggregate Stated Principal Balance of the Group I Mortgage Loans as of the Due
Date preceding the month of such Distribution Date.

         For any Distribution Date and the Class A-1V Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Group I Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date preceding
the month of such Distribution Date, over (ii) the sum of (A) the product of (I)
the Guarantee Fee Rate and (II) the percentage equivalent of a fraction, the
numerator of which is (w) the Certificate Principal Balance of the Class A-1
Certificates, and the denominator of which is (x) the aggregate Principal
Balance of the Group I Mortgage Loans as of the first day of the month preceding
the month of such Distribution Date, and (B) the percentage equivalent of a
fraction, the numerator of which is (y) the Pass-Through Rate for the Class S-1
Certificates for such Distribution Date multiplied by the S-1 Notional Amount
and the denominator of which is (z) the aggregate Stated Principal Balance of
the Group I Mortgage Loans as of the Due Date preceding the month of such
Distribution Date multiplied by (b) a fraction the numerator of which is 30 and
the denominator of which is the actual number of days elapsed in the related
Accrual Period.

         For any Distribution Date and the Class A-2 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Group II Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date preceding
the month of such Distribution Date, over (ii) the percentage equivalent of a
fraction, the numerator of which is (x) the Pass-Through Rate for the Class S-2
Certificates for such Distribution Date multiplied by the S-2 Notional Amount
and the denominator of which is (y) the aggregate Stated Principal Balance of
the Group II Mortgage Loans as of the Due Date preceding the month of such
Distribution Date multiplied by (b) a fraction the numerator of which is 30 and
the denominator of which is the actual number of days elapsed in the related
Accrual Period.

         For any Distribution Date and the Mezzanine Certificates, a per annum
rate equal to the lesser of the Maximum Cap Rate with respect to the Class A-1V
Certificates and the Maximum Cap Rate with respect to the Class A-2
Certificates, in either case for such Distribution Date.

         "Maximum LT2G-1 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of (A) the excess of (a) accrued
interest at the Uncertificated REMIC 2 Pass-Through Rate applicable to REMIC 2
Regular Interest LT2G-1 for such Distribution Date on a balance equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2G-1 minus the
REMIC 2 Overcollateralized Amount 1, in each case for such Distribution Date,
over (b) Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2B-1 with
the rate on REMIC 2 Regular Interest LT2B-1 subject to a cap equal to 4.741%,
Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2C-1 with the rate
on REMIC 2 Regular Interest LT2C-1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class A-1V Certificates and (ii) the
Maximum Cap Rate applicable to the Class A-1 Certificates, Uncertificated
Accrued Interest on REMIC 2 Regular Interest LT2D-1 with the rate on REMIC 2
Regular Interest LT2D-1 subject to a cap equal to the lesser of

                                       25
<PAGE>

(i) LIBOR plus the Certificate Margin of the Class M-1 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Mezzanine
Certificates, Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2E-1
with the rate on REMIC 2 Regular Interest LT2E-1 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-2 Certificates
and (ii) the lower of the Net WAC Rate and the Maximum Cap Rate applicable to
the Mezzanine Certificates and Uncertificated Accrued Interest on REMIC 2
Regular Interest LT2F-1 with the rate on REMIC 2 Regular Interest LT2F-1 subject
to a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the
Class M-3 Certificates and (ii) the lower of the Net WAC Rate or the Maximum Cap
Rate applicable to the Mezzanine Certificates, provided, that in each case other
than for REMIC 2 Regular Interest LT2B-1, the rates set forth in clauses (i)
above shall be multiplied by a fraction the numerator of which is the actual
number of days elapsed in the Accrual Period and the denominator of which is 30,
and (B) the REMIC 2 Group I Diverted Excess Spread.

         "Maximum LT2F-2 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of (A) the excess of (a) accrued
interest at the Uncertificated REMIC 2 Pass-Through Rate applicable to REMIC 2
Regular Interest LT2F-2 for such Distribution Date on a balance equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F-2 minus the
REMIC 2 Overcollateralized Amount 2, in each case for such Distribution Date,
over (b) Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2B-2 with
the rate on REMIC 2 Regular Interest LT2B-2 subject to a cap equal to the lesser
of (i) LIBOR plus the Certificate Margin of the Class A-2 Certificates and (ii)
the Maximum Cap Rate applicable to the Class A-2 Certificates, Uncertificated
Accrued Interest on REMIC 2 Regular Interest LT2C-2 with the rate on REMIC 2
Regular Interest LT2C-2 subject to a cap equal to the lesser of (i) LIBOR plus
the Certificate Margin of the Class M-1 Certificates and (ii) the lower of the
Net WAC Rate and the Maximum Cap Rate applicable to the Mezzanine Certificates,
Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2D-2 with the rate
on REMIC 2 Regular Interest LT2D-2 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-2 Certificates and (ii) the
lower of the Net WAC Rate and the Maximum Cap Rate applicable to the Mezzanine
Certificates and Uncertificated Accrued Interest on REMIC 2 Regular Interest
LT2E-2 with the rate on REMIC 2 Regular Interest LT2E-2 subject to a cap equal
to the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the lower of the Net WAC Rate or the Maximum Cap Rate
applicable to the Mezzanine Certificates, provided, that in each case the rates
set forth in clauses (i) above shall be multiplied by a fraction the numerator
of which is the actual number of days elapsed in the Accrual Period and the
denominator of which is 30, and (B) the REMIC 2 Group II Diverted Excess Spread.

         "Maximum Mortgage Rate": With respect to each 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 or Class M-3 Certificate.

                                       26
<PAGE>

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

         "Monthly Interest Distributable Amount": With respect to the Class A
Certificates, Mezzanine Certificates, the Class S Certificates and the Class C
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period at the related Pass-Through Rate on the Certificate
Principal Balance (or Notional Amount in the case of the Class S Certificates
and the Class C Certificates) of such Class immediately prior to such
Distribution Date, in each case, reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such Certificate
based on its respective entitlements to interest irrespective of any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date) and in each case as such shortfall allocations are set forth
in Section 4.01. Notwithstanding the foregoing, for federal income tax purposes
and under the REMIC Provisions, the Monthly Interest Distributable Amount for
the Class S-1 Certificates and any Distribution Date will be deemed to be the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1A,
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1B and
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1C for such
Distribution Date and the Monthly Interest Distributable Amount for the Class
S-2 Certificates and any Distribution Date will be deemed to be the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2A,
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2B, and
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2C for such
Distribution Date.

         "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 Sections 3.01 and 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 or second lien on, or first priority security interest or second
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 delivered to the Trustee pursuant to Section 2.01 or Section 2.03(d)
as from time to time held as

                                       27
<PAGE>

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 Master
Servicer, in its capacity as Seller, and the Depositor, regarding the transfer
of the Mortgage Loans by the Seller to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.

         "Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1 on such date, attached hereto as Exhibit D. The Mortgage
Loan Schedule shall be prepared by the Seller and shall set forth the following
information as of the Cut-off Date with respect to each Mortgage Loan, as
applicable:

         (i)       the Mortgagor's name and the Master Servicer's Mortgage Loan
                   identifying number;

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

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

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

         (v)       the original months to maturity;

         (vi)      the Loan-to-Value Ratio and the combined Loan-to-Value Ratio
                   at origination;

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

         (viii)    the date on which the first Monthly Payment was due on the
                   Mortgage Loan;

         (ix)      the stated maturity date;

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

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

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

         (xiii)    the Stated Principal Balance of the Mortgage Loan as of the
                   Close of Business on the Cut-off Date;

                                       28
<PAGE>

         (xiv)     whether such Mortgage Loan is a Fixed Rate Mortgage Loan or
                   an Adjustable Rate Mortgage Loan, and with respect to each
                   Adjustable Rate Mortgage Loan: (a) the Gross Margin, (b) the
                   Maximum Mortgage Rate, (c) the Minimum Mortgage Rate, (d) the
                   Periodic Rate Cap for the first Adjustment Date and each
                   subsequent Adjustment Date and (e) the next Adjustment Date
                   immediately following the Cut-off Date;

         (xv)      a code indicating the purpose of the Mortgage Loan (i.e.,
                   purchase financing, rate/term refinancing, cash-out
                   refinancing);

         (xvi)     the Mortgage Rate at origination;

         (xvii)    a code indicating the documentation program;

         (xviii)   the Seller's risk grade and the FICO score;

         (xix)     the Value of the Mortgaged Property;

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

         (xxi)     whether such Mortgage Loan is secured by a first lien or a
                   second lien on the related Mortgaged Property;

         (xxii)    the date of origination;

         (xxiii)   the stated remaining months to maturity as of the applicable
                   Cut-off Date;

         (xxiv)    the applicable Cut-off Date;

         (xxv)     the current principal and interest payment of the Mortgage
                   Loan as of the applicable Cut-off Date;

         (xxvi)    the interest "paid to date" of the Mortgage Loan as of the
                   applicable Cut-off Date;

         (xxvii)   a code indicating whether the Mortgage Loan is a Group I
                   Mortgage Loan or a Group II Mortgage Loan;

         (xxviii)  a code indicating the Index that is associated with such
                   Mortgage Loan (if such Mortgage Loan is an Adjustable Rate
                   Mortgage Loan);

         (xxix)    the rate adjustment frequency (if such Mortgage Loan is an
                   Adjustable Rate Mortgage Loan); and

         (xxx)     the number of years the prepayment penalty is in effect.

                                       29
<PAGE>

         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 Cut-off Date 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 Master Servicer in accordance
with the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, 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
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

         "Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D
from time to time, and any REO Properties acquired in respect thereof.

         "Mortgage Rate": With respect to each Fixed Rate Mortgage Loan, the
annual rate set forth in the related Mortgage Note. With respect to each
Adjustable Rate 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 (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, to equal the sum, rounded
to the next highest or nearest 0.125% (as provided in the Mortgage Note), of the
Index, determined as set forth in the related Mortgage Note, plus the related
Gross Margin subject to the limitations set forth in the related Mortgage Note.
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 a fee simple estate in a parcel of
real property improved by a Residential Dwelling.

         "Mortgagor": The obligor on a Mortgage Note.

         "Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property), the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other accrued and unpaid Servicing Fees received and
retained in connection with the liquidation of such Mortgage Loan or Mortgaged
Property in accordance with the terms of this Agreement.

         "Net Monthly Excess Cashflow": With respect to each Distribution Date,
the sum of (a) any Overcollateralization Release Amount for such Distribution
Date and (b) the excess of (x) Available Funds for such Distribution Date over
(y) the sum for such Distribution Date of (A) the Monthly Interest Distributable
Amounts for the Class A Certificates, the Class S

                                       30
<PAGE>

Certificates and the Mezzanine Certificates, (B) the Unpaid Interest Shortfall
Amounts for the Class A Certificates and the Class S Certificates, (C) the Group
I Principal Remittance Amount, (D) the Group II Principal Remittance Amount, (E)
the Guarantor Reimbursement Amount and (F) the Guarantee Fee.

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

         "Net Prepayment Interest Shortfall": With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.

         "Net WAC Rate": For any Distribution Date and the Class A-1F
Certificates, a per annum rate equal to the excess, if any, of (i) the weighted
average of the Adjusted Net Mortgage Rates of the Group I Mortgage Loans, over
(ii) the sum of (A) the product of (I) the Guarantee Fee Rate and (II) the
percentage equivalent of a fraction, the numerator of which is (w) the
Certificate Principal Balance of the Class A-1 Certificates, and the denominator
of which is (x) the aggregate Principal Balance of the Group I Mortgage Loans as
of the first date of the month preceding the month of such Distribution Date and
(B) the percentage equivalent of a fraction, the numerator of which is (y) the
Pass-Through Rate for the Class S-1 Certificates for such Distribution Date
multiplied by the Class S-1 Notional Amount and the denominator of which is (z)
the aggregate Stated Principal Balance of the Group I Mortgage Loans as of the
first day of the month preceding the month of such Distribution Date.

         For any Distribution Date and the Class A-1V Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Mortgage Rates of the Group I Mortgage Loans, over (ii) the sum of
(A) the product of (I) the Guarantee Fee Rate and (II) the percentage equivalent
of a fraction, the numerator of which is (w) the Certificate Principal Balance
of the Class A-1 Certificates, and the denominator of which is (x) the aggregate
Principal Balance of the Group I Mortgage Loans as of the first date of the
month preceding the month of such Distribution Date and (B) the percentage
equivalent of a fraction, the numerator of which is (y) the Pass-Through Rate
for the Class S-1 Certificates for such Distribution Date multiplied by the
Class S-1 Notional Amount and the denominator of which is (z) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the first day of
the month preceding the month of such Distribution Date multiplied by (b) a
fraction the numerator of which is 30 and the denominator of which is the actual
number of days elapsed in the related Accrual Period.

         For any Distribution Date and the Class A-2 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Mortgage Rates of the Group II Mortgage Loans, over (ii) the
percentage equivalent of a fraction, the numerator of which is (x) the
Pass-Through Rate for the Class S-2 Certificates for such Distribution Date
multiplied by the Class S-2 Notional Amount and the denominator of which is (y)
the aggregate Stated Principal Balance of the Group II Mortgage Loans as of the
Due Date preceding the month of such Distribution Date multiplied by (b) a
fraction the numerator of which is 30 and the denominator of which is the actual
number of days elapsed in the related Accrual Period.

                                       31
<PAGE>

         For any Distribution Date and the Mezzanine Certificates, a per annum
rate equal to the lesser of the Net WAC Rate with respect to the Class A-1
Certificates and the Net WAC Rate with respect to the Class A-2 Certificates, in
either case for such Distribution Date.

         "Net WAC Rate Carryover Amount": With respect to the Class A-1V
Certificates, the Class A-2 Certificates and the Mezzanine Certificates and any
Distribution Date for which the Pass-Through Rate for such Class for such
Distribution Date is the Net WAC Rate, the sum of (i) the positive excess of (A)
the amount of interest that would have been payable to such Class of
Certificates on such Distribution Date if the Pass-Through Rate for such Class
for such Distribution Date were calculated at the related Formula Rate over (B)
the amount of interest payable on such Class of Certificates at the Net WAC Rate
for such Distribution Date and (ii) the related Net WAC Rate Carryover Amount
for any previous Distribution Date not previously paid together with interest
thereon at a rate equal to the related Formula Rate for such Class of
Certificates for the most recently ended Accrual Period.

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

         "NIM Notes":  The notes to be issued pursuant to the Indenture.

         "NIMS Insurer": Radian Insurance Inc. or any successor thereto that
shall be the insurer under an insurance policy insuring certain payments on NIM
Notes, if any, issued by Long Beach NIM Trust 2001-2, the principal assets of
such trust consisting of Percentage Interests of the Class C Certificates and
the Class P Certificates; provided, however, upon the occurrence and continuance
of an Insurer Default or an Insurer Insolvency Event (each as defined in the
Indenture), the NIMS Insurer shall be Financial Security Assurance Inc.

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

         "Notional Amount": Immediately prior to any Distribution Date, with
respect to the Class S-1 Certificates, an amount equal to the Uncertificated
Principal Balance of REMIC 1 Regular Interest LT1B-1. Immediately prior to any
Distribution Date, with respect to the Class S-2 Certificates, an amount equal
to the Uncertificated Principal Balance of REMIC 1 Regular Interest LT1B-2.
Immediately prior to any Distribution Date, with respect to the Class C
Certificates, the aggregate of the Uncertificated Principal Balances of the
REMIC 2 Regular Interests.

                                       32
<PAGE>

         "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 Servicer, the Seller
or the Depositor, as applicable.

         "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
reasonably acceptable to the Trustee, if such opinion is delivered 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.

         "Optional Termination Date": The first Distribution Date on which the
Terminator may elect to terminate the Trust Fund pursuant to Section 9.01.

         "Original Class Certificate Principal Balance": With respect to the
Class A Certificates, the Mezzanine Certificates and the Class P Certificate,
the corresponding Certificate Principal Balance on the Closing Date

         "Original Mortgage Loan": Any of the Mortgage Loans included in the
Trust Fund as of the Closing Date. The aggregate scheduled principal balance of
the Original Mortgage Loans as of the Closing Date is equal to
$1,594,353,660.72.

         "Original Notional Amount": With respect to the Class S-1 Certificates,
$112,559,000. With respect to the Class S-2 Certificates, $46,876,000. With
respect to the Class C Certificates, $1,594,353,660.72.

         "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount on such Distribution Date (assuming
that 100% of the aggregate Principal Remittance Amount is applied as a principal
payment on such Distribution Date).

         "Overcollateralization Floor": $7,971,768.

         "Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the aggregate Principal Remittance Amount
for such Distribution Date and (y) the Excess Overcollateralized Amount.

         "Overcollateralization Target Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, $27,901,189, (ii) on or after the Stepdown
Date provided a Trigger Event is not in effect, the greater of (x) 3.5% of the
aggregate Stated Principal Balance of the Mortgage Loans on the last day of the
related Due Period (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 (y) the Overcollateralization Floor, and (iii) on or after the
Stepdown Date if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date.

                                       33
<PAGE>

Notwithstanding the foregoing, the Overcollateralization Target Amount shall
never exceed the initial Overcollateralization Target Amount.

         "Overcollateralized Amount": For any Distribution Date, the amount, if
any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans
on the last day of the related Due Period (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) exceeds (ii) 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 giving effect to
distributions to be made 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-1V Certificates, the Class A-2 Certificates
and the Mezzanine Certificates and any Distribution Date, the lesser of (x) the
related Formula Rate for such Distribution Date and (y) the Net WAC Rate for
such Distribution Date.

         With respect to the Class A-1F Certificates and any Distribution Date,
the lesser of (x) 4.741% per annum and (y) the Net WAC Rate for such
Distribution Date.

         With respect to the Class S Certificates and any Distribution Date, a
per annum rate equal to 4.50% for the Distribution Date in August 2001 through
the Distribution Date in May 2002, 3.50% for the Distribution Date in June 2002
through the Distribution Date in March 2003, 2.50% for the Distribution Date in
April 2003 through the Distribution Date in January 2004 and 0.00% thereafter;
provided, however, for federal income tax purposes and under the REMIC
Provisions, (A) the Class S Certificates will not have a Pass-Through Rate, (B)
the Monthly Interest Distributable Amount for the Class S-1 Certificates and any
Distribution Date will be deemed to be the Uncertificated Accrued Interest for
REMIC 2 Regular Interest LT2S-1A, the Uncertificated Accrued Interest for REMIC
2 Regular Interest LT2S-1B and the Uncertificated Accrued Interest for REMIC 2
Regular Interest LT2S-1C for such Distribution Date, (C) the Monthly Interest
Distributable Amount for the Class S-2 Certificates and any Distribution Date
will be deemed to be the Uncertificated Accrued Interest for REMIC 2 Regular
Interests LT2S-2A, the Uncertificated Accrued Interest for REMIC 2 Regular
Interest LT2S-2B and the Uncertificated Accrued Interest for REMIC 2 Regular
Interest LT2S-2C for such Distribution Date, (D) the sum of the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount for the Class S-1
Certificates and any Distribution Date will be deemed to be 100% of the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1A, the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1B and the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-1C for such
Distribution Date, and (E) the sum of the Monthly Interest Distributable Amount
and the Unpaid Interest Shortfall Amount for

                                       34
<PAGE>

the Class S-2 Certificates and any Distribution Date will be deemed to be 100%
of the Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2A, the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2B and the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2S-2C.

         With respect to the Class C Certificates and any Distribution Date, a
per annum rate equal to the percentage equivalent of a fraction, the numerator
of which is the sum of the amounts calculated pursuant to clauses (A) through
(O) below, and the denominator of which is the aggregate of the Uncertificated
Principal Balances of the REMIC 2 Regular Interests. For purposes of calculating
the Pass-Through Rate for the Class C Certificates, the numerator is equal to
the sum of the following components:

                  (A) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2A-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2A-1;

                  (B) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2B-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2B-1;

                  (C) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2C-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-1;

                  (D) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2D-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-1;

                  (E) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2E-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E-1;

                  (F) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2F-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F-1;

                  (G) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2G-1 minus Marker Rate 1, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2G-1;

                  (H) 100% of the interest on REMIC 2 Regular Interest LT2P-1;

                  (I) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2A-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2A-2;

                                       35
<PAGE>

                  (J) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2B-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2B-2;

                  (K) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2C-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-2;

                  (L) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2D-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-2;

                  (M) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2E-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E-2;

                  (N) the Uncertificated REMIC 2 Pass-Through Rate for
REMIC 2 Regular Interest LT2F-2 minus Marker Rate 2, applied to an amount equal
to the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F-2;

                  (O) 100% of the interest on REMIC 2 Regular Interest
LT2P-2.

         "Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Initial Notional Amount
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance or Original Class Notional Amount of the
related Class. With respect to a Class R Certificate, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate; provided, however, with respect to each Class referred to in this
paragraph, that the sum of all such percentages for each such Class totals 100%.

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

         "Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the NIMS
Insurer, the Trustee or any of their respective Affiliates or for which an
Affiliate of the NIMS Insurer or the Trustee serves as an advisor:

                                       36
<PAGE>

                  (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) (A) demand and time deposits in, certificates of deposit
         of, bankers' acceptances issued by or federal funds sold by any
         depository institution or trust company (including the Trustee or its
         agents acting in their commercial capacities) incorporated under the
         laws of the United States of America or any state thereof and subject
         to supervision and examination by federal and/or state authorities, so
         long as, at the time of such investment or contractual commitment
         providing for such investment, such depository institution or trust
         company (or, if the only Rating Agency is S&P, in the case of the
         principal depository institution in a depository institution holding
         company, debt obligations of the depository institution holding
         company) or its ultimate parent has a short-term uninsured debt rating
         in one of the two highest available ratings of Fitch and the highest
         available rating category of Moody's and S&P and provided that each
         such investment has an original maturity of no more than 365 days; and
         provided further that, if the only Rating Agency is S&P and if the
         depository or trust company is a principal subsidiary of a bank holding
         company and the debt obligations of such subsidiary are not separately
         rated, the applicable rating shall be that of the bank holding company;
         and, provided further that, if the original maturity of such short-term
         obligations of a domestic branch of a foreign depository institution or
         trust company shall exceed 30 days, the short-term rating of such
         institution shall be A-1+ in the case of S&P if S&P is the Rating
         Agency; and (B) any other demand or time deposit or deposit which is
         fully insured by the FDIC;

                  (iii) repurchase obligations with a term not to exceed 30 days
         with respect to any security described in clause (i) above and entered
         into with a depository institution or trust company (acting as
         principal) rated F-1+ or higher by Fitch, rated A-1+ or higher by S&P
         and rated A2 or higher by Moody's;

                  (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 a Rating
         Agency in its highest long-term unsecured rating category 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 a Rating Agency 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), "AAAm" or "AAAm-G" by S&P and "Aaa" by
         Moody's; and

                                       37
<PAGE>

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

provided, 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 a non-U.S. Person.

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

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

         "Prepayment Assumption": The pricing prepayment assumption as described
in the Prospectus Supplement.

         "Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Master
Servicer Prepayment Charge Payment Amount).

         "Prepayment Charge Schedule": As of the Cut-off Date, a list attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto),
setting forth the following information with respect to each Prepayment Charge:

                  (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 Prepayment Charge; and

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

                                       38
<PAGE>



         The Prepayment Charge Schedule shall be amended from time to time by
the Master Servicer in accordance with the provisions of this Agreement and a
copy of each related amendment shall be furnished by the Master Servicer to the
NIMS Insurer.

         "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 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 immediately preceding the calendar month in which such
Distribution Date occurs.

         "Prime Rate": The prime rate of United States money center commercial
banks as published in The Wall Street Journal.

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

         "Principal Distribution Amount": With respect to any Distribution Date,
the sum of the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount.

         "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 Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.

         "Prospectus Supplement": That certain Prospectus Supplement dated July
18, 2001 relating to the public offering of the Class A-2 Certificates, the
Class S-2 Certificates and the Mezzanine Certificates.

         "Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01, and as


                                       39
<PAGE>

confirmed by an Officers' Certificate from the Master Servicer to the Trustee,
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 paid by the Mortgagor or by
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 paid by the Mortgagor or by 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 Advances that as
of the date of purchase had been distributed in respect of REO Imputed Interest
pursuant to Section 4.01, (iii) any unreimbursed Servicing Advances, Advances
and Nonrecoverable 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, enforcement expenses
reasonably incurred or to be incurred by the NIMS Insurer, the Master Servicer
or the Trustee in respect of the breach or defect giving rise to the purchase
obligation.

         Notwithstanding the foregoing, if in excess of $31,887,073.21 in
aggregate principal balance of Mortgage Loans have previously been repurchased
(exclusive of any Mortgage Loans purchased by the Master Servicer pursuant to
Section 3.16(c)) or substituted for, then in addition to those requirements set
forth above, the Purchase Price shall include the amount of any related
Prepayment Charge (other than with respect to a Purchase Price paid in
connection with Section 9.01).

         "Qualified Insurer":  Any insurance company acceptable to Freddie Mac.

         "Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate 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, or more than 5.00% less
than, the outstanding 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) if the Qualified
Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a Maximum
Mortgage Rate not greater than the Maximum Mortgage Rate on the Deleted Mortgage
Loan and have a Minimum Mortgage Rate not less than the Minimum

                                       40
<PAGE>

Mortgage Rate of the Deleted Mortgage Loan, (iv) if the Qualified Substitute
Mortgage Loan is an Adjustable Rate Mortgage Loan, have a Gross Margin equal to
or greater than the Gross Margin of the Deleted Mortgage Loan, (v) if the
Qualified Substitute Mortgage Loan is an 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, (vi) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (vii) be current (not delinquent) as of the date of substitution, (viii)
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, (ix) have
a risk grading determined by the Seller at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (x) have been underwritten or
reunderwritten by the Seller in accordance with the same or, as determined by
the Seller, more favorable, underwriting criteria and guidelines as the Deleted
Mortgage Loan, (xi) with respect to Qualified Substituted Mortgage Loans
substituted for Deleted Mortgage Loans that are Group I Mortgage Loans, have had
an original Principal Balance that conformed to Freddie Mac loan limits as of
the date of its origination, (xii) be secured by the same property type as the
Deleted Mortgage Loan, (xiii) have a lien priority the same as or superior to
that of the Deleted Mortgage Loan, (xiv) with respect to Qualified Substitute
Mortgage Loans that are substituted for Group I Mortgage Loans, be otherwise
acceptable to the Guarantor; and (xv) conform to each representation and
warranty set forth in Section 3.01 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 clauses (ii) through (v)
hereof shall be satisfied for each such mortgage loan, the risk gradings
described in clause (ix) hereof shall be satisfied as to each such mortgage
loan, the terms described in clause (vi) hereof shall be determined on the basis
of weighted average remaining term to maturity (provided that no such mortgage
loan may have a remaining term to maturity longer than the Deleted Mortgage
Loan), the Loan-to-Value Ratios described in clause (viii) 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.

         Notwithstanding the foregoing, if in excess of $31,887,073.21 in
aggregate principal balance of Mortgage Loans have previously been repurchased
(exclusive of any Mortgage Loans purchased by the Master Servicer pursuant to
Section 3.16(c)) or substituted for, then in addition to clauses (i) through
(xiii) above, each Qualified Substitute Mortgage Loan shall also have a
Prepayment Charge provision at least as favorable to the Holders of the Class P
Certificates as the Prepayment Charge provisions in the Deleted Mortgage Loan.

         "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 Master Servicer.

                                       41
<PAGE>

         "Realized Loss": With respect to any Liquidated Mortgage Loan, the
amount of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds and Insurance Proceeds
in respect of such Mortgage Loan.

         "Record Date": With respect to (i) the Class A-1F Certificates, the
Class S Certificates, the Class P Certificates, the Class C Certificates, the
Class R Certificates and any Definitive Certificates, the Close of Business on
the last Business Day of the calendar month preceding the month in which the
related Distribution Date occurs and (ii) with respect to the Class A-1V
Certificates, the Class A-2 Certificates and the Mezzanine Certificates, the
Close of Business on the Business Day immediately preceding the related
Distribution Date; provided, however, that following the date on which
Definitive Certificates for a Class A Certificate or a Mezzanine Certificate are
available pursuant to Section 5.02, the Record Date for such Certificates shall
be the last Business Day of the calendar month preceding the month in which the
related Distribution Date occurs.

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

         "Regular Certificate": Any of the Class A Certificates, Class S
Certificates, Mezzanine Certificates, Class C Certificates or Class P
Certificates.

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

         "Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Mortgage
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.

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

         "REMIC 1": 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
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 obligations of the Guarantor to the Holders of the Guaranteed
Certificates under the Guarantee and, (vi) the Collection Account, the
Distribution Account (subject to the last sentence of this definition) and any
REO Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all

                                       42
<PAGE>

income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, a REMIC election will not be made with respect to the
Reserve Fund and Master Servicer Prepayment Charge Payment Amounts.

         "REMIC 1 Regular Interest LT1A-1": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A-1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT1A-2": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A-2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT1B-1": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B-1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT1B-2": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B-2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT1P-1": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1P-1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to any Prepayment Charges relating to the
Group I Mortgage Loans 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 Principal Balance as set forth in the
Preliminary Statement hereto.

         "REMIC 1 Regular Interest LT1P-2": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1P-2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to any Prepayment Charges relating to the
Group II Mortgage Loans collected by the Master Servicer and to a

                                       43
<PAGE>

distribution of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.

          "REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1A-1, REMIC 1
Regular Interest LT1B-1, REMIC 1 Regular Interest LT1P-1, REMIC 1 Regular
Interest LT1A-2 and REMIC 1 Regular Interest LT1B-2, and REMIC 1 Regular
Interest LTIP-2.

         "REMIC 2": The segregated pool of assets consisting of all of the REMIC
1 Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC
3, as holder of the REMIC 2 Regular Interests, and the Class R
Certificateholders, as holders of the Class R-2 Interest, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.

         "REMIC 2 Group I Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
I Mortgage Loans that, pursuant to Section 4.01(d)(ix), is used to increase the
REMIC 2 Overcollateralized Amount 2 on any Group II Loans.

         "REMIC 2 Group II Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
II Mortgage Loans that, pursuant to Section 4.01(d)(ix), is used to increase the
REMIC 2 Overcollateralized Amount 1 on any Group I Loans.

         "REMIC 2 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2
Regular Interest LT2A minus the Marker Rate, divided by (b) 12.

         "REMIC 2 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.

         "REMIC 2 Overcollateralized Amount 1": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest LT2B-1, REMIC 2
Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, REMIC 2 Regular Interest
LT2G-1, and REMIC 2 Regular Interest LT2P-1 minus (ii) the aggregate of the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2B-1, REMIC 2
Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
Interest LT2E-1, and REMIC 2 Regular Interest LT2F-1 in each case as of such
date of determination.

         "REMIC 2 Overcollateralized Amount 2": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2
Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular
Interest LT2E-2, REMIC 2 Regular Interest LT2F-

                                       44
<PAGE>

2, and REMIC 2 Regular Interest LT2P-2 minus (ii) the aggregate of the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2B-2, REMIC 2
Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, and REMIC 2 Regular
Interest LT2E-2 in each case as of such date of determination.

         "REMIC 2 Principal Loss Allocation Amount 1": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC
2 Regular Interest LT2E-1, and REMIC 2 Regular Interest LT2F-1 and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC 2 Regular Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2
Regular Interest LT2D-1, REMIC 2 Regular Interest LT2E-1, REMIC 2 Regular
Interest LT2F-1, and REMIC 2 Regular Interest LT2G-1.

         "REMIC 2 Principal Loss Allocation Amount 2": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC
2 Regular Interest LT2E-2, and REMIC 2 Regular Interest LT2F-2 and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2
Regular Interest LT2D-2, REMIC 2 Regular Interest LT2E-2 and REMIC 2 Regular
Interest LT2F-2.

         "REMIC 2 Regular Interest LT2A-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2A-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2B-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

                                       45
<PAGE>

         "REMIC 2 Regular Interest LT2B-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2C-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2C-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2C-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2C-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2D-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2D-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2D-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2D-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2E-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2E-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2E-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2E-2 shall accrue
interest at the related Uncertificated

                                       46
<PAGE>

REMIC 2 Pass-Through 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 Principal Balance as set
forth in the Preliminary Statement hereto.

         "REMIC 2 Regular Interest LT2F-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2F-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2F-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2F-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2G-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2G-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 2 Regular Interest LT2P-1": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2P-1 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC-1
Regular Interest LT1P-1.

         "REMIC 2 Regular Interest LT2P-2": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2P-2 shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT1P-2.

         "REMIC 2 Regular Interest LT2S-1A": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-1A
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-1B": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in

                                       47
<PAGE>

REMIC 2. REMIC 2 Regular Interest LT2S-1B shall accrue interest at the related
Uncertificated REMIC 2 Pass-Through Rate on its Uncertificated Notional Amount
outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-1C": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-1C
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2A": One of the separate
non-certificated beneficial ownership interests in REMIC 2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2A
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2B": One of the separate
non-certificated beneficial ownership interests in REMIC-2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2B
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interest LT2S-2C": One of the separate
non-certificated beneficial ownership interests in REMIC-2 issued hereunder and
designated as a Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2S-2C
shall accrue interest at the related Uncertificated REMIC 2 Pass-Through Rate on
its Uncertificated Notional Amount outstanding from time to time.

         "REMIC 2 Regular Interests": REMIC 2 Regular Interest LT2A-1, REMIC 2
Regular Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular
Interest LT2D-1, REMIC 2 Regular Interest LT2E-1, REMIC 2 Regular Interest
LT2F-1, REMIC 2 Regular Interest LT2G-1, REMIC 2 Regular Interest LT2P-1, REMIC
2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular
Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular Interest
LT2E-2, REMIC 2 Regular Interest LT2F-2, REMIC 2 Regular Interest LT2P-2, REMIC
2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B, REMIC 2 Regular
Interest LT2S-1C, REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest
LT2S-2B, and REMIC 2 Regular Interest LT2S-2C.

         "REMIC 3": The segregated pool of assets consisting of all of the REMIC
2 Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates, pursuant to Article II hereunder, 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 SubChapter M of

                                       48
<PAGE>

Chapter 1 of the Code, and related provisions, and regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.

         "REMIC Regular Interests": The REMIC 1 Regular Interests and the REMIC
2 Regular Interests.

         "Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.04.

         "Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.

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

         "REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.

         "REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the 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 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 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and 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 the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.

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

         "Reserve Fund": The reserve fund established and maintained pursuant to
Section 3.26.

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<PAGE>

         "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Freddie Mac eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.

         "Residual Certificates":  The Class R Certificates.

         "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, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, any vice president, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Cashier, any assistant cashier, any trust officer or assistant trust
officer, the Controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.

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

         "Seller": Long Beach Mortgage Company, a Delaware corporation, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.

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

         "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations
in connection with a default, delinquencies or other unanticipated event or
where reimbursement is otherwise permitted in accordance with any of the terms
of this Agreement, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Sections 3.01, 3.09, 3.16, and 3.23.

         "Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar

                                       50
<PAGE>

month. 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 Representative": Any officer or employee 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
representatives 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.

         "Startup Day": As defined in 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 Cut-off Date Principal Balance, 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 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 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 Due 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 the Trust Fund, minus the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

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

                                       51
<PAGE>

         "Stepdown Date": The earlier of (a) the Distribution Date in August
2004 and (b) the date on which the aggregate Certificate Principal Balance of
the Class A-1 Certificates and Class A-2 Certificates has been reduced to zero.

         "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 applicable Master Servicer and Trustee.

         "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 Adjustment": An amount equal to the excess of the
Principal Balance of the related Deleted Mortgage Loan over the Principal
Balance of such Qualified Substitute Mortgage Loan that the Seller is required
to deposit in the Collection Account on or prior to the next succeeding
Determination Date in connection with a substitution of a Qualified Substitute
Mortgage Loan.

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

         "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 the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed by the Trustee on behalf of each REMIC, together with any and
all other information reports or returns that may be required to be furnished to
the Certificateholders or filed 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 10.01(a) hereof

         "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.

                                       52
<PAGE>

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

         "Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 50% of the Credit
Enhancement Percentage.

         "Trust": Long Beach Mortgage Loan Trust 2001-2, the trust created
hereunder.

         "Trust Fund": All of the assets of the Trust, which is the trust
created hereunder consisting of REMIC 1, REMIC 2, REMIC 3, the Reserve Fund and
any Master Servicer Prepayment Charge Payment Amounts.

         "Trust REMIC": Any of REMIC 1, REMIC 2 and/or REMIC 3.

         "Trustee": Bankers Trust Company of California, N.A., a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.

         "Trustee Remittance Report": As defined in Section 4.10 of this
Agreement.

         "Uncertificated Accrued Interest": With respect to each REMIC Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated Pass-Through Rate on the Uncertificated Principal
Balance or Uncertificated Notional Amount of such REMIC Regular Interest. In
each case, Uncertificated Accrued Interest will be reduced by any Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls allocated to such REMIC
Regular Interests pursuant to Section 1.03.

         "Uncertificated Notional Amount":

         (a) With respect to REMIC 2 Regular Interest LT2S-1A and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-1 for such Distribution Date;

         (b) With respect to REMIC 2 Regular Interest LT2S-1B and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-1 for such Distribution Date;

         (c) With respect to REMIC 2 Regular Interest LT2S-1C and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-1 for such Distribution Date;

         (d) With respect to REMIC 2 Regular Interest LT2S-2A and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-2 for such Distribution Date;

                                       53
<PAGE>

         (e) With respect to REMIC 2 Regular Interest LT2S-2B and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-2 for such Distribution Date; and

         (f) With respect to REMIC 2 Regular Interest LT2S-2C and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B-2 for such Distribution Date.

         "Uncertificated Pass-Through Rate": The Uncertificated REMIC 1
Pass-Through Rate or the Uncertificated REMIC 2 Pass-Through Rate.

         "Uncertificated Principal Balance": With respect to each REMIC Regular
Interest (other than REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest
LT2S-1B, REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular Interest LT2S-2A,
REMIC 2 Regular Interest LT2S-2B, and REMIC 2 Regular Interest LT2S-2C) the
amount of such REMIC Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC Regular Interest (other than REMIC 2 Regular Interest LT2S-1A, REMIC
2 Regular Interest LT2S-1B and REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular
Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2 Regular Interest
LT2S-2C) shall equal the amount set forth in the Preliminary Statement hereto as
its initial Uncertificated Principal Balance. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC Regular Interest shall be reduced
by all distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Section 4.05 and, if and to the extent necessary
and appropriate, shall be further reduced on such Distribution Date by Realized
Losses as provided in Section 4.06, and the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2G-1 and REMIC 2 Regular Interest LT2F-2 shall be
increased by interest deferrals as provided in Section 4.05. The Uncertificated
Principal Balance of each REMIC Regular Interest that has an Uncertificated
Principal Balance shall never be less than zero. REMIC 2 Regular Interest
LT2S-1A, REMIC 2 Regular Interest LT2S-1B, REMIC 2 Regular Interest LT2S-1C,
REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and REMIC 2
Regular Interest LT2S-2C will not have Uncertificated Principal Balances.

         "Uncertificated REMIC 1 Pass-Through Rate": For any Distribution Date,
for REMIC 1 Regular Interest LT1A-1, REMIC 1 Regular Interest LT1B-1, and REMIC
Regular Interest LT1P-1, a per annum rate equal to the weighted average of the
Adjusted Net Mortgage Rates of the Group I Mortgage Loans, weighted on the basis
of the Stated Principal Balances thereof as of the Due Date preceding the month
of such Distribution Date. For any Distribution Date, for REMIC 1 Regular
Interest LT1A-2, REMIC 1 Regular Interest LT1B-2, and REMIC Regular Interest
LT1P-2, a per annum rate equal to the weighted average of the Adjusted Net
Mortgage Rates of the Group II Mortgage Loans, weighted on the basis of the
Stated Principal Balances thereof as of the Due Date preceding the month of such
Distribution Date.

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<PAGE>

         "Uncertificated REMIC 2 Pass-Through Rate":

         (a) With respect to REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular
Interest LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest
LT2D-1, REMIC 2 Regular Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, REMIC
2 Regular Interest LT2G-1, and REMIC 2 Regular Interest LT2P-1, and any
Distribution Date, a per annum rate equal to the weighted average of (x) the
Uncertificated REMIC 1 Pass-Through Rate with respect to REMIC 1 Regular
Interest LT1A-1 and REMIC 1 Regular Interest LT1P-1 for such Distribution Date
and (y) the excess, if any, of (i) the Uncertificated REMIC 1 Pass-Through Rate
with respect to REMIC 1 Regular Interest LT1B-1 for such Distribution Date over
(ii) 4.5% per annum (in the case of the Distribution Date in August 2001 through
the Distribution Date in May 2002), 3.5% per annum (in the case of the
Distribution Date in June 2002 through the Distribution Date in March 2003),
2.5% per annum (in the case of the Distribution Date in April 2003 through the
Distribution Date in January 2004) or 0.00% per annum (in the case of any
Distribution Date thereafter) weighted on the basis of the Uncertificated
Principal Balance of REMIC 1 Regular Interest LT1A-1, REMIC 1 Regular Interest
LT1P-1, and REMIC 1 Regular Interest LT1B-1, respectively, multiplied by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period;

         (b) With respect to REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular
Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular Interest
LT2D-2, REMIC 2 Regular Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, and
REMIC 2 Regular Interest LT2P-2 and any Distribution Date, a per annum rate
equal to the weighted average of (x) the Uncertificated REMIC 1 Pass-Through
Rate with respect to REMIC 1 Regular Interest LT1A-2 and REMIC 1 Regular
Interest LT1P-2 for such Distribution Date and (y) the excess, if any, of (i)
the Uncertificated REMIC 1 Pass-Through Rate with respect to REMIC 1 Regular
Interest LT1B-2 for such Distribution Date over (ii) 4.5% per annum (in the case
of the Distribution Date in August 2001 through the Distribution Date in May
2002), 3.5% per annum (in the case of the Distribution Date in June 2002 through
the Distribution Date in March 2003), 2.5% per annum (in the case of the
Distribution Date in April 2003 through the Distribution Date in January 2004)
or 0.00% per annum (in the case of any Distribution Date thereafter) weighted on
the basis of the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1A-2, REMIC 1 Regular Interest LT1P-2, and REMIC 1 Regular Interest LT1B-2,
respectively, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period;

         (c) With respect to REMIC 2 Regular Interest LT2S-1A and any
Distribution Date from the Distribution Date in August 2001 through the
Distribution Date in January 2004, 2.50% per annum; with respect to REMIC 2
Regular Interest LT2S-1A and any Distribution Date thereafter, 0.00% per annum;

         (d) With respect to REMIC 2 Regular Interest LT2S-1B and any
Distribution Date from the Distribution Date in April 2001 through the
Distribution Date in March 2003, 1.00% per annum; with respect to REMIC 2
Regular Interest LT2S-1B and any Distribution Date thereafter, 0.00% per annum;

                                       55
<PAGE>

         (e) With respect to REMIC 2 Regular Interest LT2S-1C and any
Distribution Date from the Distribution Date in April 2001 through the
Distribution Date in May 2002, 1.00% per annum; with respect to REMIC 2 Regular
Interest LT2S-1C and any Distribution Date thereafter, 0.00% per annum.

         (f) With respect to REMIC 2 Regular Interest LT2S-2A and any
Distribution Date from the Distribution Date in August 2001 through the
Distribution Date in January 2004, 2.50% per annum; with respect to REMIC 2
Regular Interest LT2S S-2A and any Distribution Date thereafter, 0.00% per
annum;

         (g) With respect to REMIC 2 Regular Interest LT2S-2B and any
Distribution Date from the Distribution Date in August 2001 through the
Distribution Date in March 2003, 1.00% per annum; with respect to REMIC 2
Regular Interest LT2S-2B and any Distribution Date thereafter, 0.00% per annum;
and

         (h) With respect to REMIC 2 Regular Interest LT2S-2C and any
Distribution Date from the Distribution Date in August 2001 through the
Distribution Date in May 2002, 1.00% per annum; with respect to REMIC 2 Regular
Interest LT2S-2C and any Distribution Date thereafter, 0.00% per annum.

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

         "United States Person" or "U.S. Person": (i) A citizen or resident of
the United States; (ii) a corporation, partnership or other entity classified as
a corporation or partnership for tax purposes created or organized in, or under
the laws of, the United States or any political subdivision thereof (except, in
the case of a partnership or entity treated as a partnership, to the extent
provided in regulations) provided that, solely for purposes of the restrictions
on the transfer of the Class R Certificates, no partnership or other entity
treated as a partnership shall be treated as a United States Person unless all
persons that own an interest in such partnership or other entity, 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; (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States Persons have the
authority to control all substantial decisions of the trust or if the trust was
in existence on August 20, 1996, was treated as a United States Person on August
19, 1996, and made a valid election to continue to be treated as a United States
Person. The term "United States" shall have the meaning set forth in Section
7701 of the Code or successor provisions.

         "Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates, the Class S Certificates and the Mezzanine Certificates and (i)
the first Distribution Date, zero, and (ii) any Distribution Date after the
first Distribution Date, the amount, if any, by which (a) the sum of (1) the
Monthly Interest Distributable Amount for such Class for the immediately
preceding

                                       56
<PAGE>

Distribution Date and (2) the outstanding Unpaid Interest Shortfall Amount, if
any, for such Class for such preceding Distribution Date exceeds (b) the
aggregate amount distributed on such Class in respect of interest pursuant to
clause (a) of this definition on such preceding Distribution Date, plus interest
on the amount of interest due but not paid on the Certificates of such Class on
such preceding Distribution Date, to the extent permitted by law, at the
Pass-Through Rate for such Class for the related Accrual Period.

         "Value": With respect to any Mortgaged Property, the lesser of (i) 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 Freddie Mac, and (ii) the purchase price
paid for the related Mortgaged Property by the Mortgagor with the proceeds of
the Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon 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 Freddie Mac.

         "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
97% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class S Certificates shall have 1% of the Voting
Rights, the Class P Certificates shall have 1% of the Voting Rights and the
Class R Certificates shall have 1% of the Voting Rights. The Voting Rights
allocated to any Class of Certificates (other than the Class P Certificates and
the Class R Certificates) shall be allocated among all Holders of each such
Class in proportion to the outstanding Certificate Principal Balance or Notional
Amount of such Certificates and the Voting Rights allocated to the Class P
Certificates and the Class R Certificates shall be allocated among all Holders
of each such Class in proportion to such Holders' respective Percentage
Interest; provided, however, that when none of the Regular Certificates are
outstanding, 100% of the Voting Rights shall be allocated among Holders of the
Class R Certificates in accordance with such Holders' respective Percentage
Interests in the Certificates of such Class. Notwithstanding any of the
foregoing, on any date on which any Guaranteed Certificates are outstanding or
any amounts are owed the Guarantor under this Agreement, all of the Voting
Rights allocated to the Guaranteed Certificates shall be vested in the
Guarantor.

Section 1.02 Accounting.

         Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.

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<PAGE>

Section 1.03 Allocation of Certain Interest Shortfalls.

         For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Class S Certificates, the
Mezzanine Certificates and the Class C Certificates for any Distribution Date,
(1) the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, among the Class C Certificates on a
pro rata basis based on, and to the extent of, one month's interest at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Class S Certificates and
the Mezzanine Certificates on a pro rata basis based on, and to the extent of,
interest for the related Accrual Period at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance or Notional
Amount 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 C Certificates on a pro rata basis based on,
and to the extent of, interest for the related Accrual Period at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 1 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first pro rata to REMIC 1 Regular Interest
LT1A-1 and REMIC 1 Regular Interest LT1A-2 and then pro rata to REMIC 1 Regular
Interest LT1B-1 and REMIC 1 Regular Interest LTB-2, in each case to the extent
of interest for the related Accrual Period at the then applicable respective
Uncertificated REMIC 1 Pass-Through Rate on the respective Uncertificated
Principal Balance of each such Uncertificated REMIC 1 Regular Interest.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 2 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, pro rata to (i) REMIC 2 Regular
Interest LT2A-1 and REMIC 2 Regular Interest LT2G-1 and (ii) REMIC 2 Regular
Interest LT2A-2 and REMIC 2 Regular Interest LT2F-2, up to an aggregate amount
equal to the REMIC 2 Interest Loss Allocation Amount, with allocations between
REMIC 2 Regular Interest LT2A-1 and REMIC 2 Regular Interest LT2G-1 being made
98% and 2%, respectively, and allocations between REMIC 2 Regular Interest
LT2A-2 and REMIC 2 Regular Interest LT2F-2 being made 98% and 2%, respectively.
Thereafter, Net Prepayment Interest Shortfalls and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated pro rata among REMIC 2 Regular Interest LT2A-1, REMIC 2
Regular Interest LT2A-2, REMIC 2 Regular Interest LT2B-1, REMIC 2 Regular
Interest LT2B-2, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest
LT2C-2, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular Interest LT2D-2, REMIC
2 Regular Interest LT2E-1, REMIC 2 Regular Interest LT2E-2, REMIC 2 Regular
Interest LT2F-1, REMIC 2 Regular Interest LT2F-2, REMIC 2 Regular Interest
LT2G-1, REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular

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<PAGE>

Interest LT2S-1B, REMIC 2 Regular Interest LT2S-1C, REMIC 2 Regular Interest
LT2S-2A, REMIC 2 Regular Interest LT2S-2B, and REMIC 2 Regular Interest LT2S-2C.

         For purposes of the preceding two paragraphs, pro rata allocations
shall be based on interest for the related Accrual Period at the then applicable
respective Uncertificated REMIC 2 Pass-Through Rate or Uncertificated REMIC 1
Pass-Through Rate on the respective Uncertificated Principal Balance or
Uncertificated Notional Amount of each such Uncertificated REMIC 2 Regular
Interest or Uncertificated REMIC 1 Regular Interest.

Section 1.04 Rights of the NIMS Insurer and the Guarantor.

         (a) Each of the rights of the NIMS Insurer set forth in this Agreement
shall exist so long as the notes issued pursuant to the Indenture remain
outstanding or, subject to paragraph (b) of this Section 1.04, the NIMS Insurer
is owed amounts in respect of its guarantee of payment on such notes; provided,
however, the NIMS Insurer shall not have any rights hereunder (except as
provided in Section 9.01) so long as any default has occurred and is continuing
under the insurance policy issued by the NIMS Insurer with respect to such
notes.

         (b) If and when (i) no notes issued pursuant to the Indenture remain
outstanding, (ii) any Guaranteed Certificates remain outstanding and (iii) no
default under the Guarantee shall have occurred and be continuing, the Guarantor
shall be entitled to exercise the rights of the NIMS Insurer set forth in this
Agreement provided, however, that if the NIMS Insurer is still owed any amounts
in respect of its guarantee of payment on such notes, the Guarantor shall be
entitled to exercise the rights of the NIMS Insurer after obtaining the consent
of the NIMS Insurer.

         (c) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the Guarantor hereunder, except rights to
indemnification, shall permanently terminate upon the later to occur of (A) such
time as the Guaranteed Certificates shall no longer be outstanding and (B) the
payment in full to the Guarantor of any amounts owed to the Guarantor as
provided in this Agreement.

         (d) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights and benefits of the NIMS Insurer hereunder shall
permanently terminate upon the later to occur of (A) such time as the NIM Notes
shall no longer be outstanding and (B) the payment in full to the NIMS Insurer
of any amounts owed to the NIMS Insurer as provided in this Agreement.

         (e) The rights of the NIMS Insurer or Guarantor referenced in Sections
3.02(a), 3.03, 6.04, 7.02(a), 7.04 and 8.07 of this Agreement shall be applied
as follows:

   (i)   In the event that the Class M-1 Certificates are rated at least "AA"
         (in the case of Fitch and/or S&P) or "Aa2" (in the case of Moody's),
         the NIMS Insurer shall have the right to act, after consultation with
         the Guarantor;

   (ii)  In the event that (x) the rating of the Class M-1 Certificates is
         reduced by two of the three Rating Agencies to less than "AA" or "Aa2"
         and (y) the Class M-2 Certificates and the Class M-3 Certificates have
         an aggregate Certificate Principal Balance greater than zero and/or the
         Overcollateralized Amount is greater than zero, the NIMS Insurer and
         the Guarantor each shall have the right

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         to act, upon the receipt of the reasonable consent of the other; and

   (iii) In the event that (x) the rating of the Class M-1 Certificates is
         reduced by two of the three Rating Agencies to less than "AA" or "Aa2"
         and (y) the Class M-2 Certificates and the Class M-3 Certificates have
         no aggregate Certificate Principal Balance and the Overcollateralized
         Amount is equal to zero, the Guarantor shall have the sole right to
         act.

The NIMS Insurer and the Guarantor shall promptly consult each other with regard
to the rights referred to in this sub-section. If this consultation would create
a delay that would have a material adverse effect on this Agreement, each party
may act individually with respect to their rights and consult with the other
party after such action has been taken. Any consents required between the NIMS
Insurer and the Guarantor shall not be unreasonably withheld or delayed.

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                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01 Conveyance of 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 Original Mortgage Loans identified on
the Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan
Purchase Agreement (other than the Depositor's rights under Section 17 thereof),
and all other assets included or to be included in REMIC 1. Such assignment
includes all interest and principal received by the Depositor or the Master
Servicer on or with respect to the Original 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.

         If the assignment and transfer of the Original Mortgage Loans and the
other property specified in Section 2.01 from the Depositor to the Trustee
pursuant to this Agreement is held or deemed not to be a sale or is held or
deemed to be a pledge of security for a loan, the Depositor intends that the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement and that, in such event, (i) the Depositor shall be deemed to
have granted and does hereby grant to the Trustee as of the Closing Date a
perfected, first priority security interest in the entire right, title and
interest of the Depositor in and to the Original Mortgage Loans and all other
property conveyed to the Trust Fund pursuant to this Section 2.01 and all
proceeds thereof and (ii) this Agreement shall constitute a security agreement
under applicable law.

         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 Original Mortgage Loan so transferred and
assigned (each, a "Mortgage File"):

              (a) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Bankers Trust Company of California, N.A.,
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 or (in the case of not more
than 1.00% of the Mortgage Loans, by aggregate principal balance as of the
Cut-off Date) a copy of such original Mortgage Note with an accompanying Lost
Note Affidavit executed by the Seller;

              (b) the original Mortgage with evidence of recording thereon, and
a copy, certified by the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;

              (c) an original Assignment in blank;

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              (d) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person assigning the
Mortgage to the Trustee or in blank;

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

              (f) the original lender's title insurance policy, together with
all endorsements or riders 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 Master Servicer, in its capacity as Seller, shall promptly (and in
no event later than thirty (30) Business Days, subject to extension upon a
mutual agreement between the Master Servicer and the Trustee), following the
later of the Closing Date and the date of receipt by the Master Servicer of the
recording information for a Mortgage 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(c) and (d) above and shall execute each original Assignment
referred to in clause (c) above in the following form: "Bankers Trust Company of
California, N.A., as Trustee under the applicable agreement, without recourse."
In the event that any such Assignment is lost or returned unrecorded because of
a defect therein, the Master Servicer, in its capacity as 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. Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be completed and submitted for recording
with respect to any Mortgage Loan if either (x) the Trustee, the NIMS Insurer
and each Rating Agency has received an opinion of counsel, reasonably
satisfactory to the Trustee, the NIMS Insurer, the Guarantor and each Rating
Agency, to the effect that the recordation of such Assignments in any specific
jurisdiction is not necessary to protect the Trust's interest in the related
Mortgage Note or (y) each Rating Agency shall have determined that no such
opinion is required in order for such Rating Agency to assign the initial
ratings to the Class A Certificates, the Class S Certificates, the Mezzanine
Certificates and the NIM Notes; provided further, however, notwithstanding the
delivery of any opinion of counsel, each Assignment shall be submitted for
recording by the Master Servicer, in its capacity as 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 Default, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Seller, (iv) the occurrence of a servicing transfer
as described in Section 7.02 hereof and (iv) if the Seller is not the Master
Servicer and with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.
Notwithstanding the foregoing, if the Master Servicer 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.

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<PAGE>

         If any of the documents referred to in Sections 2.01(b), (c) or (d)
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 Seller 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 Seller, delivery to the Trustee promptly upon receipt thereof, and in any
event no later than one year after the Closing Date, 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. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(f) above, the
Depositor shall deliver or cause to be delivered to the Trustee promptly after
receipt thereof, and in any event within 120 days after the Closing Date, the
original lender's title insurance policy. The Depositor shall deliver or cause
to be delivered to the Trustee promptly upon receipt thereof any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Loan.

         All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by 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 1 by the Trustee.

         Subject to the provisions of Section 2.01 and subject to any exceptions
noted on the exception report described in the next paragraph below, the Trustee
acknowledges receipt of the documents referred to in Section 2.01 above and all
other assets included in the definition of "REMIC 1" under clauses (i), (iii)
and (iv) (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 the Mortgage File, all such assets and such other
assets included in the definition of "REMIC 1" and 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 to the
Guarantor, the NIMS Insurer, the Depositor and the Master Servicer in
substantially the form attached hereto as Exhibit F-1 that, as to each Original
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Original
Mortgage Loan paid in full or any Original 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(e))

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<PAGE>

required to be delivered to it pursuant to this Agreement are in its possession,
(ii) such documents have been reviewed by the Trustee and are not mutilated,
torn or defaced unless initialed by the related borrower and relate to such
Original Mortgage Loan and (iii) based on the Trustee's examination and only as
to the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (vi), (ix), (xii) (xiv) (to the extent of the
Periodic Rate Cap for the first Adjustment Date and subsequent Adjustment Dates)
and (xvi) of the definition of "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. It is herein acknowledged that, in
conducting such review, the Trustee was under no duty or obligation (i) to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine whether they are genuine, enforceable, or appropriate
for the represented purpose (including with respect to Section 2.01(f), whether
such title insurance policy (a) contains all necessary endorsements, (b) insures
the priority of the Mortgage as a first lien or (c) whether the interest vested
in the Mortgagor is a fee interest) 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 (e) of Section 2.01.

         Prior to the first anniversary date of this Agreement, the Trustee
shall deliver to the Depositor, the Master Servicer, the Guarantor and the NIM
Insurer a final certification in the form annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.

         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 Seller, the NIMS Insurer, the
Guarantor and the Master Servicer. In addition, upon the discovery by the
Depositor, the Master Servicer, the Guarantor 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 and
adversely affects the value of such Original Mortgage Loan or the interests of
the related Certificateholders in such Original Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties.

Section 2.03 Cure, Repurchase or Substitution of Mortgage Loans by the Seller;
Remedies for Breaches by Depositor or Master Servicer; Remedies for Breaches
Relating to Prepayment Charges.

              (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, the 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 which
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such representation or
warranty made to the knowledge or the best of knowledge of the Seller, as to
which the Seller has no knowledge, without regard to the Seller's lack of
knowledge with respect to the substance of such representation or warranty being
inaccurate at the time it was made), the Trustee shall

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<PAGE>

promptly notify the Depositor, the Seller, the NIMS Insurer, the Guarantor 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 90
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 (or, in accordance with Section 3.02(b), the Trustee) shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to
repurchase such Mortgage Loan from REMIC 1 at the Purchase Price within 90 days
after the date on which the Seller was notified (subject to Section 2.03(e)) 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 deposited 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 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, and 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 1 (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(d). 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 Certificateholders
or the Trustee on behalf of the Certificateholders.

              (b) Within 90 days of the earlier of discovery by the Depositor or
receipt of notice by the Depositor of the breach of any representation or
warranty of the Depositor set forth in Section 2.05 with respect to any Mortgage
Loan, which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Depositor shall cure such breach
in all material respects.

              (c) As promptly as practicable (and no later than 90 days) after
the earlier of discovery by the Master Servicer or receipt of notice by the
Master Servicer of the breach of any representation, warranty or covenant of the
Master Servicer set forth in Section 2.04 which materially and adversely affects
the value of any Mortgage Loan or the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.

         Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.04(a)(vii) or
(viii) which materially and adversely affects the interests of the Holders of
the Class P Certificates to any Prepayment Charge, the Master Servicer shall
cure such breach in all material respects. If the representation made by the
Master

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<PAGE>

Servicer in its capacity as Seller in Section 2.04(a)(vii) is breached, the
Master Servicer in its capacity as Seller shall pay into the Collection Account
the amount of the scheduled Prepayment Charge, less any amount previously
collected and deposited by, or paid by, the Master Servicer into the Collection
Account; and if the covenant made by the Master Servicer in Section
2.04(a)(viii) is breached, the Master Servicer shall pay into the Collection
Account the amount of the waived Prepayment Charge.

              (d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) shall be effected prior
to the date which is two years after the Startup Date for REMIC 1.

         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, review such documents as specified in
Section 2.02 and deliver to the Depositor, the Master Servicer, the Guarantor
and the NIMS Insurer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit F-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor, the Seller, the NIMS
Insurer, the Guarantor and the Master Servicer a certification substantially in
the form of Exhibit F-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 1 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
Trustee shall give or cause to be given written notice to the NIMS Insurer, the
Guarantor and the Certificateholders that such substitution has taken place, and
the Master Servicer shall amend or cause to be amended 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
NIMS Insurer, the Guarantor and 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 as of the date of substitution.

         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

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<PAGE>

(the "Substitution Shortfall Amount"), if any, by which the aggregate Purchase
Price of all such Deleted Mortgage Loans exceeds the aggregate of, as to each
such Qualified Substitute Mortgage Loan, the Stated Principal Balance thereof as
of the date of substitution, together with one month's interest on such Stated
Principal Balance at the applicable Net Mortgage Rate, plus all outstanding
Advances and Servicing Advances. 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 Depositor or the Seller, as the case may be, the related Mortgage File or
Files and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Depositor or the Seller, as
the case may be, shall deliver to it and as shall be necessary to vest therein
any Deleted Mortgage Loan released pursuant hereto.

         In addition, the Master Servicer in its capacity as Seller shall obtain
at its own expense and deliver to the NIMS Insurer, the Guarantor and the
Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on any of REMIC 1, created hereunder,
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
hereunder to fail to qualify as a REMIC at any time that any Certificate is
outstanding.

              (e) 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 Master Servicer in its
capacity as Seller shall repurchase or, subject to the limitations set forth in
Section 2.03(d), 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 Representations, Warranties and Covenants of the Master Servicer.

              (a) The Master Servicer hereby represents, warrants and covenants
to the Trustee, for the benefit of the Trustee and 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,
validly existing and in good standing under the laws of the state of its
incorporation, is duly authorized and qualified to transact any and all business
contemplated by this Agreement and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in the states where the Mortgaged Properties are located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the

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

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

                   (v) 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;

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                   (vi) 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 the Master Servicer 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;

                   (vii) The information set forth in the Prepayment Charge
Schedule is complete, true and correct in all material respects at the date or
dates respecting which such information is furnished and each Prepayment Charge
is permissible and enforceable in accordance with its terms under applicable law
upon the Mortgagor's full and voluntary principal prepayment (except to the
extent that: (1) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or (2) the collectibility thereof may be limited due
to acceleration in connection with a foreclosure or other involuntary
prepayment; provided that the representation, warranty and covenant contained in
this clause (vii) is made by the Master Servicer only in its capacity as Seller;
and

                   (viii) The Master Servicer will not waive any Prepayment
Charge or part of a Prepayment Charge unless such waiver is related to a default
or a reasonably foreseeable default and would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in servicing mortgage loans
similar to the Mortgage Loans (including any waiver of a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is related to a default or
a reasonably foreseeable default).

                   (ix) For each Mortgage Loan, the Master Servicer will
accurately, fully and in a timely manner report its borrower credit files to
each of Equifax, Transunion, and Experian (the "Credit Repositories").

              (b) It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 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, Prepayment Charge or the
interests therein of the Certificateholders, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other of such parties. The obligation of the
Master Servicer set forth in Section 2.03(c) to cure breaches (or, in the case
of (a)(vii) or (a)(viii) above, to pay a Master Servicer Prepayment Charge
Payment Amount) shall constitute the sole remedy against the Master Servicer
available to the Certificateholders, the Depositor, the Guarantor, or the
Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.04. The
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor

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or the Trustee on behalf of the Certificateholders, (i) pursuant to the Mortgage
Loan Purchase Agreement signed by the Master Servicer in its capacity as Seller,
respecting a breach of the representations, warranties and covenants of the
Master Servicer in its capacity as Seller contained in the Mortgage Loan
Purchase Agreement or (ii) pursuant to Section 7.01 hereof.

Section 2.05 Representations and Warranties of the Depositor.

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

              (i) Each of this agreement and the Mortgage Loan Purchase
Agreement constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general an except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);

              (ii) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had
good and marketable title to each Mortgage Loan subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;

              (iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on behalf of the
Trust;

              (iv) The Depositor is solvent and will not be made insolvent by
the transfer of the Mortgage Loans. The Depositor has not transferred the
Mortgage Loans to the Trustee with any intent to hinder, delay or defraud any of
its creditors;

              (v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business as
presently being conducted;

              (vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;

              (vii) The execution, delivery and performance of this Agreement
and the Mortgage Loan Purchase Agreement by the Depositor, and the consummation
of the transactions contemplated hereby and thereby, do not and will not result
in a material breach or

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<PAGE>

violation of any of the terms or provisions of, or, to the knowledge of the
Depositor, constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property or
assets of the Depositor is subject, nor will such actions result in any
violation of the provisions of the articles of incorporation or by-laws of the
Depositor or, to the best of the Depositor's knowledge without independent
investigation, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets (except for such conflicts, breaches, violations and
defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement or the Mortgage Loan
Purchase Agreement);

              (viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body of the United States or any other jurisdiction is required for the issuance
of the Certificates, or the consummation by the Depositor of the other
transactions contemplated by this Agreement or the Mortgage Loan Purchase
Agreement, except such consents, approvals, authorizations, registrations or
qualifications as (a) may be required under State securities or blue sky laws,
(b) have been previously obtained or (c) the failure of which to obtain would
not have a material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement;

              (ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of which any of
its properties is the subject: (a) which if determined adversely to the
Depositor would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting the invalidity
of this Agreement, the Mortgage Loan Purchase Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by this Agreement or the
Mortgage Loan Purchase Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement; and

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

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Section 2.06 Issuance of Certificates.

         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 Sections
2.01 and 2.02, together with the assignment to it of all other assets included
in the Trust Fund, 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 written order of the
Depositor, the Certificates in authorized denominations. The interests evidenced
by the Certificates constitute the entire beneficial ownership interest in the
Trust Fund.

Section 2.07 Conveyance of REMIC Regular Interests and Acceptance of REMIC 1 by
the Trustee; Issuance of Certificates.

              (a) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey in trust to
the Trustee without recourse all the right, title and interest of the Depositor
in and to the REMIC 1 Regular Interests for the benefit of the holders of the
REMIC 2 Regular Interests and the Class R-1 Interest. The Trustee acknowledges
receipt of the REMIC 1 Regular Interests (which are uncertificated) and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of the holders of the REMIC 2 Regular Interests and the Class R-1 Interest. The
interests evidenced by the Class R-2 Interest, together with the REMIC 2 Regular
Interests, constitute the entire beneficial ownership interest in REMIC 2.

              (b) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey in trust to
the Trustee without recourse all the right, title and interest of the Depositor
in and to the REMIC 2 Regular Interests for the benefit of the holders of the
Certificates. The Trustee acknowledges receipt of the REMIC 2 Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the Certificates. The
interests evidenced by the Class R-3 Interest, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC 3.

              (c) In exchange for the REMIC 2 Regular Interests and,
concurrently with the assignment to the Trustee thereof, 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 Regular Certificates in authorized denominations evidencing (together with
the Class R-3 Interest) the entire beneficial ownership interest in REMIC 3.

              (d) Concurrently with (i) the assignment and delivery to the
Trustee of REMIC 1 (including the Residual Interest therein represented by the
Class R-1 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.01, Section 2.02 and Section 2.07(a), (ii) the assignment and delivery
to the Trustee of REMIC 2 (including the Residual Interest therein represented
by the Class R-2 Interest) and the acceptance by the Trustee thereof, pursuant
to Section 2.07(b), and the assignment and delivery to the Trustee of REMIC 3
(including the Residual Interest therein represented by the Class R-3 Interest)
and the acceptance by the Trustee

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<PAGE>

thereof, pursuant to Section 2.09(c), 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 authorized denominations evidencing the Class R-1 Interest, the
Class R-2 Interest and the Class R-3 Interest.

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                                  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 Trustee 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;

              (ii) the Master Servicer's obligation to make 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 shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the 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 in accordance with
policies and procedures generally accepted in the mortgage banking industry.
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 Certificateholders and the Trustee, and upon 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

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<PAGE>

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 such documents
as are necessary or appropriate to enable the Master Servicer or any
Sub-Servicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Master Servicer a power of attorney to
carry out such duties including a power of attorney to take title to Mortgaged
Properties after foreclosure on behalf of the Trustee and the
Certificateholders. The Trustee shall execute a separate power of attorney in
favor of the Master Servicer for the purposes described herein to the extent
necessary or desirable to enable the Master Servicer to perform its duties
hereunder. 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 collections on the related
Mortgage Loans 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 4.04) 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 final, temporary or proposed Treasury 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.

         For each Mortgage Loan, the Master Servicer will accurately and fully
report its borrower credit files to each of the Credit Repositories in a timely
manner.

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<PAGE>

Section 3.02 Sub-Servicing Agreements Between the Master Servicer and
Sub-Servicers.

              (a) The Master Servicer may enter into Sub-Servicing Agreements
provided (i) that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the ratings on any Class of Certificates or
the NIM Notes, as evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor, the Guarantor and the NIMS Insurer and (ii) that,
except in the case of any Sub-Servicing Agreements the Master Servicer may enter
into with Washington Mutual, Inc. or any Affiliate thereof, the NIMS Insurer or
the Guarantor as provided in Section 1.04 shall have consented to such
Sub-Servicing Agreements (which consent shall not be unreasonably withheld) with
Sub-Servicers, for the servicing and administration of the Mortgage Loans. The
Trustee is hereby authorized to acknowledge, at the request of the Master
Servicer, any Sub-Servicing Agreement that 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 in which 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, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
are insured by the FDIC and (iii) a Freddie Mac approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08. 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. 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 NIMS Insurer, the Guarantor and the Trustee copies
of all Sub-Servicing Agreements, and any amendments or modifications thereof,
promptly upon the Master Servicer's execution and delivery of such instruments.

              (b) As part of its servicing activities hereunder, the Master
Servicer (except as otherwise provided in the last sentence of this paragraph),
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related Sub-Servicing Agreement and,
subject to the last sentence of this paragraph, of the Seller under the Mortgage
Loan Purchase Agreement, including, without limitation, any obligation to make

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<PAGE>

advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or to purchase or otherwise remedy as contemplated herein 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 shall be
effected by the Master Servicer to the extent it is not the Seller, and
otherwise by the Trustee, in accordance with the foregoing provisions of this
paragraph.

              (c) For so long as the Master Servicer is Long Beach Mortgage
Company, the Master Servicer shall maintain in place a Sub-Servicing Agreement
meeting the requirements set forth herein (including, without limitation, the
requirements set forth in Section 3.02(a) above) with a Sub-Servicer that meets
the eligibility requirements set forth in Section 3.02(b) above with respect to
the Mortgage Loans.

Section 3.03 Successor Sub-Servicers.

         The Master Servicer, with the written consent of the NIMS Insurer or
Guarantor as provided in Section 1.04 and subject to Section 3.02(c), 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. After no NIM Notes are
outstanding and the NIMS Insurer is not owed any amounts in respect of its
guarantee of payment on such notes, the Guarantor (as well as the Master
Servicer) shall have the right to terminate any Sub-Servicing Agreement and the
rights and obligations of any Sub-Servicer in accordance with the terms and
conditions of the Sub-Servicing Agreement without fee. In the event of
termination of any Sub-Servicer, all servicing obligations of such Sub-Servicer,
subject to Section 3.02(c), 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, subject to Section 3.02(c),
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 without fee, in
accordance with the terms of this Agreement, and the Trustee shall so terminate
such Sub-Servicing Agreement at the direction of the NIMS Insurer or the
Guarantor, in the event that the Master Servicer (or the Trustee, if 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).

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Section 3.04 Liability of the Master Servicer.

         Notwithstanding any Sub-Servicing Agreement, any of 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 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 and no such indemnification shall be an expense of the Trust.

Section 3.05 No Contractual Relationship Between Sub-Servicers and the Trustee
or 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, the NIMS Insurer 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 and such fees shall not be an expense of the Trust.

Section 3.06 Assumption or Termination of Sub-Servicing Agreements by 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 or its designee 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 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 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.

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<PAGE>

         The Master Servicer at its own expense and without reimbursement 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.

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 that any extension pursuant to this clause (ii)
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 4.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section 4.04(d)
pursuant to which the Master Servicer shall not be required to make any such
advances that are Nonrecoverable Advances. 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; provided, that in the judgment of the Master
Servicer, any such modification, waiver or amendment could reasonably be
expected to result in collections and other recoveries in respect of such
Mortgage Loans in excess of Net Liquidation Proceeds that would be recovered
upon the foreclosure of, or other realization upon, such Mortgage Loan; and,
provided further, that the NIMS Insurer's prior written consent shall be
required for any modification, waiver or amendment if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans as of the Cut-off Date.

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 shall 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 be
entitled "Bankers Trust Company of California, N.A., as Trustee,

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in trust for registered Holders of Long Beach Mortgage Loan Trust 2001-2,
Asset-Backed Certificates, Series 2001-2. The Sub-Servicer shall be required to
deposit in the clearing account (which account must be an Eligible Account) in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and in
no event more than one Business Day after the 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 deposit of such funds into the clearing
account. The Sub-Servicer shall thereafter be required to 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 maintained, one or more accounts (the "Servicing Accounts").
Servicing Accounts shall be Eligible Accounts. The Master Servicer shall deposit
in the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Master Servicer's receipt thereof, 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") 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 deposit of
such funds in the clearing account, for the purpose of effecting the payment of
any such items as required under the terms of this Agreement. Withdrawals of
amounts from a Servicing Account may be made only to (i) effect payment of
taxes, assessments, hazard insurance premiums, and comparable items; (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; (v) clear
and terminate the Servicing Account upon the termination of the Master
Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX or (vi) recover amounts
deposited in error. As part of its servicing duties, the Master Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow Payments, the Master Servicer shall
determine whether any such payments are made by the Mortgagor in a manner and at
a time that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Master Servicer assumes full responsibility for
the payment of all such bills within such time and shall

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effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments; provided,
however, that such advances shall constitute Servicing Advances.

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

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

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

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

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

              (v) any amounts required to be deposited by the 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 and all
         Master Servicer Prepayment Charge Payment Amounts required to be
         deposited in the Collection Account pursuant to Section 2.03;

              (vii) all Substitution Shortfall Amounts; and

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              (viii) all Prepayment Charges collected by the Master Servicer.

         For purposes of the immediately preceding sentence, the Cut-off Date
with respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.

         The foregoing requirements for deposit in the Collection Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges
(other than Prepayment Charges) need not be deposited by the Master Servicer in
the Collection Account and shall, upon collection, belong to the Master Servicer
as additional compensation for its servicing activities. 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 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 on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date, (i) that portion of the Available Funds (calculated without
regard to the references in 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, the amount of all Prepayment Charges on
the Prepayment Charge Schedule collected by the Master Servicer in connection
with any of the Mortgage Loans and any Master Servicer Prepayment Charge Payment
Amounts then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advancing Person pursuant to Section 3.27 and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Master Servicer shall,
on or before 3:00 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 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 NIMS
Insurer, the Trustee, the Guarantor and the Depositor 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 NIMS Insurer, the Master Servicer,
the Guarantor and the Depositor of the location of the Distribution Account when
established and prior to any change thereof.

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              (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 that
the Trustee withdraw, and the Trustee shall withdraw, such amount from the
Distribution Account and remit to the Master Servicer 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 Advances, as required pursuant to Section 4.04, unless
         delivered directly to the Trustee by an Advancing Person;

              (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 by the Master Servicer in connection
         with a purchase of Mortgage Loans and REO Properties pursuant to
         Section 9.01;

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

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

              (e) Promptly upon receipt of any Stayed Funds, whether from the
Master Servicer, a trustee in bankruptcy, federal bankruptcy court or other
source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder.

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 4.04, without priority:

              (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 Advances, but only to the extent of amounts received which
         represent Late Collections (net of the related Servicing Fees) of
         Monthly Payments on the related Mortgage Loans in accordance with the
         provisions of Section 4.04;

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              (iii) subject to Section 3.16(d), to pay the Master Servicer or
         any Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed
         Servicing Advances with respect to each Mortgage Loan, but only to the
         extent of any Late Collections, Liquidation Proceeds, Insurance
         Proceeds or other amounts as may be collected by the Master Servicer
         from a Mortgagor, or otherwise received with respect to such Mortgage
         Loan;

              (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 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 Advance or Servicing
         Advance previously made which the Master Servicer has determined to be
         a Nonrecoverable Advance in accordance with the provisions of Section
         4.04;

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

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

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

         The Master Servicer shall keep and maintain separate accounting, on an
individual Mortgage Loan basis, for the purpose of justifying any withdrawal
from the Collection Account, to the extent held by or on behalf of it, pursuant
to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The Master Servicer
shall provide written notification to the NIMS Insurer, the Guarantor and the
Trustee, on or prior to the next succeeding Master Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclause
(vii) above.

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

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              (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 to pay any other Extraordinary Trust Fund Expenses;

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

              (iv) to reimburse itself pursuant to Section 7.02 or pursuant to
         Section 7.01 to the extent such amounts in Section 7.01 were not
         reimbursed by the Master Servicer;

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

              (vi) to remit to the Master Servicer any amount deposited in the
         Distribution Account by the Master Servicer but not required to be
         deposited therein in accordance with Section 3.10(d);

              (vii) to pay to an Advancing Person reimbursements for Advances
         and/or Servicing Advances pursuant to Section 3.27; and

              (viii) 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 and any REO Account (for purposes of this
Section 3.12, an "Investment Account"), and the Trustee, in its individual
capacity, may direct any depository institution maintaining the Distribution
Account, (for purposes of this Section 3.12, the Distribution Account is also 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. 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 (in its capacity as such), or in the name of
a nominee of the Trustee. The Trustee shall be entitled to sole possession
(except with respect to investment direction of funds held in the Collection
Account and any REO Account and any income and gain 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 Trustee shall:

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              (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
                   actual notice 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. 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.

              (c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trustee shall
be for the benefit of the Trustee and shall be subject to its withdrawal at any
time. The Trustee shall deposit in the Distribution Account, the amount of any
loss of principal incurred in respect of any such Permitted Investment made with
funds in such accounts immediately upon realization of such loss.

              (d) Except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee 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.

Section 3.13 [Reserved].

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 least of (i) the then
current principal balance of such Mortgage Loan, (ii) the amount necessary to
fully compensate for any damage or loss to the improvements that are a part of
such property on a replacement cost basis and (iii) the maximum insurable value
of the improvements which are a part of such Mortgaged Property, in each case in
an amount not less than such amount as is necessary to avoid the application of
any coinsurance clause contained in the related hazard insurance policy. The
Master Servicer shall also cause to be maintained fire

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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
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

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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 Freddie Mac
if it were the purchaser of the Mortgage Loans, unless the Master Servicer has
obtained a waiver of such requirements from Freddie Mac. The Master Servicer
shall also maintain a fidelity bond in the form and amount that would meet the
requirements of Freddie Mac, unless the Master Servicer has obtained a waiver of
such requirements from Freddie Mac. The Master Servicer shall provide the
Trustee, the Guarantor and the NIMS Insurer (upon such party's reasonable
request) with copies of any such insurance policies and fidelity bond. 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 comparable policy of insurance covering
errors and omissions and a fidelity bond meeting such requirements.

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

         The Master Servicer shall, 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 that the collections and
other recoveries in respect of such Mortgage Loans could reasonably be expected
to be maximized if the Mortgage Loan were not accelerated, and the Master
Servicer 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 may also 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 Master Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption, modification or substitution, the Master
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Master Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable under the circumstances)
it shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy, or a new policy meeting the
requirements of this Section is obtained. Any fee

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collected by the Master Servicer in respect of any assumption or substitution of
liability agreement will 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 NIMS Insurer, the Guarantor and the Trustee that any such
substitution, modification or assumption agreement has been completed by
forwarding to the Trustee (with a copy to the NIMS Insurer), the executed
original of such substitution or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.

         Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the 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 use reasonable efforts consistent
with the servicing standard set forth in Section 3.01, 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 constitute and 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 sole and absolute 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 Trustee,
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

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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.

         Notwithstanding the foregoing, if such environmental audit reveals, or
if the Master Servicer has knowledge or notice, that such Mortgaged Property
contains such wastes or substances or is within one mile of the site of such
wastes or substances, the Master Servicer shall not foreclose or accept a deed
in lieu of foreclosure without the prior written consent of the NIMS Insurer or
the Guarantor as provided in Section 1.04.

         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. It is understood
by the parties hereto that any such advance will constitute a Servicing Advance.

         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. 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)(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. It is understood by the parties hereto that any
such advance will constitute a Servicing Advance.

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              (c) The Master Servicer may at its option purchase from REMIC 1
any Mortgage Loan or related REO Property that is 90 days or more delinquent or
that has been otherwise in default for 90 days or more, 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 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; and provided,
further, that such option shall expire as of the last day of the calendar
quarter during which such Mortgage Loan or related REO Property became 90 days
delinquent or otherwise in default for 90 days or more. In the event the Master
Servicer does not exercise its option to purchase from REMIC 1 any such Mortgage
Loan or related REO Property prior to the expiration of such option, the NIMS
Insurer shall be entitled to purchase such Mortgage Loan or related REO Property
at any time thereafter. 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 or
the NIMS Insurer, as applicable, the related Mortgage File and the Trustee shall
execute and the Trustee shall deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer or the NIMS
Insurer, as applicable, shall furnish and as shall be necessary to vest in the
Master Servicer or the NIMS Insurer, as applicable, title to any Mortgage Loan
or related REO Property released pursuant hereto.

              (d) Proceeds received (other than any Prepayment Charges 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 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).

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 the Trustee by a certification in the form of Exhibit E-2 (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 3.10 have been or will
be so deposited)

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of a Servicing Representative 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
request of the Master Servicer and delivery to the Trustee of a Request for
Release in the form of Exhibit E-l, release the related Mortgage File to the
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 and the Master Servicer shall retain such Mortgage File in trust for
the benefit of the Certificateholders. 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 to the Trustee a certificate of a Servicing
Representative certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Representative stating
that such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release shall be released
by the Trustee to the Master Servicer or its designee.

              (c) Upon written certification of a Servicing Representative, the
Trustee shall execute and deliver to the Master Servicer any court pleadings,
requests for trustee's sale or other documents reasonably necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity, or shall exercise and deliver to the Master Servicer a power of
attorney sufficient to authorize the Master Servicer to execute such documents
on its behalf, provided that the Trustee shall be obligated to execute the
documents identified above if necessary to enable the Master Servicer to perform
its duties hereunder. 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.

Section 3.18 Servicing Compensation.

         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

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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 Late Collections, 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, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Master Servicer (subject to Section 3.24) 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. 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, it being understood however, that payment of such premiums by the
Master Servicer shall constitute Servicing Advances and servicing compensation
of each Sub-Servicer, and to the extent provided herein and in Section 8.05, the
fees and expenses of the Trustee) and shall not be entitled to reimbursement
therefor except as specifically provided herein.

Section 3.19 Reports to the Trustee; Collection Account Statements.

         Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the NIMS Insurer, the Trustee, the Guarantor and the
Depositor a statement prepared by the Master Servicer setting forth the status
of the Collection Account as of the close of business on such Distribution Date
and showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.10(a) and each category of withdrawal specified
in Section 3.11. Such statement may be in the form of the then current Fannie
Mae Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage Loans
as of the last day of the calendar month immediately preceding such Distribution
Date. 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.

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Section 3.20 Statement as to Compliance.

         The Master Servicer shall deliver to the NIMS Insurer, the Trustee, the
Depositor, the Guarantor and each Rating Agency on or before April 15 of each
calendar year commencing in 2002, an Officers' Certificate 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 officers' supervision and (ii) to the best of such officers'
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 the request and at the expense of the requesting party, provided that such
statement is delivered by the Master Servicer to the Trustee.

Section 3.21 Independent Public Accountants' Servicing Report.

         Not later than April 15 of each calendar year commencing in 2002, 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 furnish a copy of such report to the NIMS Insurer, the Trustee,
the Guarantor and each Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Master Servicer's
expense, provided that such statement is delivered by the Master Servicer to the
Trustee. In the event such firm of independent certified public accountants
requires the Trustee to agree to the procedures performed by such firm, the
Master Servicer shall direct the Trustee in writing to so agree; it being
understood and agreed that the Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Master Servicer, and the Trustee
has not made any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.

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Section 3.22 Access to Certain Documentation.

              (a) The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder, and
the Guarantor access to the documentation regarding the Mortgage Loans serviced
by the Master Servicer under this Agreement, as may be 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
regarding the Mortgage Loans serviced by the Master Servicer under this
Agreement will be provided to any Certificateholder, the NIMS Insurer, the
Guarantor, the Trustee and to any Person identified to the Master Servicer as a
prospective transferee of a Certificate, 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.

              (b) Within 90 days after the Closing Date, the Guarantor will be
permitted, upon reasonable notice and during normal business hours, at the
office of the Master Servicer, to review copies of the contents of the Mortgage
Files and the underwriting documentation that is required to be delivered to the
Trustee pursuant hereto with respect to up to the greater of (i) 800 of the
Mortgage Files and (ii) 10% (by number) of the Mortgage Loans (a "Mortgage Loan
Sample"), in order to ascertain whether each such Mortgage Loan was originated
generally in accordance with the Seller's underwriting guidelines in any
material respect. In addition, the Guarantor will be permitted, upon reasonable
notice and during normal business hours, at the office of the Master Servicer,
to review copies of the contents of the Mortgage Files and the underwriting
documentation that is required to be delivered to the Trustee pursuant hereto
with respect to an additional 75 of the Mortgage Files which are not part of the
foregoing Mortgage Loan Sample. If, as a result of such investigation, the
Guarantor determines (after the appeals process set forth in the Freddie Mac
Single Family Seller/Servicer Guide) that more than 20% (by number) of the
Mortgage Loans in such Mortgage Loan Sample were not so underwritten, the Master
Servicer will permit the Guarantor to review an additional Mortgage Loan Sample
in accordance with the same procedures until the Guarantor has reviewed a
Mortgage Loan Sample that contains fewer than 20% (by number) of Mortgage Loans
that were not originated generally in accordance with the Seller's underwriting
guidelines in any material respect. Any out-of-pocket expenses incurred by the
Master Servicer related to such review shall be reimbursed by the Seller.

                  Notwithstanding the foregoing, the Guarantor shall have the
right to collect data on an additional 1,200 Mortgage Loans over and above the
Mortgage Loans reviewed in the procedures described in the immediately preceding
paragraph.

                  The procedures to be followed in connection with any Mortgage
Loan which was not underwritten in accordance with the Seller's underwriting
guidelines are set forth in Section 7 of the Mortgage Loan Purchase Agreement,
provided, however, that no such procedure shall be followed if such action may
(A) result in the imposition of taxes on "prohibited transactions" of the Trust,
as defined in Section 860F of the Code, or (B) contributions to any

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Trust REMIC after the "startup day," as defined in Section 860G(d) of the Code,
or (C) cause the portion of the Trust Fund assets with respect to which a REMIC
election was made to fail to qualify as a REMIC at any time any Certificate is
outstanding.

              (c) For a period of two years from the Closing Date, the Guarantor
may contact the Seller to confirm that the Seller continues to actively engage
in a program to originate mortgage loans to low-income families and to obtain
other non-proprietary information about the Seller's activities that may assist
the Guarantor in completing its own regulatory requirements during normal
business hours and subject to reimbursement for expenses. The Seller shall use
reasonable efforts to provide such information to the Guarantor.

              (d) From time to time, during normal business hours and subject to
reimbursement for expenses, the Guarantor shall have the right to audit the
Master Servicer's servicing practices and to review the Mortgage Files.

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 1 (and on behalf
of the Trustee for the benefit of the Certificateholders), shall sell any REO
Property as soon as practicable and, in any event, shall either sell any REO
Property before the close of the third taxable year after the year REMIC 1
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 NIMS Insurer, the Trustee, the Guarantor and the Depositor an
Opinion of Counsel, addressed to the NIMS Insurer, the Trustee, the Guarantor
and the Depositor, to the effect that the holding by REMIC 1 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.
If an extension of the three-year period is granted, the Master Servicer shall
sell the related REO Property no later than 60 days prior to the expiration of
such extension period. 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

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benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Master Servicer may allow the Collection Account to serve
as the REO Account, subject to separate ledgers for each REO Property. The
Master Servicer may retain or withdraw any interest income paid on funds
deposited in the REO Account.

              (c) 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 (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof and shall thereafter deposit in the REO Account, in
no event more than two Business Days after the deposit of such funds into the
clearing account, 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;

              (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 as Servicing Advances 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 such Servicing Advance would
not constitute a Nonrecoverable Advance.

         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
                     construction permitted under Section 856(e)(4)(B) of the
                     Code; or

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              (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
(the cost of which shall constitute a Servicing Advance), provided to the NIMS
Insurer and the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC 1, 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 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 same extent 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.

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              (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 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 general servicing activities
for similar properties.

              (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).

              (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.

              (h) The Holders of the Class C Certificates shall be deemed to
have purchased the ownership interest held by the Holders of the Class A
Certificates, Mezzanine Certificates and Class S Certificates in any Mortgage
Loan as to which the Master Servicer has made a Final Recovery Determination.
After such repurchase, the Master Servicer, if requested by such
Certificateholders and if offered indemnification reasonably acceptable to the
Master Servicer and reimbursement for expenses, may seek a deficiency judgment
to the extent permitted by law against the Mortgagor under such Mortgage Loan on
behalf of such Certificateholders to the extent of any Realized Loss.
Notwithstanding the above, the Holders of the Class C Certificate do not have
any obligation to make any such request.

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 on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount ("Compensating Interest") equal to
the lesser of (i) the aggregate of the

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Prepayment Interest Shortfalls for the related Distribution Date resulting
solely from Principal Prepayments during the related Prepayment Period and (ii)
the amount of its aggregate Servicing Fee for the most recently ended calendar
month.

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,
the Guarantor 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 and shall not be an expense of the Trust.

Section 3.26 Reserve Fund.

         No later than the Closing Date, the Trustee, on behalf of the
Certificateholders, shall establish and maintain with itself a separate,
segregated trust account titled, "Reserve Fund, Bankers Trust Company of
California, N.A., in trust for registered Holders of Long Beach Mortgage Loan
Trust 2001-2, Asset-Backed Certificates, Series 2001-2." On the Closing Date,
the Depositor shall deposit, or cause to be deposited, into the Reserve Fund
$1,000.

         On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to the Class A-1V Certificates, Class A-2 Certificates or
Mezzanine Certificates, the Trustee has been directed by the Class C
Certificateholders to, and therefore will, deposit into the Reserve Fund the
amounts described in Section 4.01(d)(ix), rather than distributing such amounts
to the Class C Certificateholders. On each such Distribution Date, the Trustee
shall hold all such amounts for the benefit of the Holders of the Class A-1V
Certificates, Class A-2 Certificates and Mezzanine Certificates, and will
distribute such amounts to the Holders of the Class A-1V Certificates, Class A-2
Certificates and Mezzanine Certificates in the amounts and priorities set forth
in Section 4.01(d). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Trustee shall deposit into the Reserve Fund on behalf of
the Class C Certificateholders, from amounts otherwise distributable to the
Class C Certificateholders, an amount such that when added to other amounts
already on deposit in the Reserve Fund, the aggregate amount on deposit therein
is equal to $1,000.

         For federal and state income tax purposes, the Class C
Certificateholders shall be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by REMIC 3 to

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the Holders of the Class C Certificates. Upon the termination of the Trust, or
the payment in full of the Class A-1V Certificates, Class A-2 Certificates and
Mezzanine Certificates, all amounts remaining on deposit in the Reserve Fund
will be released by the Trustee and distributed to the Class C
Certificateholders or their designees. The Reserve Fund will be part of the
Trust but not part of any REMIC and any payments to the Holders of the Class
A-1V Certificates, Class A-2 Certificates or 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).

         By accepting a Class C Certificate, each Class C Certificateholder
shall be deemed to have directed the Trustee, and the Trustee shall pursuant to
such direction, deposit into the Reserve Fund the amounts described above on
each Distribution Date as to which there is any Net WAC Rate Carryover Amount
rather than distributing such amounts to the Class C Certificateholders. By
accepting a Class C Certificate, each Class C Certificateholder further agrees
that such direction is given for good and valuable consideration, the receipt
and sufficiency of which is acknowledged by such acceptance.

         At the direction of the Holders of a majority in Percentage Interest in
the Class C Certificates, the Trustee shall direct any depository institution
maintaining the Reserve Fund to invest the funds in such account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the 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 C Certificates with respect to the Reserve Fund is received by the
Trustee, the Trustee shall invest the funds in such account in Permitted
Investments managed by the Trustee or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments. Notwithstanding the
foregoing, any funds in the Reserve Fund shall be invested in Bankers Trust's
Institutional Cash Management Fund 1679 for so long as such investment complies
with clause (vi) of the definition of Permitted Investments. All income and gain
earned upon such investment shall be deposited into the Reserve Fund.

         For federal tax return and information reporting, the right of the
Holders of the Class A-1V Certificates, the Holders of the Class A-2
Certificates and the Holders of the Mezzanine Certificates to receive payments
from the Reserve Fund in respect of any Net WAC Rate Carryover Amount shall be
assigned a value of zero.

Section 3.27 Advance Facility.

              (a) The Trustee and the Trust Fund, at the direction of the Master
Servicer and with the consent of the NIMS Insurer, after consultation with the
Guarantor (or, if no NIM Notes are outstanding and the NIMS Insurer is not
owed any amounts in respect of its guarantee of payment on such notes, the
Guarantor), is hereby authorized to enter into a facility with any Person which
provides that such Person (an "Advancing Person") may make all or a portion of
the

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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 Advances and/or Servicing Advances. To the extent that
an Advancing Person makes all or a portion of any Advance or any Servicing
Advance and provides the Trustee with notice acknowledged by the Master Servicer
that such Advancing Person is entitled to reimbursement, such Advancing Person
shall be entitled to receive reimbursement pursuant to this Agreement for such
amount to the extent provided in Section 3.27(b). Such notice from the Advancing
Person shall specify the amount of the reimbursement and shall specify which
Section of this Agreement permits the applicable Advance or Servicing Advance to
be reimbursed. The Trustee shall be entitled to rely without independent
investigation on the Advancing Person's statement with respect to the amount of
any reimbursement pursuant to this Section 3.27 and with respect to the
Advancing Person's statement with respect to the Section of this Agreement that
permits the applicable Advance or Servicing Advance to be reimbursed. An
Advancing Person whose obligations are limited to the making of Advances and/or
Servicing Advances shall not be required to meet the qualifications of a Master
Servicer or a Sub-Servicer pursuant to Section 6.06 hereof and will not be
deemed to be a Sub-Servicer under this Agreement. If the terms of a facility
proposed to be entered into with an Advancing Person by the Trust Fund would not
materially and adversely affect the interests of any Certificateholder, then the
NIMS Insurer shall not withhold its consent, after consultation with the
Guarantor, to the Trust Fund's entering into such facility.

              (b) If an advancing facility is entered into, then the Master
Servicer shall not be permitted to reimburse itself under any Section specified
or for any amount specified by the Advancing Person in the notice described
under Section 3.27(a) above and acknowledged by the Master Servicer 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
3.10(a). The Trustee is hereby authorized to pay to the Advancing Person
reimbursements for Advances and Servicing Advances from the Distribution Account
to the same extent the Master Servicer would have been permitted to reimburse
itself for such Advances and/or Servicing Advances in accordance with the
specified Sections had the Master Servicer itself made such 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 may agree.

              (c) All 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.

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                                   ARTICLE IV

                                  FLOW OF FUNDS

Section 4.01 Distributions.

              (a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account that portion of the Available Funds for such Distribution
Date consisting of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount for such Distribution Date, and make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the Group I Interest Remittance Amount or Group II
Interest Remittance Amount, as applicable, remaining for such Distribution Date:

              (i)  the Group I Interest Remittance Amount will be distributed:

                   (A) first, to the Guarantor for payment of (i) the Guarantee
                   Fee and (ii) any Guarantor Reimbursement Amount then due;

                   (B) second, concurrently, to pay the Class A-1 Certificates
                   and the Class S-1 Certificates the Monthly Interest
                   Distributable Amount and any Unpaid Interest Shortfall
                   Amount, allocated between the Class A-1 Certificates and the
                   Class S-1 Certificates pro rata based on entitlement pursuant
                   to this clause (i)(B); and

                   (C) third, concurrently, to pay the Class A-2 Certificates
                   and the Class S-2 Certificates the Monthly Interest
                   Distributable Amount and any Unpaid Interest Shortfall
                   Amount, in each case to the extent not paid pursuant to
                   Section 4.01(a)(ii)(A) below, allocated between the Class A-2
                   Certificates and the Class S-2 Certificates pro rata based on
                   entitlement pursuant to this clause (i)(C);

              (ii) the Group II Interest Remittance Amount will be distributed:

                   (A) first, concurrently, to pay the Class A-2 Certificates
                   and the Class S-2 Certificates the Monthly Interest
                   Distributable Amount and any Unpaid Interest Shortfall
                   Amount, allocated between the Class A-2 Certificates and the
                   Class S-2 Certificates pro rata based on entitlement pursuant
                   to this clause (ii)(A); and

                   (B) second, concurrently, to pay the Class A-1 Certificates
                   and the Class S-1 Certificates the Monthly Interest
                   Distributable Amount and any Unpaid Interest Shortfall
                   Amount, in each case to the extent not paid pursuant to
                   Section 4.01(a)(i)(B) above, allocated between the Class A-1
                   Certificates and the Class S-1 Certificates pro rata based on
                   entitlement pursuant to this clause (ii)(B); and

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              (iii) any Group I Interest Remittance Amount and Group II Interest
         Remittance Amount remaining undistributed following the distributions
         pursuant to clauses (i) and (ii) above will be distributed:

                   first, to the Holders of the Class M-1 Certificates, the
                   related Monthly Interest Distributable Amount for such Class
                   for such Distribution Date;

                   second, to the Holders of the Class M-2 Certificates, the
                   related Monthly Interest Distributable Amount for such Class
                   for such Distribution Date; and

                   third, to the Holders of the Class M-3 Certificates, the
                   related Monthly Interest Distributable Amount for such Class
                   for such Distribution Date.

              (iv) Any Group I Interest Remittance Amount or Group II Interest
         Remittance Amount remaining undistributed following the distributions
         pursuant to clause (iii) above will be used in determining the amount
         of Net Monthly Excess Cashflow, if any, for such Distribution Date:

(b) On each Distribution Date (a) prior to the Stepdown Date or (b) on which a
Trigger Event is in effect, the Holders of the Class A Certificates and
Mezzanine Certificates shall be entitled to receive distributions in respect of
principal to the extent of the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount in the following amounts and order of
priority:

              (i)  first,

    (A) (x) an amount equal to the Group I Adjusted Principal Distribution
    Amount will be distributed in the following order of priority:

              (1) first, to the Guarantor for payment of (i) the Guarantee Fee
              and (ii) any Guarantor Reimbursement Amount then due (to the
              extent not paid from the Group I Interest Remittance Amount for
              such Distribution Date);

              (2) second, (i) concurrently, 55.24779872% to the Holders of the
              Class A-1F Certificates and 44.75220128% to the Holders of the
              Class A-1V Certificates, until the Certificate Principal Balance
              of the Class A-1F Certificates has been reduced to zero, then (ii)
              to the Holders of the Class A-1V Certificates until the
              Certificate Principal Balance of the Class A-1V Certificates has
              been reduced to zero; then

         (y) any portion of the Group II Adjusted Principal Distribution Amount
    distributable pursuant to Section 4.01(b)(i)(B)(x) that remains following
    distribution to the Holders of the Class A-2 Certificates will be
    distributed as set forth in Section 4.01(b)(i)(A)(x) above;

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    (B) (x) an amount equal to the Group II Adjusted Principal Distribution
    Amount will be distributed to the Holders of the Class A-2 Certificates,
    until the Certificate Principal Balance thereof has been reduced to zero;
    then

         (y) any portion of the Group I Adjusted Principal Distribution Amount
    distributable pursuant to Section 4.01(b)(i)(A)(x) that remains following
    distribution to the Holders of the Class A-1 Certificates, to the Holders of
    the Class A-2 Certificates, until the Certificate Principal Balance of the
    Class A-2 Certificates has been reduced to zero;

              (ii) second, any Group I Adjusted Principal Distribution Amount
         and Group II Adjusted Principal Distribution Amount remaining
         undistributed following the distributions pursuant to clause (i) above
         will be distributed:

                   first, to the Holders of the Class M-l Certificates, until
                   the Certificate Principal Balance thereof has been reduced to
                   zero;

                   second, to the Holders of the Class M-2 Certificates, until
                   the Certificate Principal Balance thereof has been reduced to
                   zero; and

                   third, to the Holders of the Class M-3 Certificates, until
                   the Certificate Principal Balance thereof has been reduced to
                   zero.

              (iii) Any Principal Distribution Amount remaining undistributed
         following the distributions pursuant to clauses (i) and (ii) above will
         be used in determining the amount of Net Monthly Excess Cashflow, if
         any, for such Distribution Date;

    (c) On each Distribution Date (a) on or after the Stepdown Date and (b) on
which a Trigger Event is not in effect, the Holders of the Class A Certificates
and Mezzanine Certificates shall be entitled to receive distributions in respect
of principal to the extent of the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount in the following amounts and order of
priority:

              (i) first,

         (A) (x) an amount equal to the Class A-1 Adjusted Principal
         Distribution Amount will be distributed in the following order of
         priority:

                   (1) first, to the Guarantor for payment of (i) the Guarantee
                   Fee and (ii) any Guarantor Reimbursement Amount then due (to
                   the extent not paid from the Group I Interest Remittance
                   Amount for such Distribution Date);

                   (2) second, (i) concurrently, 55.24779872% to the Holders of
                   the Class A-1F Certificates and 44.75220128% to the Holders
                   of the Class A-1V Certificates, until the Certificate
                   Principal Balance of the Class A-1F Certificates has been
                   reduced to zero, then (ii) to the Holders

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<PAGE>

                   of the Class A-1V Certificates, until the Certificate
                   Principal Balance of the Class A-1V Certificates has been
                   reduced to zero; then

              (y) any portion of the Class A-2 Adjusted Principal Distribution
         Amount distributable pursuant to Section 4.01(c)(i)(B)(x) that remains
         following distribution to the Holders of the Class A-2 Certificates
         will be distributed as set forth in Section 4.01(c)(i)(A)(x) above;
         then

         (B) (x) an amount equal to the Class A-2 Adjusted Principal
         Distribution Amount will be distributed to the Holders of the Class A-2
         Certificates, until the Certificate Principal Balance thereof has been
         reduced to zero; then

              (y) any portion of the Class A-1 Adjusted Principal Distribution
         Amount distributable pursuant to Section 4.01(c)(i)(A)(x) that remains
         following distribution to the Holders of the Class A-1 Certificates, to
         the Holders of the Class A-2 Certificates, until the Certificate
         Principal Balance of the Class A-2 Certificates has been reduced to
         zero;

              (ii) second, any Group I Adjusted Principal Distribution Amount
         and Group II Adjusted Principal Distribution Amount remaining
         undistributed following the distribution pursuant to clause (i) will be
         distributed:

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

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

                   third, to the Holders of the Class M-3 Certificates, the
                   Class M-3 Principal Distribution Amount, until the
                   Certificate Principal Balance of such Class has been reduced
                   to zero.

              (iii) Any Principal Distribution Amount remaining undistributed
         following the distributions pursuant to clauses (i) and (ii) above will
         be used in determining the amount of Net Monthly Excess Cashflow, if
         any, for such Distribution Date.

         (d) On each Distribution Date, any Net Monthly Excess Cashflow shall be
    paid in the following order or priority, in each case to the extent of the
    Net Monthly Excess Cashflow remaining undistributed:

              (i) to the Holders of the Class or Classes of Certificates then
         entitled to receive distributions in respect of principal, in an amount
         equal to any Extra Principal Distribution Amount, payable to such
         Holders as part of the Principal Distribution Amount pursuant to
         Section 4.01(b) or Section 4.01(c) above, as applicable;

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<PAGE>

              (ii) to the Holders of the Class M-1 Certificates, in an amount
         equal to the Unpaid Interest Shortfall Amount, if any, for such Class
         for such Distribution Date;

              (iii) to the Holders of the Class M-1 Certificates, in an amount
         equal to the Allocated Realized Loss Amount, if any, for such Class for
         such Distribution Date;

              (iv) to the Holders of the Class M-2 Certificates, in an amount
         equal to the Unpaid Interest Shortfall Amount, if any, for such Class
         for such Distribution Date;

              (v) to the Holders of the Class M-2 Certificates, in an amount
         equal to the Allocated Realized Loss Amount, if any, for such Class for
         such Distribution Date;

              (vi) to the Holders of the Class M-3 Certificates, in an amount
         equal to the Unpaid Interest Shortfall Amount, if any, for such Class
         for such Distribution Date;

              (vii) to the Holders of the Class M-3 Certificates, in an amount
         equal to the Allocated Realized Loss Amount, if any, for such Class for
         such Distribution Date;

              (viii) to the Reserve Fund, the amount of any Net WAC Rate
         Carryover Amounts with respect to the Class A-1V Certificates, Class
         A-2 Certificates and Mezzanine Certificates for such Distribution Date
         (or, if no Net WAC Rate Carryover Amounts are payable on such
         Distribution Date, to the Reserve Fund, an amount such that when added
         to other amounts already on deposit in the Reserve Fund, the aggregate
         amount on deposit therein is equal to $1,000);

              (ix) to the Holders of the Class C Certificates, the Monthly
         Interest Distributable Amount for such Class and any
         Overcollateralization Release Amount for such Distribution Date (net of
         such portion of amounts payable pursuant to this clause (ix) that were
         paid pursuant to clause (viii) above);

              (x) if such Distribution Date follows the Prepayment Period during
         which occurs the latest date on which a Prepayment Charge may be
         required to be paid in respect of any Mortgage Loans, to the Holders of
         the Class P Certificates, in reduction of the Certificate Principal
         Balance thereof, until the Certificate Principal Balance thereof is
         reduced to zero; and

              (xi) any remaining amounts to the Holders of the Residual
         Certificates (in respect of the appropriate Class R Interest).

         On each Distribution Date, after making the distributions of the
Available Funds as provided above, the Trustee shall withdraw from the Reserve
Fund the amount on deposit therein and shall distribute such amounts to the
Holders of the Class A-1V Certificates, Class A-2 Certificates and Mezzanine
Certificates in the following order and priority, in each case to the extent of
amounts remaining in the Reserve Fund and in each case to the extent of the Net
WAC Rate Carryover Amount for such Class or Classes for such Distribution Date:
first, to the

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Class A-1V Certificates, on a pro rata basis based on the Net WAC Rate Carryover
Amount for the Class A-1V Certificates and Class A-2 Certificates for such
Distribution Date; second, to the Class M-1 Certificates; third, to the Class
M-2 Certificates; and fourth, to the Class M-3 Certificates. Any remaining
amount shall be re-deposited into the Reserve Fund (to the extent of the
required amount of $1,000).

         On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Mortgage Loans received during the related Prepayment Period
and any Master Servicer Prepayment Charge Amounts paid by or collected by the
Master Servicer during the related Prepayment Period will be withdrawn from the
Distribution Account and distributed by the Trustee to the Holders of the Class
P Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balance
thereof.

         Without limiting the provisions of Section 9.01(b), by acceptance of
the Residual Certificates, the Holders of the Residual Certificates agree, for
so long as the NIM Notes are outstanding or any amounts are reimbursable or
payable to the NIMS Insurer in accordance with the terms of the Indenture, in
connection with any amount distributable to the Holders of the Residual
Certificates pursuant to clause (xii) above, to assign and transfer any such
amounts, and to the extent received to pay any such amounts, to the Holders of
the Class C Certificates.

         (e) All distributions made with respect to each Class of Certificates
on each Distribution Date shall be allocated pro rata among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in Section 4.01(e) or Section 9.01 respecting
the final distribution on such Class), based on the aggregate Percentage
Interest represented by their respective Certificates, and shall be made by wire
transfer of immediately available funds to the account of any such Holder at a
bank or other entity having appropriate facilities therefor, if such Holder
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance or Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the Original Class Certificate Principal
Balance or Original Notional Amount of such Class of Certificates, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Certificate Register. Notwithstanding the foregoing the Holders of the Class
A-1 Certificates and the Class S-1 Certificates shall receive all distributions
pursuant to this Section 4.01(e) by wire transfer of immediately available
funds. The final distribution on each Certificate will be made in like manner,
but only upon presentment and surrender of such Certificate at the Corporate
Trust Office of the Trustee 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, which shall credit the amount of such distribution to
the accounts of its Depository Participants

                                      108
<PAGE>

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. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by the Depository and the Depository Participants in
accordance with the provisions of the Certificates. None of the Trustee, the
Depositor, the Master Servicer or the Seller shall have any responsibility
therefor except as otherwise provided by applicable law.

         (f) 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.

         (g) 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 Distribution Date, the Trustee shall, no later than
three (3) days before the related Distribution Date, mail to the NIMS Insurer,
the Guarantor and 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 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(h) 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 such 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 Banc of America Securities LLC 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

                                      109
<PAGE>

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(h).

         (h) 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 4.06 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, (ii) in no event shall the Uncertificated Principal
Balance of a REMIC 2 Regular Interest be reduced more than once in respect of
any particular amount both (a) allocated to such REMIC 2 Regular Interest in
respect of Realized Losses pursuant to Section 4.06 and (b) distributed on such
REMIC 2 Regular Interest in reduction of the Uncertificated Principal Balance
thereof pursuant to Section 4.05 and (iii) in no event shall the Uncertificated
Principal Balance of a REMIC 1 Regular Interest be reduced more than once in
respect of any particular amount both (a) allocated to such REMIC 1 Regular
Interest in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed on such REMIC 1 Regular Interest in reduction of the Uncertificated
Principal Balance thereof pursuant to this Section 4.05.

Section 4.02 Preference Claims.

         The Trustee shall promptly notify the NIMS Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates, the Master Servicer and the
Trustee hereby agree that the NIMS Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMS Insurer
shall be subrogated to the rights of the Master Servicer, the Trustee and each
Holder of the Class C Certificates and Class P Certificates in the conduct of
any such Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim; provided, however, that the NIMS
Insurer will not have any rights with respect to any Preference Claim set forth
in this paragraph unless the Trustee, as indenture trustee with respect to the
NIM Notes or the holder of any NIM Notes has been required to relinquish a
distribution made on the Class C Certificates, the Class P Certificates or the
NIM Notes, as applicable, and the NIMS Insurer made a payment in respect of such
relinquished amount.

Section 4.03 Statements.

         (a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and make
available by electronic medium

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<PAGE>

to each Holder of the Regular Certificates, the Master Servicer, the Guarantor,
the NIMS Insurer and the Rating Agencies, a statement as to the distributions
made on such Distribution Date:

              (i) the amount of the distribution made on such Distribution Date
         to the Holders of each Class of Regular Certificates (other than the
         Class S Certificates), separately identified, allocable to principal
         and the amount of the distribution made to the Holders of the Class P
         Certificates allocable to Prepayment Charges and Master Servicer
         Prepayment Charge Payment Amounts;

              (ii) the amount of the distribution made on such Distribution Date
         to the Holders of each Class of Regular Certificates (other than the
         Class P Certificates) allocable to interest, separately identified;

              (iii) the Overcollateralized Amount, the Overcollateralization
         Release Amount, the Overcollateralization Deficiency Amount and the
         Overcollateralization Target Amount as of such Distribution Date and
         the Excess Overcollateralized Amount for the Mortgage Pool for such
         Distribution Date;

              (iv) the aggregate amount of servicing compensation received by
         the Master Servicer with respect to 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;

              (v) the Deficiency Amount, the Guarantor Payments and the
         Guarantor Reimbursement Amount for such Distribution Date;

              (vi) the aggregate amount of Advances for the related Due Period;

              (vii) the aggregate Stated Principal Balance of the Mortgage Loans
         at the Close of Business at the end of the related Due Period;

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

              (ix) the number and aggregate unpaid principal balance of Mortgage
         Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days, (c)
         delinquent 90 or more days in each case, as of the last day of the
         preceding calendar month provided, however that any aggregate unpaid
         principal balance of Mortgage Loans shall be reported as of the last
         day of the related Due Period, (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;

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              (x) with respect to any Mortgage Loan that became an REO Property
         during the preceding Prepayment Period, the unpaid principal balance
         and the Principal Balance of such Mortgage Loan as of the date it
         became an REO Property;

              (xi) the total number and cumulative principal balance of all REO
         Properties as of the Close of Business of the last day of the preceding
         Prepayment Period;

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

              (xiii) the aggregate amount of Realized Losses incurred during the
         related Prepayment Period and the cumulative amount of Realized Losses;

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

              (xv) the Certificate Principal Balance of the Class A
         Certificates, the Mezzanine Certificates and the Class C Certificates,
         after giving effect to the distributions made on such Distribution
         Date, and the Notional Amount of the Class S Certificates and the Class
         C Certificates, after giving effect to the distributions made on such
         Distribution Date;

              (xvi) the Monthly Interest Distributable Amount in respect of the
         Class A Certificates, the Class S Certificates, the Mezzanine
         Certificates and the Class C Certificates for such Distribution Date
         and the Unpaid Interest Shortfall Amount, if any, with respect to the
         Class A Certificates, the Class S Certificates and the Mezzanine
         Certificates for such Distribution Date;

              (xvii) the aggregate amount of any Prepayment Interest Shortfalls
         for such Distribution Date, to the extent not covered by payments by
         the Master Servicer pursuant to Section 3.24, and the aggregate amount
         of any Relief Act Interest Shortfalls for such Distribution Date;

              (xviii) the Credit Enhancement Percentage for such Distribution
         Date;

              (xix) the Net WAC Rate Carryover Amount for the Class A-1V
         Certificates, Class A-2 Certificates and the Mezzanine Certificates, if
         any, for such Distribution Date and the amount remaining unpaid after
         reimbursements therefor on such Distribution Date;

              (xx) [reserved];

              (xxi) when the Stepdown Date or a Trigger Event has occurred;

              (xxii) the Available Funds;

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              (xxiii) the respective Pass-Through Rates applicable to the Class
         A Certificates, the Class S Certificates, the Mezzanine Certificates
         and the Class C 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

              (xxiv) the Guarantee Fee to be paid to the Guarantor with respect
         to the Guaranteed Certificates for such Distribution Date.

              (xxv) such other information as the Guarantor may reasonably
         request in such format as reasonably requested by the Guarantor and any
         other information that is required by the Code and regulations
         thereunder to be made available to Certificateholders.

         The Trustee will 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 Guarantor,
the NIMS Insurer and the Rating Agencies via the Trustee's internet website. The
Trustee's internet website shall initially be located at
"http:\\www-apps.gis.deutsche-bank.com/invr. 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 in a separate Section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Closing Date.

         (b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate,
if requested in writing by such Person, such information as is reasonably
necessary to provide to such Person 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 prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.

         (c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders and the NIMS Insurer a copy of the reports forwarded to the
Regular Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.

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         (d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.

         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 4.04 Remittance Reports; Advances.

         (a) Within one Business Day after the Determination Date, but in no
event later than such date which would allow the Trustee to submit a claim to
the NIMS Insurer under the Indenture, the Master Servicer shall deliver to the
NIMS Insurer, the Guarantor and the Trustee by telecopy or electronic mail (or
by such other means as the Master Servicer, the Guarantor and the Trustee, or
the Master Servicer and the NIMS Insurer, as the case may be, may agree from
time to time) a Remittance Report with respect to the related Distribution Date.
Not later than the Master Servicer Remittance Date (or, in the case of certain
information, as agreed between the Trustee and the Master Servicer, not later
than four Business Days after the end of each Due Period), the Master Servicer
shall deliver or cause to be delivered to the Trustee in addition to the
information provided on the Remittance Report, such other information reasonably
available to it 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 4.03. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.

         (b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(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 (other than with respect to any Balloon Loan with a delinquent
Balloon Payment as described in clause (iii) below), which Monthly Payments were
delinquent as of the close of business on the related Determination Date, plus
(ii) with respect to each REO Property (other than with respect to any REO
Property relating to a Balloon Loan with a delinquent Balloon Payment as
described in clause (iv) below), which REO Property was acquired during or prior
to the related Prepayment Period and as to which such REO Property an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the Monthly Payments (with each interest portion
thereof net of the related Servicing Fee) that would have been due on the
related Due Date in respect of

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the related Mortgage Loans, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

         On or before 3:00 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 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 Collection Account that amounts held for future distribution have
been, as permitted by this Section 4.04, used by the Master Servicer in
discharge of any such Advance) or (iii) in the form of any combination of (i)
and (ii) aggregating the total amount of Advances to be made by the 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, which information the Master Servicer will provide to
the Guarantor upon the Guarantor's request, 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 Funds for the related
Distribution Date (determined without regard to 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 Advances. The Trustee will provide notice to the NIMS
Insurer, the Guarantor and the Master Servicer by telecopy by the close of
business on any Master Servicer Remittance Date in the event that the amount
remitted by the Master Servicer to the Trustee on such date is less than the
Advances required to be made by the Master Servicer for the related Distribution
Date. Notwithstanding the foregoing, the Guarantor shall have the right to
require, at any time, the Master Servicer to remit, from its own funds, prior to
the next succeeding Master Servicer Remittance Date after notice to the Master
Servicer, to the Collection Account an amount equal to the aggregate amount of
all Advances previously made out of funds from the Collection Account, and not
theretofore repaid from collections on the related Group I Mortgage Loans, and
related Advances then due, if, in its reasonable judgment, the Guarantor
determines such action is necessary to protect its interest. In such event, the
Master Servicer shall thereafter remit to the Trustee out of the Master
Servicer's own funds all Advances required to be made. In no event shall the
foregoing be construed as limiting the Master Servicer's right to (i) pass
through Late Collections on the related Mortgage Loans in lieu of making
Advances or (ii) reimburse itself for such Advances from Late Collections on the
related Mortgage Loans.

         (c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.

         (d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by

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the Master Servicer that it has made a Nonrecoverable Advance or that any
proposed Advance or Servicing Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officers' Certificate of the
Master Servicer delivered to the NIMS Insurer, the Guarantor, the Depositor and
the Trustee.

Section 4.05 Distributions on the REMIC Regular Interests.

         (a) On each Distribution Date, the Trustee shall cause the Available
Funds, in the following order of priority, to be distributed by REMIC 1 to REMIC
2 on account of the REMIC 1 Regular Interests or withdrawn from the Distribution
Account and distributed to the Holders of the Class R Certificates (in respect
of the Class R-1 Interest), as the case may be:

              (1) first, Available Funds equal to the Group I Interest
         Remittance Amount shall be distributed to(i) first, to the Holders of
         REMIC 1 Regular Interest LT1B-1, in an amount equal to (A) the
         Uncertificated Accrued Interest for such Distribution Date, plus (B)
         any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; (ii) second, to the Holders of REMIC 1 Regular
         Interest LT1A-1 and REMIC 1 Regular Interest LT1P-1, in an amount equal
         to (A) the Uncertificated Accrued Interest for such Distribution Date,
         plus (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates;

              (2) second, Available Funds equal to the Group II Interest
         Remittance Amount shall be distributed (i) first, to the Holders of
         REMIC 1 Regular Interest LT1B-2, in an amount equal to (A) the
         Uncertificated Accrued Interest for such Distribution Date, plus (B)
         any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; (ii) second, to the Holders of REMIC 1 Regular
         Interest LT1A-2 and REMIC 1 Regular Interest LT1P-2, in an amount equal
         to (A) the Uncertificated Accrued Interest for such Distribution Date,
         plus (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; and

              (3) third, the remainder of the Available Funds attributable to
         the Group I Mortgage Loans after the distribution of the Group I
         Interest Remittance Amount pursuant to clause (1) above shall be
         distributed to the Holders of REMIC 1 Regular Interests as follows:

                   (A) to the Holders of REMIC 1 Regular Interest LT1P-1, on the
              Distribution Date immediately following the expiration of the
              latest Prepayment Charge as identified on the Prepayment Charge
              Schedule or any Distribution Date thereafter until $100 has been
              distributed pursuant to this clause;

                   (B) to the Holders of REMIC 1 Regular Interest LT1A-1, until
              the Uncertificated Principal Balance of REMIC 1 Regular Interest
              LT1A-1 is reduced to zero;

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                   (C) to the Holders of REMIC 1 Regular Interest LT1B-1, until
              the Uncertificated Principal Balance of REMIC 1 Regular Interest
              LT1B-1 is reduced to zero; then

                   (D) any remaining amount to the Holders of the Class R
              Certificates (in respect of the Class R-1 Interest).

              (4) fourth, the remainder of the Available Funds attributable to
         the Group II Mortgage Loans after the distribution of the Group II
         Interest Remittance Amount pursuant to clause (2) above shall be
         distributed to the Holders of REMIC 1 Regular Interests as follows:

                   (A) to the Holders of REMIC 1 Regular Interest LT1P-2, on the
              Distribution Date immediately following the expiration of the
              latest Prepayment Charge as identified on the Prepayment Charge
              Schedule or any Distribution Date thereafter until $100 has been
              distributed pursuant to this clause;

                   (B) to the Holders of REMIC 1 Regular Interest LT1A-2, until
              the Uncertificated Principal Balance of REMIC 1 Regular Interest
              LT1A-2 is reduced to zero;

                   (C) to the Holders of REMIC 1 Regular Interest LT1B-2, until
              the Uncertificated Principal Balance of REMIC 1 Regular Interest
              LT1B-2 is reduced to zero; then

                   (D) any remaining amount to the Holders of the Class R
              Certificates (in respect of the Class R-1 Interest).

         On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group I Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1 to the Holders of REMIC 1 Regular Interest
LT1P-1. On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group II Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1 to the Holders of REMIC 1 Regular Interest
LT1P-2. The payment of the foregoing amounts to the Holders of REMIC 1 Regular
Interest LT1P-1 and REMIC 1 Regular Interest LT1P-2 shall not reduce the
Uncertificated Principal Balances thereof.

         (b) On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 2 to REMIC 3
on account of the REMIC 2 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates (in respect
of the Class R-2 Interest), as the case may be:

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              (1) first, Available Funds equal to the Group I Interest
         Remittance Amount shall be distributed (i) first, to the Holders of
         REMIC 2 Regular Interest LT2S-1A, REMIC 2 Regular Interest LT2S-1B and
         REMIC 2 Regular Interest LT2S-1C, pro rata, in an amount equal to (A)
         the Uncertificated Accrued Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; and (ii) second, to Holders of REMIC 2 Regular
         Interest LT2A-1, REMIC 2 Regular Interest LT2B-1, REMIC 2 Regular
         Interest LT2C-1, REMIC 2 Regular Interest LT2D-1, REMIC 2 Regular
         Interest LT2E-1, REMIC 2 Regular Interest LT2F-1, REMIC 2 Regular
         Interest LT2G-1 and REMIC 2 Regular Interest LT2P-1, pro rata, in an
         amount equal to (A) the Uncertificated Accrued Interest for such
         Distribution Date, plus (B) any amounts in respect thereof remaining
         unpaid from previous Distribution Dates; provided, however, that
         amounts payable as Uncertificated Accrued Interest in respect of REMIC
         2 Regular Interest LT2G-1 shall be reduced, when the REMIC 2
         Overcollateralized Amount 1 is less than the REMIC 2 Target
         Overcollateralized Amount 1, by the lesser of (x) the amount of such
         difference and (y) the Maximum LT2G-1 Uncertificated Accrued Interest
         Deferral Amount;

              (2) second, Available Funds equal to the Group II Interest
         Remittance Amount shall be distributed (i) first, to the Holders of
         REMIC 2 Regular Interest LT2S-2A, REMIC 2 Regular Interest LT2S-2B and
         REMIC 2 Regular Interest LT2S-2C, pro rata, in an amount equal to (A)
         the Uncertificated Accrued Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates; and (ii) second, to Holders of REMIC 2 Regular
         Interest LT2A-2, REMIC 2 Regular Interest LT2B-2, REMIC 2 Regular
         Interest LT2C-2, REMIC 2 Regular Interest LT2D-2, REMIC 2 Regular
         Interest LT2E-2, REMIC 2 Regular Interest LT2F-2, and REMIC 2 Regular
         Interest LT2P-2, pro rata, in an amount equal to (A) the Uncertificated
         Accrued Interest for such Distribution Date, plus (B) any amounts in
         respect thereof remaining unpaid from previous Distribution Dates;
         provided, however, that amounts payable as Uncertificated Accrued
         Interest in respect of REMIC 2 Regular Interest LT2F-2 shall be
         reduced, when the REMIC 2 Overcollateralized Amount 2 is less than the
         REMIC 2 Target Overcollateralized Amount 2, by the lesser of (x) the
         amount of such difference and (y) the Maximum LT2F-2 Uncertificated
         Accrued Interest Deferral Amount;

              (3) third, to the Holders of REMIC 2 Regular Interests, in an
         amount equal to the remainder of the Available Funds for such
         Distribution Date attributable to the Group I Mortgage Loans after the
         distributions made pursuant to clause (1) above, allocated as follows:

                   (A) (i) 98% to the Holders of REMIC 2 Regular Interest
              LT2A-1, (ii) 1.00% to the Holders of REMIC 2 Regular Interest
              LT2B-1, REMIC 2 Regular Interest LT2C-1, REMIC 2 Regular Interest
              LT2D-1, REMIC 2 Regular Interest LT2E-1 and REMIC 2 Regular
              Interest LT2F-1, in the same proportion as principal payments are
              allocated to the Corresponding Certificates, and (iii) 1.00% to
              the Holders of REMIC 2 Regular Interest LT2G-1, until the

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              Uncertificated Principal Balance of all such Uncertificated REMIC
              2 Regular Interests is reduced to zero;

                   (B) then, to the Holders of REMIC 2 Regular Interest LT2P-2,
              on the Distribution Date immediately following the expiration of
              the latest Prepayment Charge as identified on the Prepayment
              Charge Schedule or any Distribution Date thereafter until $100 has
              been distributed pursuant to this clause; and

                   (C) then, any remaining amount to the Holders of the Class R
              Certificates (in respect of the Class R-2 Interest);

              (4) fourth, to the Holders of REMIC 2 Regular Interests, in an
         amount equal to the remainder of the Available Funds for such
         Distribution Date attributable to the Group II Mortgage Loans after the
         distributions made pursuant to clause (1) above, allocated as follows:

                   (A) (i) 98% to the Holders of REMIC 2 Regular Interest
              LT2A-2, (ii) 1.00% pro rata to the Holders of REMIC 2 Regular
              Interest LT2B-2, REMIC 2 Regular Interest LT2C-2, REMIC 2 Regular
              Interest LT2D-2, and REMIC 2 Regular Interest LT2E-2, and (iii)
              1.00% to the Holders of REMIC 2 Regular Interest LT2F-2, until the
              Uncertificated Principal Balance of all such Uncertificated REMIC
              2 Regular Interests is reduced to zero;

                   (B) then, to the Holders of REMIC 2 Regular Interest LT2P-2,
              on the Distribution Date immediately following the expiration of
              the latest Prepayment Charge as identified on the Prepayment
              Charge Schedule or any Distribution Date thereafter until $100 has
              been distributed pursuant to this clause;

                   (C) then, any remaining amount to the Holders of the Class R
              Certificates (in respect of the Class R-2 Interest); and

              (5) fifth, to REMIC 2 Regular Interest LT2P-1, 100% of the amount
         of Prepayment Charges paid in respect of REMIC 1 Regular Interest
         LT1P-1, and to REMIC 2 Regular Interest LT2P-2, 100% of the amount of
         Prepayment Charges paid in respect of REMIC 1 Regular Interest LT1P-2

provided, however, that 98% and 2% of any principal payments that are
attributable to an Overcollateralization Release Amount with respect to the
Group I Mortgage Loans shall be allocated to Holders of REMIC 2 Regular Interest
LT2A-1 and REMIC 2 Regular Interest LT2G-1, respectively, and 98% and 2% of any
principal payments that are attributable to an Overcollateralization Release
Amount with respect to the Group II Mortgage Loans shall be allocated to Holders
of REMIC 2 Regular Interest LT2A-2 and REMIC 2 Regular Interest LT2F-2,
respectively.

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Section 4.06 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 NIMS Insurer and 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 allocated to any Regular
Certificate shall be allocated by the Trustee on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class C
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
fifth, to the Class M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero. All Realized Losses to be allocated to the
Certificate Principal Balances of all Classes on any Distribution Date shall be
so allocated after the actual distributions to be made on such date as provided
above. All references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

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

         (c) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on each Distribution Date to REMIC 1 Regular Interest
LT1A-1 until the Uncertificated Principal Balance has been reduced to zero and
then to REMIC 1 Regular Interest LT1B-1 until the Uncertificated Principal
Balance has been reduced to zero. All Realized Losses on the Group II Mortgage
Loans shall be allocated by the Trustee on each Distribution Date to

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REMIC 1 Regular Interest LT1A-2 until the Uncertificated Principal Balance has
been reduced to zero and then to REMIC 1 Regular Interest LT1B-2 until the
Uncertificated Principal Balance has been reduced to zero.

         (d) All Realized Losses on the Group I Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 2 Regular Interest LT2A-1
and REMIC 2 Regular Interest LT2G-1 up to an aggregate amount equal to the REMIC
2 Interest Loss Allocation Amount 1, 98% and 2.00%, respectively; second, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-1 and REMIC 2
Regular Interest LT2G-1 up to an aggregate amount equal to the REMIC 2 Principal
Loss Allocation Amount, 98% and 2.00%, respectively; third, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-1, REMIC 2
Regular Interest LT2F-1 and REMIC 2 Regular Interest LT2G-1, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 2
Regular Interest LT2F-1 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest
LT2E-1 and REMIC 2 Regular Interest LT2G-1, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E-1
has been reduced to zero; fifth, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2A-1, REMIC 2 Regular Interest LT2D-1 and REMIC 2
Regular Interest LT2G-1, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-1 has been
reduced to zero; and sixth, to the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2A-1, REMIC 2 Regular Interest LT2C-1 and REMIC 2 Regular
Interest LT2G-1, 98%, 1.00% and 1.00%, respectively, until the Uncertificated
Principal balance of REMIC 2 Regular Interest LT2C-1 has been reduced to zero.

         (e) All Realized Losses on the Group II Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 2 Regular Interest LT2A-2
and REMIC 2 Regular Interest LT2F-2 up to an aggregate amount equal to the REMIC
2 Interest Loss Allocation Amount 1, 98% and 2.00%, respectively; second, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-2 and REMIC 2
Regular Interest LT2F-2 up to an aggregate amount equal to the REMIC 2 Principal
Loss Allocation Amount, 98% and 2.00%, respectively; third, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A-2, REMIC 2
Regular Interest LT2E-2 and REMIC 2 Regular Interest LT2F-2, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 2
Regular Interest LT2E-2 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest
LT2D-2 and REMIC 2 Regular Interest LT2F-2, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D-2
has been reduced to zero; and fifth, to the Uncertificated Principal Balances of
REMIC 2 Regular Interest LT2A-2, REMIC 2 Regular Interest LT2C-2 and REMIC 2
Regular Interest LT2F-2, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C-2 has been
reduced to zero.

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Section 4.07 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 Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

Section 4.08 Commission Reporting.

         Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards and applicable regulations, file with the
Commission via the Electronic Data Gathering Analysis and Retrieval system, a
Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an Exhibit thereto. Prior to January 30, 2002, the Trustee
shall in accordance with industry standards file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
2002, the Trustee shall file a Form 10-K, in substance conforming to industry
standards and applicable regulations, with respect to the Trust Fund. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until 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 Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.

Section 4.09 The Guarantee.

         On each Distribution Date following receipt of a statement (as set
forth in Section 4.03) that indicates a Deficiency Amount for such Distribution
Date, the Guarantor shall distribute a Guarantor Payment in an aggregate amount
equal to the Deficiency Amount for such Distribution Date directly to the
Holders of the Guaranteed Certificates, without first depositing such amount in
the Distribution Account, as follows: (i) the portion of any such Deficiency
Amount related to clause (i) of the definition of Deficiency Amount shall be
distributed to the applicable Class A-1 Certificateholders and Class S-1
Certificateholders in respect of the Interest Distributable Amount payable on
such Certificates on such Distribution Date; and (ii) the portion of any such
Deficiency Amount related to clause (ii) of the definition of Deficiency Amount
shall be distributed as principal in the order provided in Section
4.01(b)(i)(A)(x)(2).

Section 4.10 The Trustee Remittance Report.

         (a) No later than four Business Days prior to each Distribution Date by
noon New York time, the Trustee shall furnish a report (the "Trustee Remittance
Report") in the form

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attached as Exhibit M to this Agreement (together with a statement containing
the information that is required to be included in the statement to be prepared
by the Trustee pursuant to Section 4.03) to the Guarantor and the NIMS Insurer
by electronic medium as agreed to by the Trustee, the Guarantor and the NIMS
Insurer.

         (b) Subject to Section 4.10(d), if in any month the Trustee fails to
deliver the Trustee Remittance Report as provided in Section 4.10(a), the
Guarantor shall use its best efforts to determine the amount of any required
Guarantor Payment. If on any Distribution Date the Guarantor makes any Guarantor
Payment as a result of such failure of the Trustee to deliver the Trustee
Remittance Report, the Trustee shall pay the Guarantor from its own funds (not
from the proceeds of the Trust Fund), not later than the fourth Business Day
following such Distribution Date, a $100 fee plus an amount equal to the product
of (i) the principal portion of such Guarantor Payment, (ii) a percentage equal
to (A) the weighted average of the Pass-Through Rates of the Class A-1
Certificates plus 2.00% divided by (B) 365 and (iii) the number of days between
the date by which the Trustee had been required to deliver the Trustee
Remittance Report pursuant to Section 4.10(a) and the date on which the
Guarantor received the Trustee Remittance Report.

         (c) Subject to Section 4.10(d), if in any month the Trustee fails to
provide the Guarantor the Trustee Remittance Report on or prior to the date
specified in Section 4.10(a), the Trustee shall pay to the Guarantor the
following amounts: (i) upon the first such failure, $500; (ii) upon the second
such failure, $750; and (iii) upon the third such failure, $1,000; provided,
however, that the Trustee shall not be required to make any such payment upon
the first such failure during each successive two year period following the
Closing Date. The fourth consecutive such failure to provide a Trustee
Remittance Report to the Guarantor pursuant to Section 4.10(a) shall constitute
an event of default and permit the Guarantor to remove the Trustee for cause.

         (d) The Trustee shall have no responsibility or liability (including
removal as Trustee) under paragraphs (b) and (c) of this Section 4.10 if the
Trustee's failure to deliver timely the Trustee Remittance Report is due to the
failure of the Master Servicer to furnish the Trustee with a report in
accordance with Section 4.04(a). If the Trustee's failure to deliver timely the
Trustee Remittance Report is due to the failure of the Master Servicer to
furnish the Trustee with a report in accordance with Section 4.04(a), the Master
Servicer shall pay to the Guarantor the amount set forth in Section 4.10(b)
above (i.e. the product of the amounts described in clauses (i), (ii) and (iii)
of Section 4.10(b) above) and the following additional amounts: (i) upon the
first such failure, $500; (ii) upon the second such failure, $750; and (iii)
upon the third such failure, $1,000; provided, however, that the Master Servicer
shall not be required to make any such payment upon the first such failure
during each successive two year period following the Closing Date. The fourth
consecutive such failure to provide the Trustee with a report in accordance with
Section 4.04(a) and thereby causing the Trustee's failure to timely deliver a
Trustee Remittance Report to the Guarantor pursuant to Section 4.10(a) shall
constitute an event of default and permit the Guarantor to remove the Master
Servicer for cause.

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Section 4.11 Loan Data Remittance Report.

         (a) No later than four Business Days prior to each Distribution Date by
noon New York Time, the Master Servicer shall furnish a complete and accurate
report (the "Loan Data Remittance Report") in the form attached as Exhibit N to
this Agreement to the Guarantor and the NIMS Insurer by electronic medium as
agreed to by the Master Servicer, the NIMS Insurer and the Guarantor. In
addition, the Master Servicer shall (i) furnish to the Guarantor and the NIMS
Insurer a report with respect to the Mortgage Loans that have been voluntarily
repurchased by the Master Servicer pursuant to Section 3.16 during the related
Prepayment Period indicating the Mortgage Loan number, the date of repurchase
and the Principal Balance of each Mortgage Loan so repurchased.

         (b) If in any month the Master Servicer fails to provide the Guarantor
the Loan Data Remittance Report on or prior to the date specified in Section
4.11(a) or if such report is deemed to be materially incomplete or inaccurate by
the Guarantor, the Master Servicer shall pay to the Guarantor the following
amounts: (i) upon the first such failure, $500; (ii) upon the second such
failure, $750; and (iii) upon the third such failure, $1,000; provided, however,
that the Master Servicer shall not be required to make any such payment upon the
first such failure during each successive two year period following the Closing
Date. The fourth consecutive such failure to provide a Loan Data Remittance
Report to the Guarantor pursuant to Section 4.11(a) shall constitute an event of
default and permit the Guarantor to remove the Master Servicer for cause.

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                                   ARTICLE V

                                THE CERTIFICATES

Section 5.01 The Certificates.

              (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC 1. At the Closing Date, the aggregate Certificate Principal
Balance of the Certificates (other than the Class S Certificates) will equal the
aggregate Stated Principal Balance of the Mortgage Loans.

         The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-11. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.

         Upon original issue, the Certificates shall be executed by the Trustee
and authenticated and delivered by the Trustee, to or upon the order of the
Depositor. The Certificates shall be executed and attested 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 Book Entry 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
the Book-Entry Certificates may not be transferred by the Trustee except to
another Depository that agrees to hold the Book-Entry for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to the Book-Entry
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

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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 and any other transfer agent (including the Depository or
any successor Depository) to act as Book-Entry Custodian under such conditions
as the predecessor Book-Entry Custodian and the Depository or any successor
Depository may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of any
such appointment of other than the Depository. If the Trustee resigns or is
removed in accordance with the terms hereof, 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, the NIMS Insurer 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 the exercise by Certificateholders of 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 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 issue the Definitive Certificates.
Such Definitive Certificates will be issued in minimum denominations of $50,000,
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $50,000 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

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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.

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 8.12 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, sale, pledge or other disposition of any Class C
Certificate, Class P Certificate or Class R Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer (other than in connection with the initial transfer of any Class C
Certificate, Class P Certificate or Class R Certificates by the Depositor to the
Seller or the transfer of any Class C Certificate, Class P Certificate or Class
R Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller) (i) unless such transfer is
made in reliance upon Rule 144A (as evidenced by the investment letter delivered
to the Trustee, in substantially the form attached hereto as Exhibit J) under
the 1933 Act, the Trustee and the Depositor shall require a written Opinion of
Counsel (which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit L) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Class C
Certificate, Class P Certificate or Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Trust Fund 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) Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 96-92, 61 F.
R. 66334 (December 17, 1996), as amended by PTE 2000-58, 65 F. R. 67765
(November 13, 2000) (the "Exemption"), and that it understands that there are

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certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in U.S. Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (iii) the conditions set forth
in Sections I and III of PTCE 95-60 have been satisfied.

         No transfer of a Class C Certificate, Class P Certificate or Class R
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the 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 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 Class C Certificate,
Class P Certificate or Class R Certificates by the Depositor to the Seller or
the transfer of any Class C Certificate, Class P Certificate or Class R
Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller (in which case, the Depositor,
the Seller and any such affiliate shall have deemed to have represented that the
applicable transferee 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 each transferee the Seller or such an affiliate. Each
transferee of a Class C Certificate, Class P Certificate or Class R Certificate
shall sign a letter substantially in the form of Exhibit I to demonstrate its
compliance with this Section 5.02(c) (other than in connection with the initial
transfer of any Class C Certificate, Class P Certificate or Class R Certificates
by the Depositor to the Seller or the transfer of any Class C Certificate, Class
P Certificate or Class R Certificates by the Seller to an affiliate of the
Seller or to a trust, the depositor of which is an affiliate of the Seller).

         If any Mezzanine Certificate, Class C Certificate, Class P Certificate
or Class R Certificate or any interest therein is acquired or held in violation
of the provisions of the preceding paragraphs, 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.

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              (d) Each Person who has or who acquires any Ownership Interest in
a Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:

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

              (ii)   No Person shall acquire an Ownership Interest in a Class R
                     Certificate unless such Ownership Interest is a pro rata
                     undivided interest.

              (iii)  In connection with any proposed transfer of any Ownership
                     Interest in a Class R Certificate, the Trustee shall as a
                     condition to registration of the transfer, require delivery
                     to it, in form and substance satisfactory to it, of each of
                     the following:

                     A.   an affidavit in the form of Exhibit K hereto from the
                          proposed transferee to the effect that such transferee
                          is a Permitted Transferee and that it is not acquiring
                          its Ownership Interest in the Class R Certificate that
                          is the subject of the proposed transfer as a nominee,
                          trustee or agent for any Person who is not a Permitted
                          Transferee; and

                     B.   a covenant of the proposed transferee to the effect
                          that the proposed transferee agrees to be bound by and
                          to abide by the transfer restrictions applicable to
                          the Class R Certificates.

              (iv)   Any attempted or purported transfer of any Ownership
                     Interest in a Class R Certificate in violation of the
                     provisions of this Section shall be absolutely null and
                     void and shall vest no rights in the purported transferee.
                     If any purported transferee shall, in violation of the
                     provisions of this Section, become a Holder of a Class R
                     Certificate, then the prior Holder of such Class R
                     Certificate that is a Permitted Transferee shall, upon
                     discovery that the registration of transfer of such Class R
                     Certificate was not in fact permitted by this Section, be
                     restored to all rights as Holder thereof retroactive to the
                     date of registration of transfer of such Class R
                     Certificate. The Trustee shall be under no liability to any
                     Person for any registration of transfer of a Class R
                     Certificate that is in fact not permitted by this Section
                     or for making any distributions due on such Class R
                     Certificate to the Holder thereof or taking any other
                     action with respect to

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                     such Holder under the provisions of this Agreement so long
                     as the Trustee received the documents specified in clause
                     (iii). The Trustee shall be entitled to recover from any
                     Holder of a Class R Certificate that was in fact not a
                     Permitted Transferee at the time such distributions were
                     made all distributions made on such Class R Certificate.
                     Any such distributions so recovered by the Trustee shall be
                     distributed and delivered by the Trustee to the prior
                     Holder of such Class R Certificate that is a Permitted
                     Transferee.

              (v)    If any Person other than a Permitted Transferee acquires
                     any Ownership Interest in a Class R Certificate in
                     violation of the restrictions in this Section, then the
                     Trustee shall have the right but not the obligation,
                     without notice to the Holder of such Class R Certificate or
                     any other Person having an Ownership Interest therein, to
                     notify the Depositor to arrange for the sale of such Class
                     R Certificate. The proceeds of such sale, net of
                     commissions (which may include commissions payable to the
                     Depositor or its affiliates in connection with such sale),
                     expenses and taxes due, if any, will be remitted by the
                     Trustee to the previous Holder of such Class R Certificate
                     that is a Permitted Transferee, except that in the event
                     that the Trustee determines that the Holder of such Class R
                     Certificate may be liable for any amount due under this
                     Section or any other provisions of this Agreement, the
                     Trustee may withhold a corresponding amount from such
                     remittance as security for such claim. The terms and
                     conditions of any sale under this clause (v) shall be
                     determined in the sole discretion of the Trustee and it
                     shall not be liable to any Person having an Ownership
                     Interest in a Class R Certificate as a result of its
                     exercise of such discretion.

              (vi)   If any Person other than a Permitted Transferee acquires
                     any Ownership Interest in a Class R Certificate in
                     violation of the restrictions in this Section, then the
                     Trustee will provide to the Internal Revenue Service, and
                     to the persons specified in Sections 860E(e)(3) and (6) of
                     the Code, information needed to compute the tax imposed
                     under Section 860E(e)(1) of the Code on transfers of
                     residual interests to disqualified organizations.

         The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section will not cause such Rating
Agency to downgrade its rating of the NIM Notes or the Certificates and (ii) an
Opinion of Counsel to the effect that such removal will not cause any REMIC
created hereunder to fail to qualify as a REMIC.

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              (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee designated from time to time for such purpose pursuant to Section 8.12,
the Trustee shall execute and 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.

              (g) No service charge shall be made for any registration of
transfer or exchange of Certificates of any Class, 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.

         All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Trustee and disposed of pursuant to its standard
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, the Depositor and
(in the case of a Class C Certificate or Class P Certificate) the NIMS Insurer
such security or indemnity as may be required by them to save each of them, and
the Trust Fund, harmless, then, in the absence of notice to the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor 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) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
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 Master Servicer, the Depositor, the Trustee, the NIMS Insurer, the
Guarantor and any agent of the Master Servicer, the Depositor, the Trustee or
the NIMS Insurer may treat the

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Person, including a Depository, in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.01 and for all other purposes whatsoever, and none of the
Master Servicer, the Depositor, the Trustee, the NIMS Insurer nor any agent of
any of them shall be affected by notice to the contrary.

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                                   ARTICLE VI

                      THE MASTER SERVICER AND THE DEPOSITOR

Section 6.01 Liability of the Master Servicer and the Depositor.

         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 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 and its
qualification as an approved conventional seller/servicer for Fannie Mae or
Freddie Mac in good standing. 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
Freddie Mac; and provided further that the Rating Agencies' ratings of the NIM
Notes, 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 to the Trustee).

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

         None of the Depositor, the Guarantor, 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 Guarantor, 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 willful misfeasance, bad faith or

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negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Master Servicer, the
Guarantor and any director, officer, employee or agent of the Depositor, the
Guarantor 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,
the Guarantor and any director, officer, employee or agent of the Depositor, the
Guarantor 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, the Guarantor 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 and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor, the Guarantor 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, unless the Depositor or the Master Servicer acts
without the consent of Holders of Certificates entitled to at least 51% of the
Voting Rights (which consent shall not be necessary in the case of litigation or
other legal action by either to enforce their respective rights or defend
themselves hereunder), 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.

         The Master Servicer (except the Trustee to the extent it has succeeded
the Master Servicer as required hereunder) indemnifies and holds the Trustee,
the Depositor, the Guarantor and the Trust Fund 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 Trustee, the
Depositor or the Trust Fund may sustain in any way related to the failure of the
Master Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Master Servicer shall
immediately notify the Trustee and the Depositor and the NIMS Insurer 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 Master Servicer shall assume (with the consent of the Trustee) 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 Master Servicer, the
Trustee, the Depositor and/or the Trust Fund in respect of such claim.

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The provisions of this paragraph shall survive the termination of this Agreement
and the payment of the outstanding Certificates.

Section 6.04 Limitation on Resignation of Master Servicer.

         The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with the written consent of
the Trustee and the NIMS Insurer, after consultation with the Guarantor, and
written confirmation from each Rating Agency (which confirmation shall be
furnished to the Depositor and the Trustee) that such resignation will not cause
such Rating Agency to reduce the then current rating of the NIM Notes, the Class
A Certificates or the Mezzanine Certificates. Any such determination pursuant to
clause (i) of 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 reasonably acceptable to the NIMS Insurer, or the Guarantor as provided
in Section 1.04, 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, nor delegate to or subcontract with, nor 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 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 but in no instance shall such Servicing Fees exceed the current
Servicing Fee.

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, the NIMS Insurer,
the Guarantor 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, the NIMS Insurer, the Guarantor 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 that it possesses. To the extent such
information is not otherwise available to the public, the Depositor, the NIMS
Insurer and the

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Trustee shall not disseminate any information obtained pursuant to the preceding
two sentences without the Master Servicer's (or any such Sub-Servicer's) written
consent, except as required pursuant to this Agreement or to the extent that it
is necessary to do so (i) in working with legal counsel, auditors, taxing
authorities or other governmental agencies, rating agencies or reinsurers 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 NIMS Insurer, the Trustee or the Trust Fund, and in either case,
the Depositor or the Trustee, as the case may be, shall use, and the NIMS
Insurer shall be deemed to have agreed with the parties hereto to 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.

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                                  ARTICLE VII

                                     DEFAULT

Section 7.01 Master Servicer Events of Default.

         "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 an
              Advance required to be made from its own funds on any Master
              Servicer Remittance Date pursuant to Section 4.04) 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, the Trustee (in which case notice shall be provided
              by telecopy), or to the Master Servicer, the Depositor and the
              Trustee by the NIMS Insurer, the Guarantor or 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 of the covenants or
              agreements on the part of the Master Servicer contained in this
              Agreement (or, if the Master Servicer is the Seller, the failure
              of the Seller to repurchase a Mortgage Loan as to which a breach
              has been established that requires a repurchase pursuant to the
              terms of the Mortgage Loan Purchase Agreement) which continues
              unremedied for a period of 45 days (30 days in the case of any
              failure to maintain a Sub-Servicing Agreement with an eligible
              Sub-Servicer to the extent required in accordance with Section
              3.02(c)) 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 or the Trustee,
              or to the Master Servicer, the Depositor and the Trustee by the
              NIMS Insurer, the Guarantor or the Holders of Certificates
              entitled to at least 25% of the Voting Rights and (ii) actual
              knowledge of such failure by a Servicing Representative 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,
              marshaling 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 if such proceeding is
              being contested by the Master Servicer in good faith, such decree
              or order shall have remained in force undischarged or unstayed for
              a period of 60 days or results in the entry of an order for relief
              or any such adjudication or appointment; or

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

              (v) the 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 Advance on
              any Master Servicer Remittance Date required to be made from its
              own funds pursuant to Section 4.04 which continues unremedied
              until 3:00 p.m. New York time on the Business Day immediately
              following the Master Servicer Remittance Date; or

              (viii) the Master Servicer ceases to be an approved servicer of
              Freddie Mac; or

              (ix) the fourth consecutive failure of the Master Servicer to
              provide a Loan Data Remittance Report to the Guarantor pursuant to
              Section 4.11(a)

         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 NIMS Insurer
or the Guarantor, or the Holders of Certificates entitled to at least 51% of
Voting Rights, the Trustee shall, by notice in writing to the NIMS Insurer, the
Guarantor and the Master Servicer (and to the Depositor if given by the Trustee
or to the Trustee if given by 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), (viii) or (ix) hereof shall occur, the Trustee shall, by notice in
writing to the NIMS Insurer, the Master Servicer, the Guarantor 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, at its sole cost and expense,

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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, or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
any REO Property (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 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, any of the Trust
REMICs or this Agreement.

         The Trustee 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.

Section 7.02 Trustee to Act; Appointment of Successor.

              (a) 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 shall be subject to 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 2.03(c) and its 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
Advances pursuant to Section 4.04; 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 Advances pursuant to Section 4.04; 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;
provided, however, it is understood and acknowledged by the parties that there
will be a period of transition (not to exceed 90 days) before the servicing
transfer is fully effected. As compensation therefor, the Trustee shall be

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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 (other than amounts which were due or would become due to the Master
Servicer prior to its termination or resignation). Notwithstanding anything
herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Master Servicer to
act as successor Master Servicer under this Agreement and the transactions set
forth or provided for herein. Notwithstanding the above and subject to the next
paragraph, 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 NIMS Insurer, the Guarantor or 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, having a net worth of not less than
$15,000,000 and reasonably acceptable to the NIMS Insurer or Guarantor, as
provided in Section 1.04, 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.

         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.

         Upon removal or resignation of the Master Servicer, the Trustee, with
the cooperation of the Depositor, (x) shall solicit bids for a successor Master
Servicer as described below and (y) pending the appointment of a successor
Master Servicer as a result of soliciting such bids, shall serve as Master
Servicer of the Mortgage Loans serviced by such predecessor Master Servicer. The
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth in the first paragraph of this Section 7.02 (including
the Trustee or any affiliate thereof). Such public announcement shall specify
that the successor Master Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor Master Servicer and
the Depositor; provided, however, that no such fee shall exceed the Servicing
Fee. Within thirty days after any such public announcement, the Trustee with the
cooperation of the Depositor, shall negotiate in good faith and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest satisfactory bid as to the price
they will pay to obtain such servicing. The Trustee, upon receipt of the
purchase price shall pay such purchase price to the Master Servicer being so
removed, after deducting from any sum received by the Trustee from the successor
to the Master Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale,

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transfer and assignment of the servicing rights and responsibilities reasonably
incurred hereunder. After such deductions, the remainder of such sum shall be
paid by the Trustee to the Master Servicer at the time of such sale.

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

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, to the Guarantor and to the NIMS Insurer.

              (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, to the
Guarantor and to the NIMS Insurer notice of each such occurrence, unless such
default or Master Servicer Event of Default shall have been cured or waived.

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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, with the consent of the NIMS Insurer or the Guarantor as
provided in Section 1.04, 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 and the NIMS Insurer (as evidenced by the
written consent of the NIMS Insurer, after consultation with the Guarantor).
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.

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                                  ARTICLE VIII

                                   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 to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee 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 NIMS Insurer or 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

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         available to the Trustee, or exercising any trust or power conferred
         upon the Trustee, under this Agreement.

Section 8.02 Certain Matters Affecting the Trustee.

              (a) Except as otherwise provided in Section 8.01:

              (i) The Trustee may request and rely conclusively 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 and the manner of obtaining consents and
         evidencing the authorization of the execution thereof shall be subject
         to such reasonable regulations as the Trustee may prescribe;

              (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 NIMS Insurer or
         the Certificateholders, pursuant to the provisions of this Agreement,
         unless the NIMS Insurer or such Certificateholders shall have offered
         to the Trustee security or indemnity 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 NIMS Insurer or 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

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         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 the NIMS Insurer or such
         Certificateholders, the Trustee may require reasonable indemnity
         against such expense, or liability from the NIMS Insurer or 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 custodians, nominees or attorneys and shall not be
         responsible for any willful misconduct or negligence of such agents,
         custodians, nominees or attorneys (as long as such agents, custodians,
         nominees or attorneys are appointed with due and proper care);

              (vii) The Trustee shall not be personally liable for any loss
         resulting from the investment of funds held in the Collection Account
         at the direction of the Master Servicer pursuant to Section 3.12; and

              (viii) Except as otherwise expressly provided herein, none of the
         provisions of this Agreement shall require the Trustee to expend or
         risk its own funds or otherwise to incur any liability, financial or
         otherwise, in the performance of any of its duties hereunder, or in the
         exercise of any of its rights or powers (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 performance in
         accordance with the provisions of this Agreement) if it shall have
         reasonable grounds for believing that repayment of such funds or
         indemnity satisfactory to it against such risk or liability is not
         assured to it.

              (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 its name 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 execution and authentication of the Trustee 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 shall not assume any
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 in Section 8.13) or of the Certificates (other than
execution and authentication of the Trustee 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 the 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

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Collection Account by the Master Servicer, other than any funds 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 and may transact banking and/or trust business with the Seller,
the Depositor, the Master Servicer, the Guarantor or their Affiliates.

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 one day's interest earnings (net of
losses) on amounts on deposit in the Distribution Account. In addition to such
interest earnings, the compensation to be paid to the Trustee in respect of its
obligations under this Agreement will be the amounts paid by the Seller pursuant
to a letter agreement between the Trustee and the Seller.

         The Trustee, and any director, officer, employee or agent of the
Trustee, shall be indemnified by REMIC 1 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 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 the Master Servicer's actions or omissions in
connection with this Agreement and the Mortgage Loans, (ii) that constitutes a
specific liability of the Trustee pursuant to Section 10.01(c) or (iii) any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or as a result of a breach of the
Trustee's obligations under Article X hereof. 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. Such
indemnity shall survive the termination of this Agreement and the resignation of
the Trustee.

         As a limitation on the foregoing with respect to certain expenses of
the Trustee, the Trustee shall receive from REMIC 1 amounts with respect to
indemnification for counsel fees and expenses (collectively, "Legal Fees") in
connection with any third-party litigation or other claims alleging violations
of laws or regulations relating to consumer lending and/or servicing of the
Trust Fund (collectively, "Third Party Claims") in an amount not greater than
$25,000 per month, and $600,000 in the aggregate (with amounts in excess of
$25,000 for any month carried-forward to subsequent months, until the $600,000
aggregate maximum is reached). The Trustee shall not have any obligation to
incur additional expenses for which reimbursement is limited

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pursuant to this paragraph in excess of the aggregate limit set forth above
unless it has received reasonable security or indemnity for such additional
expenses. The Certificateholders shall hold the Trustee harmless for any
consequences to such Certificateholders resulting from any failure of the
Trustee to incur any such additional expenses in excess of the aforementioned
aggregate limit.

              (b) Without limiting the Master Servicer's indemnification
obligations under Section 6.03, the Master Servicer agrees to indemnify the
Trustee from, and hold it harmless against, any loss, liability or expense
resulting from 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 under
this Section 8.05(b) 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 Trustee shall pay any annual rating agency fees of the
Rating Agencies for ongoing surveillance from its own funds without right of
reimbursement.

Section 8.06 Eligibility Requirements for Trustee.

         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
conditions 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.

Section 8.07 Resignation or Removal of Trustee.

         The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the NIMS Insurer, the
Guarantor, the Depositor, the Master Servicer and the Certificateholders. Upon
receiving such notice of resignation, 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 acceptable to
the NIMS Insurer or the Guarantor as provided in Section 1.04 and to the Holders
of Certificates entitled to at least 51% of the Voting Rights. 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, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

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         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 the NIMS Insurer, after consultation with
the Guarantor, 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 or the NIMS
Insurer may remove the Trustee and the Depositor may appoint a successor trustee
acceptable to the NIMS Insurer (after consultation with the Guarantor, or, if no
NIM Notes are outstanding and the NIMS Insurer is not owed any amounts in
respect of its guarantee of payment on such notes, acceptable to the Guarantor)
and to the Holders of Certificates entitled to at least 51% of the Voting
Rights, 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, with the consent of the NIMS Insurer or the Guarantor as provided in
Section 1.04, may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed, (except in the case
of appointment by the Guarantor as provided in Section 1.04) 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.

         The NIMS Insurer or the Guarantor as provided in Section 1.04, upon
the failure of the Trustee to perform its obligations hereunder, may remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by the NIMS Insurer or the Guarantor as provided in Section
1.04, 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.

         The fourth consecutive failure to provide a Trustee Remittance Report
to the Guarantor pursuant to Section 4.10(a) shall constitute an event of
default and permit the Guarantor to remove the Trustee for cause.

         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

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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 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 the NIM Notes or 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 1 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, the NIMS Insurer and the Guarantor, 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 1, and to vest in such Person or Persons, in such
capacity, such title to REMIC 1, 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. If the Master Servicer shall not have joined in such appointment or
the NIMS Insurer shall not have approved

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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. If such appointment is
at the request of the Master Servicer then any expense of the Trustee shall be
deemed a Servicing Advance for all purpose of this Agreement, otherwise it will
be an expense of the Trustee and will be payable out of the Trustee's funds.

         In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to 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 1 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.

         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 Appointment of Custodians.

         The Trustee may, with the consent of the Depositor and the Master
Servicer, appoint one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The Trustee shall initially serve as the Custodian and this Agreement shall
serve as the Custodial Agreement. The appointment of any Custodian may at any
time be terminated and a substitute Custodian appointed therefor upon the
reasonable request of the Master Servicer to the Trustee and the consent of the
NIMS Insurer, after consultation with the

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Guarantor, the consent to which shall not be unreasonably withheld. The Trustee
shall pay any and all fees and expenses of any Custodian in accordance with each
Custodial Agreement. Subject to Article VIII hereof, the Trustee agrees to
comply with the terms of each Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders having an interest in any Mortgage File held by such
Custodian. Each Custodian shall be a depository institution or trust company
subject to supervision by federal or state authority, shall have combined
capital and surplus of at least $10,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only as provided in Section 11.01. In no event shall
the appointment of any Custodian pursuant to a Custodial Agreement diminish the
obligations of the Trustee hereunder.

Section 8.12 Appointment of Office or Agency.

         The Trustee will appoint 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
served. As of the Closing Date, the Trustee designates its offices located at
123 Washington Street, New York, New York 10006 for such purpose.

Section 8.13 Representations and Warranties of the Trustee.

         The Trustee hereby represents and warrants to the Master Servicer, the
Guarantor 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, and the
         performance and compliance with the terms of this Agreement, will not
         violate the Trustee's charter or bylaws or constitute a default (or an
         event which, with notice or lapse of time, or both, would constitute a
         default) under, or result in the breach of, any material agreement or
         other instrument to which it is a party or which is applicable to it or
         any of its assets.

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

              (iv) this Agreement, assuming due authorization, execution and
         delivery by the Master Servicer and the Depositor, constitutes a valid,
         legal and binding obligation of the Trustee, enforceable against the
         Trustee 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.

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Section 8.14 Trustee Procedures

         On or prior to the Distribution Date in October 2001 the Trustee shall
cooperate with the Guarantor to confirm that the cash flows, weighted average
lives, yields and credit enhancement default analysis for the Class A-1F
Certificates, Class A-1V Certificates and Class S-1 Certificates are consistent
based on the assumptions and principal and interest methodology furnished by the
Guarantor and are consistent with the model developed by the Trustee for the
calculations that the Trustee is required to make under this Agreement. Such
confirmation shall be in writing to the Guarantor and the NIMS Insurer, in such
form as the Guarantor and the Trustee shall agree.

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                                   ARTICLE IX

                                   TERMINATION

Section 9.01 Termination Upon Purchase 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, the
Guarantor 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 provide for
and the Trustee to make payments in respect of the REMIC 1 Regular Interests or
the Classes of Certificates as hereinafter set forth) shall terminate upon the
later of (A) the payment in full of all amounts owing to the Guarantor hereunder
unless the Guarantor shall otherwise consent, and (B) 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 1 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 1; 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. The
purchase by the Terminator of all Mortgage Loans and each REO Property remaining
in REMIC 1 shall be at a price (the "Termination Price") equal to the greater of
(A) the aggregate Purchase Price of all the Mortgage Loans included in REMIC 1,
plus the appraised value of each REO Property, if any, included in REMIC 1, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion, any unpaid Guarantor
Reimbursement Amount and unpaid Guarantee Fee and (B) the aggregate fair market
value of all of the assets of REMIC 1 (as determined by the Terminator and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01) plus
any unpaid Guarantor Reimbursement Amount and unpaid Guarantee Fee, and in the
case of both clauses (A) and (B) of this sentence, any additional amounts
necessary to pay all interest accrued on, as well as amounts necessary to pay in
full the principal balance of, the NIM Notes and any amounts necessary to
reimburse the NIMS Insurer for all amounts paid under the NIMs insurance policy
and any other amounts reimbursable or otherwise payable to the NIMS Insurer, in
each case, with interest thereon at the applicable rate set forth in the
Indenture and to the extent not previously reimbursed or paid.

              (b) The Master Servicer shall have the right and, if the Master
Servicer does not exercise such right, the NIMS Insurer shall have the right
(the party exercising such right, the "Terminator") to purchase all of the
Mortgage Loans and each REO Property in both Loan Groups remaining in REMIC 1
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 1 pursuant to clause (i) above

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only if the aggregate Stated Principal Balance of the Mortgage Loans and each
REO Property remaining in the Trust Fund at the time of such election is equal
to or 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
Holders of the Residual Certificates agree, 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 C Certificates.

              (c) Notice of the liquidation of the REMIC 1 Regular Interests
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 final payment in respect of the REMIC 1 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 1 Regular Interests or the Certificates from and after the 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 designated in such notice for purposes of such surrender. 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 1 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 9.01(d) below.
Upon certification to the Trustee by a Servicing Representative of the making of
such final deposit, the Trustee shall promptly release or cause to be released
to the Terminator the Mortgage Files for the remaining Mortgage Loans, and the
Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer.

              (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. On the
final Distribution Date, the Trustee will withdraw from the Distribution Account
and remit to the Guarantor amounts otherwise payable to the Guarantor on such
Distribution Date in accordance with Section 4.01. Any funds not distributed to
any Holder or Holders of Certificates being retired on such Distribution Date
because of the failure of such Holder or Holders to tender their

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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
9.01 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 remaining related non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the trust funds. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Banc of America Securities LLC 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 9.01.

         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 1 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-l
              and shall satisfy all requirements of a qualified liquidation
              under Section 860F of the Code and any regulations thereunder, as
              evidenced by an Opinion of Counsel delivered to the Guarantor, the
              Trustee, and the Depositor 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 1 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 Terminator, the Trustee shall prepare or
cause to be prepared the documentation required in connection with the adoption
of a plan of liquidation of each Trust REMIC pursuant to this Section 9.02.

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         (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.

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                                   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 on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are issued
copies of which forms and returns shall promptly be furnished by the Trustee to
the NIMS Insurer. For the purposes of the REMIC election in respect of REMIC 1,
the REMIC 1 Regular Interests shall be designated as the Regular Interests in
REMIC 1 and the Class R-1 Interest shall be designated as the Residual Interest
in REMIC 1. For the purposes of the REMIC election in respect of REMIC 2, the
REMIC 2 Regular Interests shall be designated as the Regular Interest in REMIC 2
and the Class R-2 Interest shall be designated as the Residual Interests in
REMIC 2. For the purposes of the REMIC election in respect of REMIC 3, the
Regular Certificates shall be designated as the Regular Interests in REMIC 3 and
the Class R-3 Interest shall be designated as the Residual Interest in REMIC 3.
The Trustee shall not permit the creation of any "interests" in REMIC 1, REMIC 2
or REMIC 3 (within the meaning of Section 860G of the Code) other than the REMIC
1 Regular Interests, the REMIC 2 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 pay out of funds on deposit in the Distribution
Account, 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) unless such expenses, professional
fees or any administrative or judicial proceedings are incurred by reason of the
Trustee's willful misfeasance, bad faith or negligence. The Trustee, as agent
for all 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, after consultation with the Guarantor and upon
accommodation of the Guarantor's reasonable requests, the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto and will be entitled to
reimbursement from the Trust Fund for any expenses incurred by the Trustee in
connection therewith unless such administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority is incurred by
reason of the Trustee's willful misfeasance, bad faith or negligence. The holder
of the largest Percentage Interest of the Class R Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations Section 301.6231(a)(7)-1, as the tax
matters person of each related Trust REMIC created hereunder. By their
acceptance thereof, the holder of the largest Percentage Interest of

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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 in a timely manner all of
the Tax Returns in respect of each REMIC created hereunder, copies of which Tax
Returns it shall promptly furnish to the NIMS Insurer. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.

         (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 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 Master Servicer shall
provide on a timely basis to the Trustee such information with respect to the
assets of the Trust Fund, including, without limitation, the Mortgage Loans, as
is in its possession and reasonably required by the Trustee to enable it to
perform its obligations under this subsection. In addition, 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. The Depositor shall also
provide such information or data to the NIMS Insurer.

         (f) The Trustee shall take such action and shall cause each Trust REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist the Trustee, to the extent reasonably requested by
the Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, 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, the Guarantor and the NIMS
Insurer have received an Opinion of Counsel, addressed to the Trustee, the
Guarantor and the NIMS Insurer (at the expense of the party seeking to take such
action but in no event at the expense of the

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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. The
Trustee shall deliver to the NIMS Insurer and the Guarantor a copy of any such
advice or opinion. 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 a 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 both REMIC 1 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.

         (g) In the event that any tax is imposed on "prohibited transactions"
of any Trust REMIC created hereunder as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of such REMIC as defined in
Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the 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 otherwise (iii) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.

         (h) On or before April 15 of each calendar year, commencing April 15,
2002, the Trustee shall deliver to the Master Servicer, the NIMS Insurer, the
Guarantor and each Rating Agency a Certificate from a Responsible Officer 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, the Trustee shall not accept any
contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan

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delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause any Trust REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject any Trust REMIC to any tax
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.

         (k) 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 permit any Trust REMIC to receive any income from assets other
than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.

Section 10.02 Prohibited Transactions and Activities.

         None of the Depositor, the 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 1, (iii) the termination of REMIC 1
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), nor
sell or dispose of any investments in the Collection Account or the Distribution
Account for gain, nor accept any contributions to any Trust REMIC after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it, the Guarantor and the NIMS Insurer
have received an Opinion of Counsel, addressed to the Trustee, the Guarantor and
the NIMS Insurer (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) 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 Trustee, Master Servicer and Depositor 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 or any state, local or franchise taxes
imposed upon the Trust as a result of the location of the Trustee.

         (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 or any state, local or
franchise taxes imposed upon the Trust as a result of the location of the Master
Servicer or any subservicer.

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

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                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01 Amendment.

         This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer, the Trustee, the Guarantor and, if
applicable, the Custodian, with consent of the NIMS Insurer, and 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 in any Custodial
Agreement, (iii) to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or desirable to maintain the qualification of the
Trust Fund as a REMIC at all times that any Certificate is outstanding or to
avoid or minimize the risk of the imposition of any tax on the Trust Fund
pursuant to the Code that would be a claim against the Trust Fund, provided that
the Trustee, the Guarantor, the NIMS Insurer, the Depositor and the Master
Servicer have received an Opinion of Counsel to the effect that (A) such action
is necessary or desirable to maintain such qualification or to avoid or minimize
the risk of the imposition of any such tax and (B) such action will not
adversely affect the status of the Trust Fund as a REMIC or adversely affect in
any material respect the interest of any Certificateholder or (iv) to make any
other provisions with respect to matters or questions arising under this
Agreement or in any Custodial Agreement which shall not be inconsistent with the
provisions of this Agreement or such Custodial Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, the Guarantor and the NIMS Insurer adversely affect in any material
respect the interests of any Certificateholder and, provided, further, that (A)
such action will not affect in any material respect the permitted activities of
the Trust and (B) such action will not increase in any material respect the
degree of discretion which the Master Servicer is allowed to exercise in
servicing the Mortgage Loans. No amendment shall be deemed to adversely affect
in any material respect the interests of any Certificateholder who shall have
consented thereto, and no Opinion of Counsel shall be required to address the
effect of any such amendment on any such consenting Certificateholder.

         This Agreement or any Custodial Agreement may also be amended from time
to time by the Depositor, the Master Servicer, the Trustee, the Guarantor and,
if applicable, the Custodian, with the consent of the NIMS Insurer, and 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 any Custodial Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (ii) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner, other than as described
in (i), without the consent of the Holders of Certificates of such Class
evidencing at least 66% of the Voting Rights allocated to such Class, or (iii)
modify the consents required by the immediately preceding clauses (i) and (ii)
without the consent of the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the

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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.

         Notwithstanding any contrary provision of this Agreement, the Trustee,
the Guarantor and the NIMS Insurer shall be entitled to receive an Opinion of
Counsel to the effect that such amendment will not result in the imposition of
any tax on any Trust REMIC pursuant to the REMIC Provisions or cause any Trust
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

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

         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.

         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 Trust, but only upon direction of
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 together constitute but
one and the same instrument.

Section 11.03 Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) 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

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Trust, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

         Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third 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 whatever 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, which priority or
preference is not otherwise provided for herein, 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 11.03 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; Jurisdiction.

         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 11.05 Notices.

         All directions, demands and notices hereunder 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, by facsimile or by express delivery service,
to (a) in the case of the Master Servicer, Long Beach Mortgage Company, 1100
Town & Country Road, Suite 1600, Orange, California 92868, Attention: General
Counsel (telecopy number: (714) 543-6847), or such other address or telecopy
number as may hereafter be furnished to the Depositor and the Trustee in writing
by the

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Master Servicer, (b) in the case of the Trustee, Bankers Trust Company of
California, N.A., 1761 St. Andrew Place, Santa Anna, California 92705-4934,
Attention: Securities Administration Services (telecopy number (714) 247-6000)
or such other address or telecopy number as may hereafter be furnished to the
Depositor and the Master Servicer in writing by the Trustee, (c) in the case of
the Depositor, Long Beach Securities Corp., 1100 Town & Country Road, Suite
1600, Orange California 92868, Attention: General Counsel (telecopy number:
(714) 543-6847), or such other address or telecopy number as may be furnished to
the aster Servicer and the Trustee in writing by the Depositor, (d) in the case
of Guarantor, Freddie Mac, 8200 Jones Branch Drive, McLean, Virginia 22102,
Attention: Director, Mortgage Security Operations -- Funding and Investments
(telecopy number (703) 903-2992), and (e) in the case of the NIMS Insurer,
Radian Insurance Inc., 1601 Market Street, Philadelphia, Pennsylvania 19103,
Attention: General Counsel (telecopy number: (215) 405-9160). Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Notice of any Master Servicer default shall be given by
telecopy and by certified mail. Any notice so mailed within the time prescribed
in this Agreement shall be conclusively presumed to have duly been given when
mailed, whether or not the Certificateholder receives such notice. A copy of any
notice required to be telecopied hereunder shall also 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 for any reason whatsoever be 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 the Rating Agencies and the NIMS Insurer.

         The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies, the Guarantor and the NIMS Insurer with respect to each of
the following of which it has actual knowledge:

         1.   Any 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;

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

         7.   The Trustee, were it to succeed as Master Servicer, is unable to
              make advances regarding delinquent Mortgage Loans; and

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

         In addition, the Trustee shall promptly make available to each Rating
Agency copies of each Statement to Certificateholders described in Section 4.03
hereof 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
              hereof;

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

         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 or mailed by
first class mail, postage prepaid, or by express delivery service to Moody's
Investors Service, Inc., 99 Church Street, New York, NY 10048, Attention: MBS
Monitoring/Long Beach Mortgage Loan Trust 2001-2; Fitch, Inc., One State Street
Plaza, New York, New York 10004, and the Guarantor and the NIMS Insurer at the
addresses provided in Section 11.05.

         In addition, each party hereto agrees that it will furnish or make
available to the NIMS Insurer a copy of any opinions, notices, reports,
schedules, certificates, statements, rating confirmation letters or other
information that are furnished hereunder to the Trustee or the
Certificateholders.

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 NIMS Insurer's Rights.

         The NIMS Insurer shall be deemed a third-party beneficiary of this
Agreement, and shall be entitled to enforce such rights, in each case, as if it
were a party hereto. Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the NIMS Insurer hereunder (i) shall not be operable
whenever an Insurer Default or an Insurer Insolvency Event and a Backup Insurer
Default (as defined in the Indenture) shall have occurred and be continuing and
(ii) except in the case of any right to indemnification hereunder shall
permanently cease to be operable upon the later to occur of (A) the payment in
full of the NIM Notes as provided in the Indenture and (B) the payment in full
to the NIMS Insurer of any amounts owed to the NIMS Insurer as provided in the
Indenture.

                                      166
<PAGE>

Section 11.10 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 by the Depositor 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)(i) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                                      167
<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, all as of the day and year first above written.

                                       LONG BEACH SECURITIES CORP.,
                                       as Depositor


                                       By:
                                          --------------------------------------
                                          Name:  Jeffery A.  Sorensen
                                          Title: Senior Vice President

                                       LONG BEACH MORTGAGE COMPANY,
                                         as Master Servicer


                                       By:
                                          --------------------------------------
                                          Name:    Jeffery A.  Sorensen
                                          Title:   Senior Vice President

                                       BANKERS TRUST COMPANY OF
                                       CALIFORNIA, N.A.,
                                         as Trustee


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

                                       FEDERAL HOME LOAN MORTGAGE CORPORATION,
                                       as Guarantor (with respect to the Class
                                       A-1 Certificates and the Class S-1
                                       Certificates)


                                       By:
                                          --------------------------------------
                                          Name:  Mike L. Dawson
                                          Title: Director - Securities Marketing
                                                 - Investments

                                      168
<PAGE>

STATE OF          )
                  )  ss.:
COUNTY OF         )

         On the __th day of ________, 2001 before me, a notary public in and for
said State, personally appeared ________________ known to me to be a
_______________ of Long Beach Securities Corp., a Delaware corporation 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

                                      169
<PAGE>

STATE OF          )
                  )  ss.:
COUNTY OF         )

         On the __th day of ________, 2001 before me, a notary public in and for
said State, personally appeared ________________ known to me to be a
_______________ of Long Beach Mortgage Company, a corporation 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

                                      170
<PAGE>

STATE OF          )
                  )  ss.:
COUNTY OF         )

         On the __th day of ________, 2001 before me, a notary public in and for
said State, personally appeared ________________, known to me to be a
_____________________ of Bankers Trust Company of California, N.A., a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said association, 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

                                      171
<PAGE>

STATE OF          )
                  )  ss.:
COUNTY OF         )

         On the __th day of ________, 2001 before me, a notary public in and for
said State, personally appeared ________________, known to me to be a
____________________ of Federal Home Loan Mortgage Corporation, a
_____________________ that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, 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

                                       172



<PAGE>

                             CLASS A-1V CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS BEEN SOLD TO FREDDIE MAC, ALSO KNOWN AS THE FEDERAL HOME
LOAN MORTGAGE CORPORATION, PURSUANT TO A PURCHASE AGREEMENT DATED AS OF JULY 11,
2001 AMONG FREDDIE MAC, THE MASTER SERVICER AND THE DEPOSITOR ("THE PURCHASE
AGREEMENT"), WHICH AGREEMENT CONTAINS RESTRICTIONS ON TRANSFER OF THE
CERTIFICATE. THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE PURCHASE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                            :   1

Cut-off Date                               :   With respect to any Mortgage
                                               Loan, the later of (i) the date
                                               of origination of such Mortgage
                                               Loan or (ii) July 1, 2001

First Distribution Date                    :   August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")          :   $[__]

Original Class Certificate Principal
Balance of this Class                      :   $[__]

Percentage Interest                        :   [100.00%]

Pass-Through Rate                          :   Variable

Class                                      :   A-1V

Assumed Maturity Date                      :   July 25, 2031



                                      A-1-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                   Class A-1V

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1V Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1V
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Freddie Mac, also known as The Federal Home Loan
Mortgage Corporation is the registered owner of the Percentage Interest
evidenced by this Class A-1V Certificate (obtained by dividing the Denomination
of this Class A-1V Certificate by the Original Class Certificate Principal
Balance) in certain monthly distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Long Beach Securities Corp. (the
"Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of July 1, 2001 (the "Agreement") among the Depositor, as
depositor Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Freddie Mac, as guarantor with respect to the Class A-1 Certificates
and the Class S-1 Certificates, and Bankers Trust Company of California, N.A. as
trustee (the "Trustee"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Class A-1V
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A-1V
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.



         Reference is hereby made to the further provisions of this Class A-1V
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-1V Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.



                                      A-1-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                  LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                  By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity, but
                                      solely as Trustee

                                  By
                                    -------------------------------------------


This is one of the Class A-1V Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee




                                      A-1-3
<PAGE>






                       [Reverse of Class A-1V Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

                                     A-1-4
<PAGE>

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.




                                     A-1-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      --------------------------

                                          --------------------------------------
                                           Signature by or on behalf of assignor





                                     A-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>



                             CLASS A-1F CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS BEEN SOLD TO FREDDIE MAC, ALSO KNOWN AS THE FEDERAL HOME
LOAN MORTGAGE CORPORATION, PURSUANT TO A PURCHASE AGREEMENT DATED AS OF JULY 11,
2001 AMONG FREDDIE MAC, THE MASTER SERVICER AND THE DEPOSITOR ("THE PURCHASE
AGREEMENT"), WHICH AGREEMENT CONTAINS RESTRICTIONS ON TRANSFER OF THE
CERTIFICATE. THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE PURCHASE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                            :   1

Cut-off Date                               :   With respect to any Mortgage
                                               Loan, the later of (i) the date
                                               of origination of such Mortgage
                                               Loan or (ii) July 1, 2001

First Distribution Date                    :   August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")
                                           :   $[__]

Original Class Certificate Principal
Balance of this Class                      :   $[__]

Percentage Interest                        :   [100.00%]

Pass-Through Rate                          :   Variable

Class                                      :   A-1F

Assumed Maturity Date                      :   July 25, 2031




                                     A-1-8
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                   Class A-1F

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1F Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1F
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Freddie Mac, also known as The Federal Home Loan
Mortgage Corporation is the registered owner of the Percentage Interest
evidenced by this Class A-1F Certificate (obtained by dividing the Denomination
of this Class A-1F Certificate by the Original Class Certificate Principal
Balance) in certain monthly distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Long Beach Securities Corp. (the
"Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of July 1, 2001 (the "Agreement") among the Depositor, as
depositor Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Freddie Mac, as guarantor with respect to the Class A-1 Certificates
and the Class S-1 Certificates, and Bankers Trust Company of California, N.A. as
trustee (the "Trustee"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Class A-1F
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A-1F
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.

         Reference is hereby made to the further provisions of this Class A-1F
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-1F Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     A-1-9
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                 LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                 By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                                 By
                                   --------------------------------------------

This is one of the Class A-1F Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     A-1-10
<PAGE>



                       [Reverse of Class A-1F Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     A-1-11
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     A-1-12
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor





                                     A-1-13
<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-1-14
<PAGE>



                             CLASS A-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")
                                           :  $[__]

Original Class Certificate Principal
Balance of this Class                      :  $[__]

Percentage Interest                        :  [100.00%]

Pass-Through Rate                          :  Variable

CUSIP                                      :  [        ]

Class                                      :  A-2

Assumed Maturity Date                      :  July 25, 2031



                                     A-2-1
<PAGE>


                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class A-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the Denomination of this Class A-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class A-2 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A-2 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class A-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     A-2-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                 LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                 By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                                 By
                                   --------------------------------------------


This is one of the Class A-2 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     A-2-3
<PAGE>



                       [Reverse of Class A-2 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     A-2-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.




                                     A-2-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor






                                     A-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>


                             CLASS S-1 CERTIFICATES

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS BEEN SOLD TO FREDDIE MAC, ALSO KNOWN AS THE FEDERAL HOME
LOAN MORTGAGE CORPORATION, PURSUANT TO A PURCHASE AGREEMENT DATED AS OF JULY 11,
2001 AMONG FREDDIE MAC, THE MASTER SERVICER AND THE DEPOSITOR ("THE PURCHASE
AGREEMENT"), WHICH AGREEMENT CONTAINS RESTRICTIONS ON TRANSFER OF THE
CERTIFICATE. THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE PURCHASE AGREEMENT.

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, AS AMENDED (THE "CODE").

Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Certificate Notional Amount of
this Certificate ("Denomination")          :  $[__]

Original Class Certificate Notional
Amount of this Class                       :  $[__]

Percentage Interest                        :  100.00%

Pass-Through Rate                          :  Variable

Class                                      :  S-1

Assumed Maturity Date                      :  January 25, 2004




                                     S-1-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class S-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Class S-1 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.

         This certifies that Freddie Mac, formerly known as The Federal Home
Loan Mortgage Corporation is the registered owner of the Percentage Interest
evidenced by this Class S-1 Certificate (obtained by dividing the Denomination
of this Class S-1 Certificate by the Original Class Certificate Principal
Balance) in certain monthly distributions with respect to a Trust consisting
primarily of the Mortgage Loans deposited by Long Beach Securities Corp. (the
"Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of July 1, 2001 (the "Agreement") among the Depositor, as
depositor Long Beach Mortgage Company, as master servicer (the "Master
Servicer") Freddie Mac, as guarantor with respect to the Class A-1 Certificates
and the Class S-1 Certificates, and Bankers Trust Company of California, N.A. as
trustee (the "Trustee"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Class S-1
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class S-1
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.

         Reference is hereby made to the further provisions of this Class S-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class S-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     S-1-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                  LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                  By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity, but
                                      solely as Trustee

                                  By
                                    -------------------------------------------


This is one of the Class S-1 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee




                                     S-1-3
<PAGE>



                       [Reverse of Class S-1 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     S-1-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     S-1-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor






                                     S-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.









                                     S-1-7
<PAGE>

                             CLASS S-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Certificate Notional Amount of
this Certificate ("Denomination")          :  $[__]

Original Class Certificate Notional
Amount of this Class                       :  $[__]

Percentage Interest                        :  100.00%

Pass-Through Rate                          :  Variable

CUSIP                                      :  [        ]

Class                                      :  S-2

Assumed Maturity Date                      :  January 25, 2004





                                     S-2-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class S-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Class S-2 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class S-2 Certificate (obtained by
dividing the Denomination of this Class S-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class S-2 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class S-2 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class S-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class S-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     S-2-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                    not in its individual capacity, but
                                    solely as Trustee

                                By
                                  -------------------------------------------

This is one of the Class S-2 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     S-2-3
<PAGE>



                       [Reverse of Class S-2 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     S-2-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     S-2-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor





                                     S-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.






                                     S-2-7
<PAGE>


                             CLASS M-1 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES AND THE CLASS S-2 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $[___]

Original Class Certificate Principal
Balance of this Class                      :  $[___]

Percentage Interest                        :  100.00%

Pass-Through Rate                          :  Variable

CUSIP                                      :  [    ]

Class                                      :  M-1

Assumed Maturity Date                      :  July 25, 2031




                                     M-1-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class M-1

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-1 Certificate (obtained by
dividing the Denomination of this Class M-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-1 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-1 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     M-1-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                  LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                  By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity, but
                                      solely as Trustee

                                  By
                                    -------------------------------------------

This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     M-1-3
<PAGE>



                       [Reverse of Class M-1 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer and the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     M-1-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     M-1-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor






                                     M-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.







                                     M-1-7
<PAGE>



                             CLASS M-2 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES AND THE
CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

Certificate No.                            :   1

Cut-off Date                               :   With respect to any Mortgage
                                               Loan, the later of (i) the date
                                               of origination of such Mortgage
                                               Loan or (ii) July 1, 2001

First Distribution Date                    :   August 27, 2001
Initial Certificate Principal Balance of
this Certificate ("Denomination")          :   $[__]

Original Class Certificate Principal
Balance of this Class                      :   $[__]

Percentage Interest                        :   100.00%

Pass-Through Rate                          :   Variable

CUSIP                                      :   [   ]

Class                                      :   M-2

Assumed Maturity Date                      :   July 25, 2031




                                     M-2-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class M-2

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-2 Certificate (obtained by
dividing the Denomination of this Class M-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-2 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-2 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     M-2-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                 LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                 By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                     not in its individual capacity, but
                                     solely as Trustee

                                 By
                                   -------------------------------------------

This is one of the Class M-2 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     M-2-3
<PAGE>



                       [Reverse of Class M-2 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                     M-2-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     M-2-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor






                                     M-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.









                                     M-2-7
<PAGE>


                             CLASS M-3 CERTIFICATES

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 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.

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, AS AMENDED (THE "CODE").

Certificate No.                            : 1

Cut-off Date                               : With respect to any Mortgage
                                             Loan, the later of (i) the date
                                             of origination of such Mortgage
                                             Loan or (ii) July 1, 2001

First Distribution Date                    : August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")          : $[__]

Original Class Certificate Principal
Balance of this Class                      : $[__]

Percentage Interest                        : 100.00%

Pass-Through Rate                          : Variable

CUSIP                                      : [        ]

Class                                      : M-3

Assumed Maturity Date                      : July 25, 2031



                                     M-3-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                    Class M-3

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-3 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-3 Certificate (obtained by
dividing the Denomination of this Class M-3 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-3 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-3 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Class M-3
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class M-3 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                     M-3-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                             LONG BEACH MORTGAGE LOAN TRUST 2001-2

                             By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                 not in its individual capacity, but
                                 solely as Trustee

                             By
                               -------------------------------------------


This is one of the Class M-3 Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                     M-3-3
<PAGE>



                       [Reverse of Class M-3 Certificate]

                      LONG BEACH MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.


                                     M-3-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                     M-3-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor







                                     M-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.




                                     M-3-7
<PAGE>



                              CLASS C CERTIFICATES

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, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
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.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.



Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Notional Amount of this
Certificate ("Denomination")               :  $[__]

Original Notional Amount of this Class     :  $[__]

Percentage                                 :  100.00%

Class                                      :  C





                                      C-1
<PAGE>


                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                     Class C

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class C Certificate (obtained
by dividing the Denomination of this Class C Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class C Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class C Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.

         Reference is hereby made to the further provisions of this Class C
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                      C-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                             LONG BEACH MORTGAGE LOAN TRUST 2001-2

                             By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                 not in its individual capacity, but
                                 solely as Trustee

                             By
                               -------------------------------------------

This is one of the Class C Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                      C-3
<PAGE>


                        [Reverse of Class C Certificate]

                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                      C-4
<PAGE>

         The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or NIMs Insurer may purchase, in whole, from the Trust the Mortgage
Loans in the manner and at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                      C-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor








                                      C-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.





                                      C-7
<PAGE>



                               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, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.


Certificate No.                            :  1

Cut-off Date                               :  With respect to any Mortgage
                                              Loan, the later of (i) the date
                                              of origination of such Mortgage
                                              Loan or (ii) July 1, 2001

First Distribution Date                    :  August 27, 2001

Initial Certificate Principal Balance of
this Certificate ("Denomination")          :  $200.00

Original Class Certificate Principal
Balance of this Class                      :  $200.00

Percentage Interest                        :  100.00%

Class                                      :  P






                                      P-1
<PAGE>



                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                     Class P

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting of first lien and second lien, fixed rate and
         adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class P Certificate (obtained
by dividing the Denomination of this Class P Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of July 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class P Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class P Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         This Certificate does not have a pass-through rate and will be entitled
to distributions only to the extent set forth in the Agreement.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.

         Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

         This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.





                                      P-2
<PAGE>



         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                  LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                  By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity,
                                      but solely as Trustee

                                  By
                                    -------------------------------------------

This is one of the Class P Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                      P-3
<PAGE>



                        [Reverse of Class P Certificate]

                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                      P-4
<PAGE>

         The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                      P-5
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor









                                      P-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.





                                      P-7
<PAGE>



                              CLASS R CERTIFICATES

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
"RESIDUAL INTERESTS" IN THREE SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

Certificate No.                            : 1

Cut-off Date                               : With respect to any Mortgage
                                             Loan, the later of (i) the date
                                             of origination of such Mortgage
                                             Loan or (ii) July 1, 2001

First Distribution Date                    : August 27, 2001

Percentage Interest                        : 100.00%

Class                                      : R




                                      R-1
<PAGE>



                      Long Beach MORTGAGE LOAN TRUST 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2
                                     Class R

         evidencing the Percentage Interest in the distributions allocable to
         the Certificates of the above-referenced Class with respect to the
         Trust consisting primarily of a pool of first lien and second lien,
         fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")

                    LONG BEACH SECURITIES CORP., as Depositor

         This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates.

         This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of July 1, 2001
(the "Agreement") among the Depositor, Long Beach Mortgage Corporation, as
master servicer (the "Master Servicer") and Bankers Trust Company of California,
N.A. as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

         This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in Santa Ana, California.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely


                                      R-2
<PAGE>

null and void and will vest no rights in the purported transferee. Pursuant to
the Agreement, The Trustee will provide the Internal Revenue Service and any
pertinent persons with the information needed to compute the tax imposed under
the applicable tax laws on transfers of residual interests to disqualified
organizations, if any person other than a Permitted Transferee acquires an
Ownership Interest on a Class R Certificate in violation of the restrictions
mentioned above.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.




                                      R-3
<PAGE>





         IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.

Dated:  July __, 2001

                                  LONG BEACH MORTGAGE LOAN TRUST 2001-2

                                  By: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                      not in its individual capacity,
                                      but solely as Trustee

                                  By
                                    -------------------------------------------


This is one of the Class R Certificates
referenced in the within-mentioned Agreement


By
  -------------------------------------------
   Authorized Signatory of
   Bankers Trust Company of California, N.A.,
   as Trustee





                                      R-4
<PAGE>



                        [Reverse of Class R Certificate]

                      Long Beach Mortgage Loan Trust 2001-2
                           Asset-Backed Certificates,
                                  Series 2001-2

         This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-2, Asset-Backed Certificates,
Series 2001-2 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.

         Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.



                                      R-5
<PAGE>

         The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.

         On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the Principal
Balance of the Mortgage Loans as of the Cut-off Date, the Master Servicer or the
NIMs Insurer may purchase, in whole, from the Trust the Mortgage Loans in the
manner and at a purchase price determined as provided in the Agreement. In the
event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
(iii) the Distribution Date in July 2031.

         Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.





                                      R-6
<PAGE>



                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

         I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
                         -------------------------------------------------------

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

Dated:
      -------------------------


                                        -------------------------------------
                                        Signature by or on behalf of assignor










                                      R-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.





                                      R-8
<PAGE>





                                    EXHIBIT B
                                   [RESERVED]



                                      B-1
<PAGE>



                                    EXHIBIT C

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT




                                       C-1

<PAGE>


                        MORTGAGE LOAN PURCHASE AGREEMENT

                  This is a Mortgage Loan Purchase Agreement (the "Agreement"),
dated July 18, 2001, between Long Beach Securities Corp., a Delaware corporation
(the "Purchaser") and Long Beach Mortgage Company, a Delaware corporation (the
"Seller").

                              Preliminary Statement

                  The Seller intends to sell the Mortgage Loans (as hereinafter
defined) 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 constituting the trust fund. The trust fund will be evidenced by
fixed rate and adjustable rate asset backed certificates designated as Long
Beach Mortgage Loan Trust Series 2001-2, Asset-Backed Certificates 2001-2 (the
"Certificates"). The Certificates will consist of eleven classes of
certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement, dated as of July 1, 2001 (the "Pooling and Servicing
Agreement"), among the Purchaser, as depositor, Bankers Trust Company of
California, N.A., as trustee, Freddie Mac, as guarantor with respect to the
Class A-1 Certificates and the Class S-1 Certificates, and the Seller, as master
servicer (in such capacity, the "Master Servicer"). 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 July 20, 2001 (the "Closing Date"), certain fixed-rate
and adjustable-rate conventional residential mortgage loans (the "Mortgage
Loans"), having an aggregate principal balance as of the close of business on
July 1, 2001 (the "Cut-off Date") of approximately $1,125,593,429, after giving
effect to all payments due on the Mortgage Loans on or before the Cut-off Date,
whether or not received.

                  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 on the Closing Date 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. 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.

                  In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall on the Closing Date, as described in Section 8
hereof, (i) pay to or upon the order of the Seller in immediately available
funds an amount (the "Purchase Price") equal to the net sale proceeds of the
Class A Certificates, the Class S Certificates and the Mezzanine Certificates
and (ii) deliver to


<PAGE>

Long Beach Asset Holdings Corp. upon the order of the Seller the Class C
Certificates, the Class P Certificates and the Class R Certificates (the "Long
Beach Certificates").

                  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.

                  Pursuant to the Pooling and Servicing Agreement, the Purchaser
will 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 Purchaser in and to the Mortgage Loans (other than Sections 17
and 18 hereof), together with its rights under this Agreement.

                  SECTION 4. Transfer of the Mortgage Loans.

                  (a) Possession of Mortgage Files. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans. 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 and promptly transferred to the Trustee. 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
promptly to the Purchaser or as otherwise directed by the Purchaser. All amounts
received by the Seller after the Cut-off Date but prior to the date hereof with
respect to the Mortgage Loans, to which amounts the Seller is not entitled, will
be deposited into the Collection Account within one Business Day after the
Closing Date;

                  (b) Delivery of Mortgage Loan Documents. The Seller will, on
or prior to the Closing Date, deliver or cause to be delivered to the Purchaser
or any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:

                  (i) the original Mortgage Note, endorsed in blank or in the
         following form: "Pay to the order of Bankers Trust Company of
         California, N.A. 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 or (in the case of not more than 1.00% of the
         Mortgage Loans, by aggregate principal balance as of the Cut-off Date)
         a copy of such original Mortgage Note with an accompanying Lost Note
         Affidavit executed by the Seller;

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



                                       2
<PAGE>

                  (iii) an original Assignment executed 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 or in blank;

                  (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 issued with or subsequent to the
         issuance of such policy, insuring the priority of the Mortgage as a
         first lien or second 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 the title issued by the title insurance
         or escrow company.

                  The Seller shall promptly (and in no event later than thirty
(30) Business Days, subject to extension upon a mutual agreement between the
Seller and the Purchaser), following the later of the Closing Date and the date
of receipt by the Seller of the recording information for a Mortgage submit or
cause to be submitted for recording, at no expense to the Purchaser, in the
appropriate public office for real property records, each Assignment referred to
in (iii) and (iv) above and shall execute each original Assignment referred to
in clause (iii) above in the following form: "Bankers Trust Company of
California, N.A., as Trustee under the applicable agreement, without recourse."
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.
Notwithstanding the foregoing, however, for administrative convenience and
facilitation of servicing and to reduce closing costs, the Assignments shall not
be required to be completed and submitted for recording with respect to any
Mortgage Loan if the Trustee, the NIMs Insurer, the Guarantor and each Rating
Agency has received an opinion of counsel, reasonably satisfactory to the
Trustee, the NIMs Insurer and each Rating Agency, to the effect that the
recordation of such Assignments in any specific jurisdiction is not necessary to
protect the Trust's interest in the related Mortgage Note; provided further,
however, notwithstanding the delivery of any opinion of counsel, each Assignment
shall be submitted for recording by 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 Default,
(iii) the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Seller, (iv) the occurrence of a servicing transfer as described in Section 7.02
of the Pooling and Servicing Agreement and (v) if the Seller is not the Master
Servicer and with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.

                  If any document referred to in Section 4(b)(ii), Section
4(b)(iii) or Section 4(b)(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 Seller 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)


                                       3
<PAGE>

if such copy is certified by the Seller, delivery to the Purchaser upon receipt
thereof, and in any event no later than one year after the Closing Date, 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. 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 or any assignee, transferee or designee of the Purchaser promptly
after receipt thereof, and in any event within 120 days after the Closing Date,
the original lender's title insurance policy. The Seller shall deliver or cause
to be delivered to the Purchaser or any assignee, transferee or designee of 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 or its
assignee, transferee or designee. 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.

                  (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, on and
after the Closing Date (and with respect to each document permitted to be
delivered after the Closing Date within seven days of its delivery) to ascertain
that all required documents have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule.

                  (d) Transfer of Interest in Agreements. The Purchaser has the
right to assign its interest under this Agreement (other than Sections 17 and 18
hereof), 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 Trustee shall succeed to the rights and obligations hereunder of
the Purchaser. Any expense reasonably incurred by or on behalf of the Purchaser,
the Trustee or the NIM Insurer 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 respective designees, upon reasonable notice to the Seller
during normal business hours at any time before or after the Closing Date. If
any such person makes such examination prior to the Closing Date and identifies
any Mortgage Loans with respect to which the Seller's representations and
warranties contained in this Agreement are not correct, 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.



                                       4
<PAGE>

                  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 a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware
         and is duly authorized and qualified to transact any and all business
         contemplated by this Agreement to be conducted by the Seller 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
         the Pooling and Servicing Agreement;

                  (ii) The Seller had the full corporate power and authority to
         originate, hold and sell each Mortgage Loan and has the full corporate
         power and authority to service each Mortgage Loan, and to execute,
         deliver and perform, and to enter into and consummate the transactions
         contemplated by this Agreement and has duly authorized by all necessary
         corporate action on the part of the Seller the execution, delivery and
         performance of this Agreement; and this Agreement, assuming the due
         authorization, execution and delivery thereof by the Purchaser,
         constitutes a legal, valid and binding obligation of the Seller,
         enforceable against the Seller in accordance with its terms, except to
         the extent that the enforceability thereof may be limited by (a)
         bankruptcy, insolvency, moratorium, receivership, conservatorship,
         arrangement, moratorium and other similar laws relating to creditors'
         rights generally and (b) the general principles of equity, whether such
         enforcement is sought in equity or at law;

                  (iii) The execution and delivery of this Agreement by the
         Seller, the servicing of the Mortgage Loans by the Seller under the
         Pooling and Servicing Agreement, the consummation 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
         Seller and does not (A) result in a breach of any term or provision of
         the charter or by-laws of the Seller, (B) conflict with, result in a
         breach, violation or acceleration of, or result in a default under, the
         terms of any other material agreement, instrument or indenture to which
         the Seller is a party or by which it may be bound, or any statute,
         order or regulation applicable to the Seller of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over the Seller or any of its property or (C) 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; and the Seller
         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 Seller's knowledge,
         would in the future 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 or materially and adversely affect (x) the
         ability of the Seller to perform its obligations under this


                                       5
<PAGE>

         Agreement or the Pooling and Servicing Agreement or (y) the business,
         operations, financial condition, properties or assets of the Seller
         taken as a whole;

                  (iv) No consent, approval, authorization, or order of, any
         court or governmental agency or body is required for the execution,
         delivery and performance by the Seller of, or compliance by the Seller
         with, this Agreement or the consummation of the transactions
         contemplated hereby, or if any such consent, approval, authorization or
         order is required, the Seller has obtained the same;

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

                  (vi) No litigation or proceeding is pending or, to the best
         knowledge of the Seller, threatened, against the Seller that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the Pooling and Servicing Agreement
         or the issuance of the Certificates or the ability of the Seller to
         service the Mortgage Loans or to perform any of its other obligations
         hereunder in accordance with the terms hereof and the terms of the
         Pooling and Servicing Agreement or, that would result in a material
         adverse change in the financial or operating conditions of the Seller;

                  (vii) No certificate of an officer, statement or other
         information furnished in writing or report delivered by the Seller to
         the Purchaser, any Affiliate of the Purchaser, the Guarantor or the
         Trustee for use in connection with the purchase of the Mortgage Loans
         and the transactions contemplated hereunder and under the Pooling and
         Servicing Agreement contains any untrue statement of a material fact,
         or omits a material fact necessary to make the information,
         certificate, statement or report not misleading in any material
         respect;

                  (viii) The Seller has not dealt with any broker, investment
         banker, agent or other person, except for the Purchaser or any of its
         affiliates, that may be entitled to any commission or compensation in
         connection with the sale of the Mortgage Loans;

                  (ix) Each Mortgage Note, each Mortgage, each Assignment and
         any other document required to be delivered by or on behalf of the
         Seller under this Agreement or the Pooling and Servicing Agreement to
         the Purchaser or any assignee, transferee or designee of the Purchaser
         for each Mortgage Loan has been or will be, in accordance with Section
         4(b) hereof, delivered to the Purchaser or any such assignee,
         transferee or designee. With respect to each Mortgage Loan, the Seller
         is in possession of a complete Mortgage File in compliance with the
         Pooling and Servicing Agreement, except for such documents that have
         been delivered (1) to the Purchaser or any assignee, transferee or
         designee of the Purchaser or (2) for recording to the appropriate
         public recording office and have not yet been returned;

                  (x) The Seller (A) is a solvent entity and is paying its debts
         as they become due, (B) immediately after giving effect to the transfer
         of the Mortgage Loans, will be a solvent entity and will have
         sufficient resources to pay its debts as they


                                       6
<PAGE>

         become due and (C) did not sell the Mortgage Loans to the Purchaser
         with the intent to hinder, delay or defraud any of its creditors;

                  (xi) The transfer of the Mortgage Loans to the Purchaser at
         the Closing Date will be treated by the Seller for financial accounting
         and reporting purposes as a sale of assets; and

                  (xii) Seller currently operates or actively participates in an
         on-going business (A) to originate single family mortgage loans, and/or
         (B) to make periodic purchases of single family mortgage loans from
         originators or sellers, and/or (C) to issue and/or purchase securities
         or bonds supported by single family mortgage loans a portion of which
         Loans are made to borrowers who are low-income families (families with
         incomes of 80% or less of area median income) living in low-income
         areas (a census tract or block numbering area in which the median
         income does not exceed 80 percent of the area median income;

                  SECTION 6. Representations and Warranties of the Seller
                             Relating to the Individual Mortgage Loans.

                  The Seller hereby represents and warrants to the Purchaser,
that as of the Closing Date:

                  (i) The information set forth on the Mortgage Loan Schedule
         with respect to each Mortgage Loan is complete, true and correct in all
         material respects as of the Cut-off Date, unless another date is set
         forth on the Mortgage Loan Schedule;

                  (ii) The Mortgage Loans are in compliance with the
         characteristics of the Mortgage Loans as set forth on Exhibit 1;

                  (iii) [RESERVED];

                  (iv) Each Mortgage is a valid and enforceable first lien or
         second lien on the Mortgaged Property, including all improvements
         thereon, subject only to (a) the lien of non-delinquent current real
         property taxes and assessments, (b) covenants, conditions and
         restrictions, rights of way, easements and other matters of public
         record as of the date of recording of such Mortgage, such exceptions
         appearing of record being acceptable to mortgage lending institutions
         generally or specifically reflected in the appraisal made in connection
         with the origination of the related Mortgage Loan, (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
         such Mortgage and (d) in the case of a second lien, only to a first
         lien on such Mortgaged Property;

                  (v) Immediately prior to the assignment of the Mortgage Loans
         to the Purchaser, the Seller had good, marketable and undefeasable
         title to, and was the sole legal and beneficial owner of, each Mortgage
         Loan free and clear of any pledge, lien, encumbrance or security
         interest and has full right and authority, subject to no interest or
         participation of, or agreement with, any other party to sell and assign
         the same. The form of endorsement of each Mortgage Note satisfied the
         requirement, if any, of endorsement in order to transfer all right,
         title and interest of the party so


                                       7
<PAGE>

         endorsing, as noteholder or assignee thereof, in and to that Mortgage
         Note; and each Assignment to be delivered hereunder is in recordable
         form and is sufficient to effect the assignment of and to transfer to
         the assignee thereunder the benefits of the assignor, as mortgagee or
         assignee thereof, under each Mortgage to which that Assignment relates;

                  (vi) To the best of the Seller's knowledge, there is no
         delinquent tax or assessment lien against any Mortgaged Property;

                  (vii) There is no valid offset, defense or counterclaim to any
         Mortgage Note or Mortgage, including the obligation of the Mortgagor to
         pay the unpaid principal of or interest on such Mortgage Note, 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
         Note or the Mortgage unenforceable, in whole or in part, or subject to
         any right of rescission, set-off, counterclaim or defense, including
         the defense of usury and no such right of rescission, set-off,
         counterclaim or defense has been asserted with respect thereto;

                  (viii) To the best of the Seller's knowledge, there are no
         mechanics' liens or claims for work, labor or material affecting any
         Mortgaged Property which are or may be a lien prior to, or equal with,
         the lien of the related Mortgage, except those which are insured
         against by the title insurance policy referred to in (xii) below;

                  (ix) To the best of the Seller's knowledge, each Mortgaged
         Property is free of material damage and is at least in average repair;

                  (x) Each Mortgage Loan at origination complied in all material
         respects with applicable local, state and federal laws, including,
         without limitation, usury, equal credit opportunity, real estate
         settlement procedures, truth-in-lending and disclosure laws, and
         consummation of the transactions contemplated hereby, including without
         limitation the receipt of interest does not involve the violation of
         any such laws;

                  (xi) Neither the Seller nor any prior holder of any Mortgage
         has modified the Mortgage in any material respect (except that a
         Mortgage Loan may have been modified by a written instrument which has
         been recorded, if necessary, to protect the interests of the Seller and
         the Purchaser and which has been delivered to the Custodian as part of
         the Mortgage File, and the terms of which are reflected in the Mortgage
         Loan Schedule); satisfied, canceled or subordinated such Mortgage in
         whole or in part; released the related Mortgaged Property in whole or
         in part from the lien of such Mortgage; or executed any instrument of
         release, cancellation, modification or satisfaction with respect
         thereto;

                  (xii) A lender's policy of title insurance together with a
         condominium endorsement and extended coverage endorsement, if
         applicable, 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, or a commitment
         (binder) to issue the same was effective on the date of the origination
         of each Mortgage Loan, each such policy is valid and remains in full
         force and effect, the transfer of the related Mortgage Loan to the
         Purchaser and Trustee does not affect the


                                       8
<PAGE>

         validity or enforceability of such policy and each such policy was
         issued by a title insurer qualified to do business in the jurisdiction
         where the Mortgaged Property is located and acceptable to Freddie Mac
         and in a form acceptable to Freddie Mac, which policy insures the
         Seller and successor owners of indebtedness secured by the insured
         Mortgage, as to the first or second, as the case may be, priority lien
         of the Mortgage; to the best of the Seller's knowledge, no claims have
         been made under such mortgage title insurance policy and no prior
         holder of the related Mortgage, including the Seller, has done, by act
         or omission, anything which would impair the coverage of such mortgage
         title insurance policy;

                  (xiii) Each Mortgage Loan was originated by the Seller (or, if
         generated on behalf of the Seller by a Person other than the Seller, is
         subject to the same standards and procedures used by the Seller in
         originating mortgage loans directly) or by a savings and loan
         association, savings bank, commercial bank, credit union, insurance
         company or similar institution which is supervised and examined by a
         federal or state authority, or by a mortgagee approved by the Secretary
         of Housing and Urban Development pursuant to Sections 203 and 211 of
         the National Housing Act;

                  (xiv) With respect to each Adjustable Rate Mortgage Loan on
         each Adjustment Date, the Mortgage Rate will be adjusted to equal the
         Index plus the Gross Margin, rounded to the nearest 0.125%, subject to
         the Periodic Rate Cap, the Maximum Mortgage Rate and the Minimum
         Mortgage Rate. The related Mortgage Note is payable on the first day of
         each month in self-amortizing monthly installments of principal and
         interest, with interest payable in arrears, and requires a Monthly
         Payment which is sufficient to fully amortize the outstanding principal
         balance of the Mortgage Loan over its remaining term and to pay
         interest at the applicable Mortgage Rate. No Mortgage Loan is subject
         to negative amortization. All rate adjustments have been performed in
         accordance with the terms of the related Mortgage Note or subsequent
         modifications, if any;

                  (xv) To the best of the Seller's knowledge, all of the
         improvements which were included for the purpose of determining the
         Value of the Mortgaged Property lie wholly within the boundaries and
         building restriction lines of such property, and no improvements on
         adjoining properties encroach upon the Mortgaged Property;

                  (xvi) 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 and to the best of
         the Seller's knowledge, the Mortgaged Property is lawfully occupied
         under applicable law;

                  (xvii) All parties which have had any interest in the
         Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are
         (or, during the period in which they held and disposed of such
         interest, were) in compliance with any and all applicable licensing
         requirements of the laws of the state wherein the Mortgaged Property is
         located;

                                       9
<PAGE>

                  (xviii) The Mortgage Note and the related Mortgage are
         genuine, and each is the legal, valid and binding obligation of the
         Mortgagor enforceable against the Mortgagor by the mortgagee or its
         representative in accordance with its terms, except only as such
         enforcement may be limited by bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting the enforcement of
         creditors' rights generally and by law. To the best of the Seller's
         knowledge, all parties to the Mortgage Note and the Mortgage had full
         legal capacity to execute all Mortgage Loan documents and to convey the
         estate purported to be conveyed by the Mortgage and each Mortgage Note
         and Mortgage have been duly and validly executed by such parties;

                  (xix) The proceeds of each Mortgage Loan have been fully
         disbursed, there is no requirement for future advances thereunder and
         any and all requirements as to completion of any on-site or off-site
         improvements and as to disbursements of any escrow funds therefor have
         been complied with. All costs, fees and expenses incurred in making,
         closing or recording the Mortgage Loans were paid and the Mortgagor is
         not entitled to any refund of amounts paid or due under the Mortgage
         Note other than excess escrow funds and interest thereon;

                  (xx) The related Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the Mortgaged Property of the
         benefits of the security, including, (i) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale, and (ii) otherwise by
         judicial foreclosure. 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. Upon default by a Mortgagor on a Mortgage Loan and
         foreclosure on, or trustee's sale of, the Mortgaged Property pursuant
         to the proper procedures, the holder of the Mortgage Loan will be able
         to deliver good and merchantable title to the Mortgaged Property;

                  (xxi) With respect to each Mortgage constituting a deed of
         trust, a trustee, duly qualified under applicable law to serve as such,
         has been properly designated and currently so serves and is named in
         such Mortgage, 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;

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

                  (xxiii) The origination, underwriting and collection practices
         used by the Seller with respect to each Mortgage Loan have been in all
         respects legal, proper, prudent and customary in the mortgage servicing
         business. Each Mortgage Loan is currently being serviced by the Seller
         and has been serviced by the Seller since the date of origination of
         each Mortgage Loan;

                  (xxiv) There is no pledged account or other security other
         than real estate securing the Mortgagor's obligations;


                                       10
<PAGE>

                  (xxv) No Mortgage Loan has a shared appreciation feature, or
         other contingent interest feature;

                  (xxvi) None of the Mortgage Loans provide for primary mortgage
         insurance;

                  (xxvii) The improvements upon each Mortgaged Property are
         covered by a valid and existing hazard insurance policy with a
         generally acceptable carrier that provides for fire extended coverage
         and coverage of such other hazards as are customarily covered by hazard
         insurance policies with extended coverage in the area where the
         Mortgaged Property is located representing coverage not less than the
         lesser of the outstanding principal balance of the related Mortgage
         Loan or the minimum amount required to compensate for damage or loss on
         a replacement cost basis. All individual insurance policies and flood
         policies referred to in this clause (xxvii) and in clause (xxviii)
         below contain a standard mortgagee clause naming the Seller or the
         original mortgagee, and its successors in interest, as mortgagee, and
         the Seller has received no notice that any premiums due and payable
         thereon have not been paid; the Mortgage obligates the Mortgagor
         thereunder to maintain all such insurance, including flood insurance,
         at the Mortgagor's cost and expense, and upon the Mortgagor's failure
         to do so, authorizes the holder of the Mortgage to obtain and maintain
         such insurance at the Mortgagor's cost and expense and to seek
         reimbursement therefor from the Mortgagor;

                  (xxviii) If the Mortgaged Property is in an area identified in
         the Federal Register by the Federal Emergency Management Agency as
         subject to special flood hazards, a flood insurance policy in a form
         meeting the requirements of the current guidelines of the Flood
         Insurance Administration is in effect with respect to such Mortgaged
         Property with a generally acceptable carrier in an amount representing
         coverage not less than the least of (A) the original outstanding
         principal balance of the Mortgage Loan, (B) the minimum amount required
         to compensate for damage or loss on a replacement cost basis or (C) the
         maximum amount of insurance that is available under the Flood Disaster
         Protection Act of 1973;

                  (xxix) There is no default, breach, violation or event of
         acceleration existing under the Mortgage or the related Mortgage Note;
         and neither the Seller nor any other entity involved in originating or
         servicing the Mortgage Loan has waived any default, breach, violation
         or event of acceleration;

                  (xxx) Each Mortgaged Property is improved by a one- to
         four-family residential dwelling, including condominium units and
         dwelling units in planned unit developments, which, to the best of the
         Seller's knowledge, does not include cooperatives and does not
         constitute property other than real property under state law. Each
         manufactured housing constituting any portion of any Mortgaged Property
         is a "single family residence" as defined in Section 25(e)(10) of the
         Code;

                  (xxxi) There is no obligation on the part of the Seller or any
         other party under the terms of the Mortgage or related Mortgage Note to
         make payments in addition to those made by the Mortgagor;

                                       11
<PAGE>

                  (xxxii) Any future advances made 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 reflected on the
         related Mortgage Loan Schedule. The consolidated principal amount does
         not exceed the original principal amount of the Mortgage Loan;

                  (xxxiii) Each Mortgage Loan was underwritten in accordance
         with the Seller's underwriting guidelines as described in the
         Prospectus Supplement as applicable to its credit grade;

                  (xxxiv) Each appraisal of a Mortgage Loan that was used to
         determine the appraised value of the related Mortgaged Property was
         conducted generally in accordance with the Seller's underwriting
         guidelines, and included an assessment of the fair market value of the
         related Mortgaged Property at the time of the appraisal. The Mortgage
         File contains an appraisal of the applicable Mortgaged Property;

                  (xxxv) None of the Mortgage Loans is a graduated payment
         Mortgage Loan, nor is any Mortgage Loan subject to a temporary buydown
         or similar arrangement;

                  (xxxvi) [Reserved]

                  (xxxvii) Each Mortgage contains an enforceable provision for
         the acceleration of the payment of the unpaid principal balance of the
         Mortgage Loan in the event that the Mortgaged Property is sold or
         transferred without the prior written consent of the mortgagee
         thereunder;

                  (xxxviii)To the best of the Seller's knowledge no
         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;

                  (xxxix) Each Mortgage Loan constitutes a "qualified mortgage"
         within the meaning of Section 860G(a)(3) of the Code;

                  (xl) The information set forth in the Prepayment Charge
         Schedule is complete, true and correct in all material respects at the
         date or dates respecting with such information is furnished and each
         Prepayment Charge is permissible and enforceable in accordance with its
         terms upon the Mortgagor's full and voluntary Principal Prepayment
         (except to the extent that: (1) the enforceability thereof may be
         limited by bankruptcy, insolvency, moratorium, receivership and other
         similar laws relating to creditors' rights generally; (2) the
         collectability thereof may be limited due to acceleration in connection
         with a foreclosure or other involuntary prepayment; or (3) subsequent
         changes in applicable law may limit or prohibit enforceability thereof)
         under applicable law. No Mortgage Loan has a prepayment premium for a
         term in excess of five years from the date of its origination;


                                       12
<PAGE>

                  (xli) The Loan-to-Value Ratio for each Mortgage Loan was no
         greater than 100% at the time of origination;

                  (xlii) The first date on which each Mortgagor must make a
         payment on the related Mortgage Note is no later than 60 days from the
         date of this Agreement;

                  (xliii) [Reserved];

                  (xliv) [Reserved];

                  (xlv) There are no defaults in complying with the terms of the
         Mortgage, and either (1) any taxes, governmental assessments, insurance
         premiums, water, sewer and municipal charges or ground rents which
         previously became due and owing have been paid, or (2) an escrow of
         funds has been established in an amount sufficient to pay for every
         such item which remains unpaid and which has been assessed but is not
         yet due and payable. Except for payments in the nature of escrow
         payments, including without limitation, taxes and insurance payments,
         the Seller has not advanced funds, or induced, solicited or knowingly
         received any advance of funds by a party other than the Mortgagor,
         directly or indirectly, for the payment of any amount required by the
         Mortgage Note, except for interest accruing from the date of the
         Mortgage Note or date of disbursement of the Mortgage proceeds,
         whichever is greater, to the day which precedes by one month the Due
         Date of the first installment of principal and interest;

                  (xlvi) There is no proceeding pending, or to best of the
         Seller's knowledge threatened, for the total or partial condemnation of
         the Mortgaged Property or the taking by eminent domain of any Mortgaged
         Property;

                  (xlvii) None of the Mortgage Loans is subject to the Home
         Ownership and Equity Protection Act of 1994 or any comparable state law
         and any breach of this representation will be deemed to materially and
         adversely affect the value of the related loan;

                  (xlviii) No proceeds from any Mortgage Loans were used to
         finance single-premium credit insurance policies;

                  (xlix) The Seller did not select the Mortgage Loans with the
         intent to adversely affect the interests of the Purchaser;

                  (l) The Seller has not received any notice that any Mortgagor
         has field for any bankruptcy or similar legal protection;

                  (li) Each document or instrument in the related Mortgage File
         is in a form generally acceptable to prudent mortgage lenders that
         regularly originate or purchase mortgage loans comparable to the
         Mortgage Loans for sale to prudent investors in the secondary market
         that invest in mortgage loans such as the Mortgage Loans;



                                       13
<PAGE>

                  (lii) The servicer for each Mortgage Loan has accurately and
         fully reported its borrower credit files to each of the credit
         repositories in a timely manner;

                  (liii) Each Mortgage Loan conforms, and all Mortgage Loans in
         the aggregate conform, in all material respects, to the description
         thereof set forth in the Prospectus Supplement or Information Circular;

                  (liv) With respect to each Mortgage Loan secured by
         manufactured housing: (a) the manufactured housing is permanently
         affixed to a foundation which is suitable for the soil conditions of
         the site; (b) all foundations, both perimeter and interior, have
         footings that are located below the frost line; (c) any wheels, axles
         and trailer hitches are removed from the manufactured housing; and (d)
         the Mortgage Loan is covered under a standard real estate title
         insurance policy or attorney's title opinion or certificate that
         identified the manufactured housing as part of the real property and
         insurers or indemnifies against any loss if the manufactured housing is
         determined not to be part of the real property;

                  (lv) With respect to second lien Mortgages, either (a) no
         consent for the Mortgage Loan is required by the holder of the related
         first lien or (b) such consent has been obtained and is contained in
         the Mortgage File;

                  (lvi) No Mortgage Loan secured by a second lien has a
         principal balance as of the Cut-Off Date in excess of half of Freddie
         Mac's loan limits for such type of residence based upon the information
         provided by Freddie Mac to Seller;

                  (lvii) The pool of Mortgages backing the Certificates does not
         contain the first and second lien mortgage loans relating to a single
         Mortgaged Property if the aggregate original principal balance of such
         mortgage loans exceeds Freddie Mac's loan limits;

                  (lviii) No Mortgage Loan has been previously rejected by
         Freddie Mac;

                  (lix) The transfer, assignment and conveyance of the Mortgage
         Notes and the Mortgages by the Seller pursuant to this Agreement are
         not subject to the bulk transfer or any similar statutory provisions in
         effect in any relevant jurisdiction, except any as may have been
         complied with; and

                  (lx) Each original Mortgage was recorded and all subsequent
         assignments of the original Mortgage (other than the assignment to the
         Trustee) have been recorded in the appropriate jurisdictions wherein
         such recordation is necessary to perfect the lien thereof as against
         creditors of the Seller, or is in the process of being recorded.

                  SECTION 7. Repurchase Obligation for Defective Documentation
                             and for Breach of Representation and Warranty.

                  (a) The representations and warranties contained in Section 5
(ix), (xii) and (xiv) and Section 6 shall not be impaired by any review and
examination of loan files or other


                                       14
<PAGE>

documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Seller or 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 asset-backed
certificates evidencing an interest in all or a portion of the Mortgage Loans.
With respect to the representations and warranties contained herein which are
made to the knowledge or the best of knowledge of the Seller, or 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 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 Seller, the Guarantor the Purchaser or
any assignee, transferee or designee of the Purchaser of any materially
defective document in, or that any material document was not transferred by the
Seller (as listed on the Trustee's initial certification), as part of, any
Mortgage File or of a breach of any of the representations and warranties
contained in Section 5 or Section 6 that materially and adversely affects the
value of any Mortgage Loan or the interest of the Purchaser, the Guarantor or
the Purchaser's assignee, transferee or designee in any Mortgage Loan, the party
discovering the breach shall give prompt written notice to the others. Within
ninety (90) days of its discovery or its receipt of notice of any such missing
documentation which was not transferred to the Purchaser as described above or
materially defective documentation or 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 such defect or breach cannot be cured, the
Seller shall, within 90 days of its discovery or receipt of notice, either (i)
repurchase the affected Mortgage Loan at a price equal to the Purchase Price (as
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; provided, however, that in the case of a breach of
the representation and warranty concerning the Mortgage Loan Schedule contained
in Section 6(i), if such breach relates to any field on the Mortgage Loan
Schedule which identifies any Prepayment Charge and such Prepayment Charge has
been triggered pursuant to the terms of the related Mortgage Note, then in lieu
of purchasing such Mortgage Loan from the Trust Fund at the Purchase Price (as
defined in the Pooling and Servicing Agreement), the Seller shall pay the amount
of the incorrectly identified Prepayment Charge (net of any amount previously
collected by or paid to the Trust Fund in respect of such Prepayment Charge),
and the Seller shall have no obligation to repurchase or substitute for such
Mortgage Loan. 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 and the addition, if any, of a Qualified
Substitute Mortgage Loan. 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 deposit in the Collection Account of the amount of the Purchase
Price (as defined in the Pooling and Servicing Agreement) in accordance with
Section 2.03 of the Pooling and Servicing Agreement. Any repurchase or
substitution required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement and any remedy by the Seller
for a breach of a representation or warranty that materially and adversely
affects the value of any Prepayment


                                       15
<PAGE>

Charge shall be made in a manner consistent with Section 2.03(c) 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, repurchase or substitute for a
defective Mortgage Loan constitute the sole remedies of the Purchaser against
the Seller respecting a missing or defective document or a breach of the
representations and warranties contained in Section 5 or 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 Fifth Avenue, New York City office of Heller Ehrman White &
McAuliffe LLP, at 10:00 am New York City time on the Closing Date.

                  The Purchaser's obligation to close the transactions
contemplated by this Agreement 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 are made and no event shall have occurred which, with
notice or the passage of time, would constitute a default under this Agreement;

                  (b) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from escrow at the time
of closing), all Closing Documents as specified in Section 9 of this Agreement,
in such forms as are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required pursuant to the
respective terms thereof;

                  (c) The Seller shall have delivered or caused to be delivered
and released to the Purchaser or to its designee, all documents (including
without limitation, the Mortgage Loans) required to be so delivered by the
Purchaser pursuant to Section 2.01 of the Pooling and Servicing Agreement; and

                  (d) All other terms and conditions of this Agreement to be
complied with by Seller, 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 delivery of the
Long Beach Certificates to Long Beach Asset Holdings Corp.

                  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:



                                       16
<PAGE>

                  (a) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Purchaser and Banc of America Securities LLC, as
representative of the several underwriters (the "Representative"), Freddie Mac
and Radian Insurance Inc. (the "NIMs Insurer") 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 the State of Delaware;

                  (b) An Officers' Certificate of the Seller, dated the Closing
Date, upon which the Purchaser, the Representative, Freddie Mac and the NIMs
Insurer may rely, with respect to certain facts regarding the sale of the
Mortgage Loans by the Seller to the Purchaser;

                  (c) An Opinion of Counsel of the Seller (which may be in-house
counsel of the Seller), dated the Closing Date and addressed to the Purchaser,
the Representative, Freddie Mac and the NIMs Insurer;

                  (d) Such opinions of counsel as the Rating Agencies, the
Representative, the Trustee, Freddie Mac or the NIMs Insurer may reasonably
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;

                  (e) A letter from Deloitte & Touche L.L.P., certified public
accountants, dated the date hereof and 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 under the captions "Summary of Terms--Mortgage Loans,"
"Risk Factors," "The Mortgage Pool," and "Long Beach Mortgage Company," agrees
with the records of the Seller;

                  (f) The Seller shall deliver to the Purchaser for inclusion in
the Prospectus Supplement under the caption "Long Beach Mortgage Company" or for
inclusion in other offering materials, such publicly available information
regarding the Seller, its financial condition and its mortgage loan delinquency,
foreclosure and loss experience, underwriting standards, lending activities and
loan sales, production, and servicing and collection practices, and any similar
nonpublic, unaudited financial information and a computer tape with respect to
the pool information, as the Representative may reasonably request;

                  (g) Letters from at least two nationally recognized
statistical rating agencies rating the Offered Certificates; and

                  (h) Such further information, certificates, opinions and
documents as the Purchaser, Freddie Mac or the Representative 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 in-house accountants and in-house
attorneys, the costs and expenses incurred in connection with determining the
Seller's loan loss, foreclosure and delinquency experience, the costs and
expenses incurred in connection with obtaining the


                                       17
<PAGE>

documents referred to in Sections 9(d) and 9(e), the cost of an opinion of
counsel regarding the true sale and non-consolidation of the mortgage loans, the
costs and expenses of printing (or otherwise reproducing) and delivering this
Agreement, the Pooling and Servicing Agreement, the Certificates, the
prospectus, the Prospectus Supplement, the Information Circular, any blue sky
filings and private placement memorandum relating to the Certificates and other
related documents, 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, the
cost of any opinions of outside special counsel that may be required for the
Seller 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. Servicing.

                  The Seller has represented to the Purchaser that the Mortgage
Loans are being serviced in accordance with the terms of the Pooling and
Servicing Agreement, and it is understood and agreed by and between the Seller
and the Purchaser that any interim servicing arrangements with the Seller will
be superseded by the servicing arrangements set forth in the Pooling and
Servicing Agreement.

                  SECTION 12. 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 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 (i) the Purchaser's
right, prior to the Closing Date, to reject any Mortgage Loan to the extent
permitted by this Agreement and (ii) the Purchaser's 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 automatically released from the security interest
created hereby. The Seller agrees that, upon acceptance of the Mortgage Loans by
the Purchaser or its designee and delivery of payment to the Seller, that its
security interest in the Mortgage Loans shall be released. 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 shall
not have delivered or caused to be delivered the Long Beach Certificates to Long
Beach Asset Holding Corp., 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 or not to deliver or cause to be delivered the Long Beach
Certificates to Long Beach Asset Holding Corp, the Purchaser shall immediately
effect the re-delivery of the Mortgage Loans, if delivery to the


                                       18
<PAGE>

Purchaser has occurred and the security interest created by this Section 12
shall be deemed to have been released.

                  SECTION 13. Notices.

                  All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered to
or mailed by registered mail, postage prepaid, or transmitted by telex or
telegraph and confirmed by a similar mailed writing, if to the Purchaser,
addressed to the Purchaser at 1100 Town & Country Road, Suite 1650, Orange,
California 92868, Attention: General Counsel, or such other address as may
hereafter be furnished to the Seller in writing by the Purchaser; if to the
Seller, addressed to the Seller at 1100 Town & Country Road, Suite 1650, Orange,
California 92868, Attention: General Counsel, or to such other address as the
Seller may designate in writing to the Purchaser.

                  SECTION 14. Severability of Provisions.

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

                  SECTION 15. Agreement of Parties.

                  The Seller and the Purchaser each agree to execute and deliver
such instruments (including UCC financing statements and continuation
statements) 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 16. Survival.

                  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 and
its successors and assigns, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.

                  SECTION 17. Indemnification, Representative.

                  (a) The Seller indemnifies and holds harmless the Purchaser,
         the Purchaser's


                                       19
<PAGE>

         officers and directors and each person, if any, who controls the
         Purchaser within the meaning of Section 15 of the 1993 Act or Section
         20 of the Exchange Act of 1934, as amended, (the "Exchange Act"), as
         follows:

         (i)      against any and all losses, claims, expenses, damages or
                  liabilities, joint or several, to which the Purchaser or such
                  controlling person may become subject under the 1993 Act or
                  otherwise, insofar as such losses, claims, damages or
                  liabilities (or actions in respect thereof including, but not
                  limited to, any loss, claim, expense, damage or liability
                  related to purchases and sales of the Class A-2 Certificates,
                  the Class S-2 Certificates and the Mezzanine Certificates, the
                  "Underwritten Certificates") arise out of or are based upon
                  any untrue statement or alleged untrue statement of any
                  material fact contained in the Prospectus Supplement, or any
                  amendment or supplement thereto, or arise out of, or are based
                  upon, the omission or alleged omission to state therein a
                  material fact required to be stated therein or necessary to
                  make the statements made therein not misleading; and will
                  reimburse, as incurred, the Purchaser and each such
                  controlling person for any legal or other expenses reasonably
                  incurred by the Purchaser or such controlling person in
                  connection with investigating, defending against or appearing
                  as a third party witness in connection with any such loss,
                  claim, damage, liability or action as such expenses are
                  incurred; provided, however, that the Seller will be liable in
                  any such case only to the extent that any such loss, claim,
                  damage or liability arises out of or is based upon an untrue
                  statement or omission, or alleged untrue statement or
                  omission, made therein in reliance upon and in conformity with
                  written information furnished to the Purchaser by the Seller
                  specifically for use in the preparation thereof (the "Seller's
                  Prospectus Supplement Information");

         (ii)     against any and all loss, liability, claim, damage and expense
                  whatsoever, to the extent of the aggregate amount paid in
                  settlement of any litigation, or investigation or proceeding
                  by any governmental agency or body, commenced or threatened,
                  or of any claim whatsoever based upon any such untrue
                  statement or omission, or any such alleged untrue statement or
                  omission, if such settlement is effected with the written
                  consent of the Seller; and

         (iii)    against any and all expense whatsoever (including the fees and
                  disbursements of counsel chosen by the Purchaser, subject to
                  Section 17(c) below), reasonably incurred in investigating,
                  preparing or defending against any litigation, or
                  investigation or proceeding by any governmental agency or
                  body, commenced or threatened, or any claim whatsoever based
                  upon any such untrue statement or omission, or any such
                  alleged untrue statement or omission, to the extent that any
                  such expense is not paid under clause (i) or clause (ii)
                  above.

                  This indemnity agreement will be in addition to any liability
         which the Seller may otherwise have.

                  (b) The Purchaser agrees to indemnify and hold harmless the
         Seller, each of its directors, each of its officers and each person, if
         any, who controls the Seller within the


                                       20
<PAGE>

         meaning of Section 15 of the 1993 Act or Section 20 of the Exchange
         Act, against any and all losses, claims, expenses, damages or
         liabilities to which the Seller or any such director, officer or
         controlling person may become subject, under the 1993 Act or otherwise,
         insofar as such losses, claims, damages or liabilities (or actions in
         respect thereof) arise out of or are based upon any untrue statement or
         alleged untrue statement of any material fact contained in the
         Prospectus Supplement, other than in the Seller's Prospectus Supplement
         Information, or arise out of, or are based upon, the omission or the
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements made therein not
         misleading, and will reimburse any legal or other expenses reasonably
         incurred by the Seller or any such director, officer or controlling
         person in connection with investigating or defending any such loss,
         claim, damage, liability or action. This indemnity agreement will be in
         addition to any liability which the Purchaser may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
         Section 17 of notice of the commencement of any action described
         therein, such indemnified party will, if a claim in respect thereof is
         to be made against the indemnifying party under this Section 17, notify
         the indemnifying party of the commencement thereof; but the omission so
         to notify the indemnifying party will not relieve the indemnifying
         party from any liability that it may have to any indemnified party
         under this Section 17 unless the indemnifying party is materially
         prejudiced by such omission to notify and in any event the failure to
         notify the indemnifying party shall not relieve it from any liability
         which it may have to the indemnified party otherwise than under this
         Agreement. In case any such action is brought against any indemnified
         party, and it notifies the indemnifying party of the commencement
         thereof, the indemnifying party will be entitled to participate
         therein, and, to the extent that it may wish to do so, jointly with any
         other indemnifying party similarly notified, to assume the defense
         thereof, with counsel satisfactory to such indemnified party (who shall
         not, except with the consent of the indemnified party (such consent not
         to be unreasonably withheld, conditioned or delayed), be counsel to the
         indemnifying party), and, after notice from the indemnifying party to
         such indemnified party under this Section 17, such indemnifying party
         shall not be liable for any legal or other expenses subsequently
         incurred by such indemnified party in connection with the defense
         thereof other than reasonable costs of investigation and preparation
         for a defense.

                  Any indemnified party shall have the right to employ separate
         counsel in any such action and to participate in the defense thereof,
         but the fees and expenses of such counsel shall be at the expense of
         such indemnified party unless: (i) the employment thereof has been
         specifically authorized by the indemnifying party in writing (ii) such
         indemnified party shall have been advised by such counsel that there
         may be one or more legal defenses available to it which are different
         from or additional to those available to the indemnifying party and in
         the reasonable judgment of such counsel it is advisable for such
         indemnified party to employ separate counsel; (iii) a conflict or
         potential conflict exists (based on advice of counsel to the
         indemnified party) between the indemnified party and the indemnifying
         party (in which case the indemnifying party will not have the right to
         direct the defense of such action on behalf of the indemnified party)
         or (iv) the indemnifying party has failed to assume the defense of such
         action and employ counsel reasonably satisfactory to the indemnified
         party, in which case, if such indemnified party notifies the
         indemnifying party


                                       21
<PAGE>

         in writing that it elects to employ separate counsel at the expense of
         the indemnifying party, the indemnifying party shall not have the right
         to assume the defense of such action on behalf of such indemnified
         party, it being understood, however, the indemnifying party shall not,
         in connection with any one such action or separate but substantially
         similar or related actions in the same jurisdiction arising out of the
         same general allegations or circumstances, be liable for the reasonable
         fees and expenses of more than one separate firm of attorneys (in
         addition to local counsel) at any time for all such indemnified
         parties, which firm shall be designated in writing (i) by the Seller if
         the indemnified parties under this Section 17 consist of the Seller or
         any of its officers, directors or controlling persons, or (ii) the
         Purchaser, if the indemnified party under this Section 17 consist of
         the Purchaser or any of the Purchaser's directors, officers or
         controlling persons.

                  Each indemnified party, as a condition of the indemnity
         agreements contained in Section 17(a) and Section 17(b), shall use its
         reasonable efforts to cooperate with the indemnifying party in the
         defense of any such action or claim. No indemnifying party shall be
         liable for any settlement of any such action effected without its
         written consent (which consent shall not be unreasonably withheld,
         conditioned or delayed), but if settled with its written consent or if
         there be a final judgment for the plaintiff in any such action, the
         indemnifying party agrees to indemnify and hold harmless any
         indemnified party from and against any loss or liability (to the extent
         set forth in Section 17(a) or Section 17(b) as applicable) by reason of
         such settlement or judgment. No indemnifying party shall, without the
         prior written consent of the indemnified party, effect any settlement
         of any pending or threatened action in respect of which any indemnified
         party is or could have been a party and indemnity could have been
         sought hereunder by such indemnified party unless such settlement (i)
         includes an unconditional release of such indemnified party from all
         liability on any claims that are the subject of such action and (ii)
         does not include a statement as to, or an admission of, fault,
         culpability or failure to act by or on behalf of an indemnified party.

                  Notwithstanding the foregoing paragraph, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.

                  (d) If the indemnification provided for in Section 17(a) or
         17(b) is unavailable or insufficient to hold harmless an indemnified
         party under subsection (a) or (b) above, then each indemnifying party
         shall contribute to the amount paid or payable by such indemnified
         party as a result of the losses, claims, damages or liabilities
         referred to in subsection (a) or (b) above (i) in such proportion as is
         appropriate to reflect the relative benefits received by the Purchaser
         on the one hand and the Seller on the other from the offering of the
         Underwritten Certificates or (ii) if the allocation provided by clause
         (i) above is not permitted by applicable law, in such proportion as is
         appropriate to reflect not only the relative benefits referred to in
         clause (i) above but also the relative fault of the Purchaser on


                                       22
<PAGE>

         the one hand and the Seller on the other in connection with the
         statements or omissions which resulted in such losses, claims, damages
         or liabilities as well as any other relevant equitable considerations.
         If the indemnification provided for in Section 17(b) is unavailable or
         insufficient to hold harmless the indemnified party under Section
         17(b), then each indemnifying party shall contribute to the amount paid
         or payable by such indemnified party as a result of the losses, claims,
         damages or liabilities referred to in Section 17(b) in such proportion
         as appropriate to reflect the relative fault of the Purchaser on one
         hand and the Seller on the other in connection with the statements or
         omissions which resulted in such losses, claims, damages or liabilities
         as well as any other relevant equitable considerations. The relative
         benefits received by the Purchaser on the one hand and the Seller on
         the other shall be deemed to be in the same proportion as the total net
         proceeds from the offering (before deducting expenses) received by the
         Purchaser bear to the total underwriting discounts and commissions
         received by the Underwriters. The relative fault shall be determined by
         reference to, among other things, whether the untrue or alleged untrue
         statement of a material fact or the omission or alleged omission to
         state a material fact relates to information supplied by the Purchaser
         or by the Seller and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such untrue statement
         or omission. The amount paid by an indemnified party as a result of the
         losses, claims, damages or liabilities referred to above in the first
         sentence of this subsection (d) shall be deemed to include any legal or
         other expenses reasonably incurred by such indemnified party in
         connection with investigating or defending any action or claim which is
         the subject of this subsection (d). No person guilty of fraudulent
         misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
         shall be entitled to contribution from any person who was not guilty of
         such fraudulent misrepresentation.

                  SECTION 18. Indemnification, Freddie Mac.

                  (a) The Seller agrees to indemnify and hold harmless the
Purchaser against losses, claims, damages, or liabilities, joint or several, to
which the Purchaser may become subject, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
part of the information circular of Purchaser, dated as of July 11, 2001
(together with all amendments, exhibits and any supplements thereto, the
"Information Circular"), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, as of the date thereof
and in light of the circumstances under which they were made, not misleading,
and will reimburse the Purchaser for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss,
claim, damage, liability, or action; provided, however, that the Seller shall be
liable in any such case only to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Purchaser by the Seller
specifically for use in the preparation thereof ("Seller's Information Circular
Information").

                  (b) The Purchaser will indemnify and hold harmless the Seller
against any losses, claims, damages, or liabilities to which the Seller may
become subject, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon


                                       23
<PAGE>

an untrue statement or alleged untrue statement of a material fact contained in
the Information Circular or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, 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 therein in reliance upon and
in conformity with written information other than Seller's Information Circular
Information, and will reimburse the Seller for any legal or other expenses
reasonably incurred by the Seller in connection with investigating or defending
against any such loss, claim, damage, liability, or action.

                  (c) Promptly after receipt by an indemnified party under this
Section 18 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 18, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party,
unless otherwise set forth under this Section 18. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 18 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the immediately preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, chosen by the Purchaser in the case of paragraph (a) of this
Section 18, representing the indemnified parties under such paragraph (a) who
are parties to such action and that such expenses are to be reimbursed as they
are incurred), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).

                  (d) If the indemnification provided for in this Section 18
shall for any reason be unavailable in accordance with its terms to an
indemnified party under this Section 18, then the Seller and the Purchaser shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in subsection (a) or
(b) above, in such proportion as is appropriate to reflect (i) the relative
benefits received by the Seller and the Purchaser from the offering of the Class
A-1 Certificates and the Class S-1 Certificates and (ii) the relative fault of
the Seller and the Purchaser in connection with the statement or omission that



                                       24
<PAGE>

resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Seller
and the Purchaser shall be deemed to be in the same proportion as the total
proceeds from the offering of the Class A-1 Certificates and the Class S-1
Certificates (before deducting expenses) received by the Seller bear to the
total proceeds (before deducting expenses) received or realized by the Purchaser
from the sale of the Class A-1 Certificates and the Class S-1 Certificates. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Purchaser or the Seller (which information supplied by the Seller is Seller's
Information Circular Information) and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such untrue
statement or omission. The Seller and the Purchaser agree that it would not be
just and equitable if contributions pursuant to this Section 18(d) were to be
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the first
sentence of this Section 18(d). The amount paid by an indemnified party as a
result of the losses, claims, damages, or liabilities referred to in the first
sentence of this Section 18(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this Section 18(d). No party guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the 1933 Act) shall be entitled to contribution
from the other party who was not guilty of such fraudulent misrepresentation.

                  (e) The obligations of the Seller under this Section 18 shall
be in addition to any liability which the Seller may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Purchaser,
to each officer of the Purchaser and to each person, if any, who controls the
Purchaser within the meaning of the 1933 Act or the Exchange Act; and the
obligations of the Purchaser under this Section 18 shall be in addition to any
liability that the Purchaser may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Seller, to each officer of the
Seller and to each person, if any, who controls the Seller within the meaning of
the 1933 Act or the Exchange Act.

                  SECTION 19. 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 AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW PRINCIPLES. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.

                  SECTION 20. 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


                                       25
<PAGE>

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
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.

                  SECTION 21. Third Party Beneficiary.

                  Each of the Trustee and the NIMs Insurer, shall be a third
party beneficiary hereof (except with respect to Section 17 and Section 18) and
shall be entitled to enforce the provisions hereof as if a party hereto, except
the provisions of Section 17 and Section 18 hereof. This provision shall not
limit waiver, enforcement and consent powers that Radian Insurance Inc. has
except as specifically agreed in a separate letter agreement between such
parties or as otherwise agreed between Radian Insurance Inc. and the parties may
perform in accordance with such powers. The Representative, on behalf of the
underwriters, shall be a third party beneficiary hereof solely with respect to
Section 17 and shall be entitled to enforce the provisions of Section 17 as if
it were a party hereto. Freddie Mac shall be a third party beneficiary hereof
solely with respect to Section 18 and shall be entitled to enforce the
provisions of Section 18 as if it were a party hereto.





                                       26
<PAGE>




                  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.

                                                LONG BEACH SECURITIES CORP.


                                                By:
                                                   ------------------------
                                                Name:  Jeffery A. Sorensen
                                                Title: Vice President


                                                LONG BEACH MORTGAGE COMPANY


                                                By:
                                                   ------------------------
                                                Name:  Jeffery A. Sorensen
                                                Title: Vice President




<PAGE>

                                    EXHIBIT 1

                  Pool Characteristics of the Mortgage Loans as delivered on the
Closing Date:

                  All percentages set forth herein are based upon the aggregate
Principal Balance as of the Cut-off Date.

                  (1) No Group I Mortgage Loan or Group II Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of approximately 100.00% and
90.00%, respectively;

                  (2) No more than approximately 0.61% and 1.26% of the Group I
Mortgage Loans and Group II Mortgage Loans, respectively, are related to
Mortgaged Properties located in any one zip code area;

                  (3) Each Mortgaged Property related to a Group I Mortgage Loan
and Group II Mortgage Loan, respectively, is located in one of the states listed
in the chart entitled "Geographic Distribution of the Mortgaged Properties
relating to the Group I Mortgage Loans" and "Geographic Distribution of the
Mortgaged Properties relating to the Group II Mortgage Loans," respectively, in
the Prospectus Supplement;

                  (4) No more than approximately 4.53% and 3.52% of the Group I
Mortgage Loans and Group II Mortgage Loans, respectively, are secured by
condominium units and all condominium Mortgage Loans have been originated on a
form acceptable to Fannie Mae or Freddie Mac with such riders as have been
acceptable to Fannie Mae or Freddie Mac, as the case may be;

                  (5) No more than approximately 4.96% and 2.19% of the Group I
Mortgage Loans and Group II Mortgage Loans, respectively, are secured by two- to
four-family dwellings. No more than approximately 0.09% of the Group I Mortgage
Loans are secured by town houses. None of the Group II Mortgage Loans are
secured by town houses. No more than approximately 8.57% of the Group I Mortgage
Loans are secured by manufactured housing. None of the Group II Mortgage Loans
are secured by manufactured housing. No more than approximately 7.63% and 14.80%
of the Group I Mortgage Loans and Group II Mortgage Loans, respectively, are
secured by dwelling units in PUDs. None of the Mortgage Loans are secured by
mobile homes;

                  (6) No Group I Mortgage Loan or Group II Mortgage Loan had a
principal balance in excess of approximately $444,000 and $890,000,
respectively, at origination;

                  (7) Each Mortgage Loan has a first Due Date on or after July
1, 2001 and each Adjustable Rate Mortgage Loan has a next Adjustment Date no
later than June 2006;

                  (8) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 5.15% and 2.69% of the Group
I Mortgage Loans and Group II Mortgage Loans, respectively, are secured by
non-owner occupied properties and at least approximately 94.36% and 96.24% of
the Group I Mortgage Loans and Group II Mortgage Loans, respectively, are
owner-occupied Mortgaged Properties;

                  (9) The Mortgage Rates borne by the Group I Mortgage Loans and
Group II Mortgage Loans as of the Cut-off Date ranged from approximately 6.500%
and 6.240% per annum, respectively, to approximately 14.990% and 13.900% per
annum respectively, and the weighted


                                      1-1
<PAGE>

average Mortgage Rate as of the Cut-off Date was approximately 10.337% and
9.116% per annum respectively;

                  (10) Approximately 15.28% and 14.93% of the Group I Mortgage
Loans and Group II Mortgage Loans, respectively, were rate/term refinancings,
approximately 43.98% and 56.37% of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were cash out refinancings and approximately
40.74% and 28.70% of the Group I Mortgage Loans and Group II Mortgage Loans,
respectively, were made to purchase the related Mortgaged Properties;

                  (11) As of the Cut-off Date, the Gross Margins for the Group I
Mortgage Loans and the Group II Mortgage Loans (which are Adjustable Rate
Mortgage Loans) range from approximately 4.000% and 5.250% to approximately,
7.250% and 6.990% per annum, respectively, and the weighted average Gross Margin
for the Group I Mortgage Loan and the Group II Mortgage Loans (which are
Adjustable Rate Mortgage Loans) as of the Cut-off Date was approximately 6.032%
and 5.866%, respectively;

                  (12) No less than approximately 80.50% and 74.27% of the Group
I Mortgage Loans and Group II Mortgage Loans, respectively, were originated by
the Seller under the Seller's "Full Documentation" mortgage loan program, no
more than approximately 3.26% and 18.59% of the Group I Mortgage Loans and Group
II Mortgage Loans, respectively, were originated by the Seller under the
Seller's "Limited Documentation" mortgage loan program and no more than
approximately 16.24% and 7.15% of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated by the Seller under the Seller's
"Stated Income Documentation" mortgage loan program; and

                  (13) With respect to the Seller's underwriting risk
categories, approximately 51.79%, 20.12%, 16.85%, 8.38% and 2.30% of the Group I
Mortgage Loans constitute "A-" Risk Mortgage Loans, "B" Risk Mortgage Loans,
"B-" Risk Mortgage Loans, "C" Risk Mortgage Loans and "D" Risk Mortgage Loans,
respectively and approximately 80.23%, 12.77%, 2.94%, 3.55% and 0.52% of the
Group II Mortgage Loans constitute "A-" Risk Mortgage Loans, "B" Risk Mortgage
Loans, "B-" Risk Mortgage Loans, "C" Risk Mortgage Loans and "D" Risk Mortgage
Loans, respectively.

                  (14) As of the Cut-off Date, there were no Group I Mortgage
Loans or Group II Mortgage Loans with respect to which the monthly payment due
thereon in May 2001 had not been made and none of the Mortgage Loans has been
contractually delinquent for more than 30 days more than once during the
preceding twelve months and, except as provided above, no Mortgage Loan has ever
experienced a delinquency of 60 or more days since the origination thereof.




                                      1-2
<PAGE>


                                    EXHIBIT D

                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]



                                       D-1
<PAGE>


                                   EXHIBIT E-1

                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)

Loan Information

         Name of Mortgagor:
                                -----------------------------------

         Master Servicer
                                -----------------------------------

         Loan No.:
                                -----------------------------------

Trustee/Custodian

         Name:
                                -----------------------------------

         Address:
                                -----------------------------------

         Trustee/Custodian
         Mortgage File No.:
                                -----------------------------------

Depositor

         Name:                  LONG BEACH SECURITIES CORP.

         Address:
                                -----------------------------------

         Certificates:          Long Beach Mortgage Certificates, Series 2001-2.






                                       E-1

<PAGE>



         The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Long Beach
Mortgage Loan Trust 2001-2, Asset-Backed Certificates, Series 2001-2, 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 July __, 2001, among the
Trustee, the Depositor, Freddie Mac and the Master Servicer (the "Pooling and
Servicing Agreement").

(a) Promissory Note dated _______________, 20__, in the original principal sum
of $__________, made by ___________________, payable to, or endorsed to the
order of, the Trustee.

(b) 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 _____________.

(c) 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 ______________.

(d) 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 ____________.

(e) Other documents, including any amendments, assignments or other assumptions
of the Mortgage Note or Mortgage.

(f)      _____________________________________________

(g)      _____________________________________________

(h)      _____________________________________________

(i)      _____________________________________________

         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 ear-marked 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:

                                       LONG BEACH MORTGAGE COMPANY


                                       E-2
<PAGE>

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






                                       E-3
<PAGE>



                                   EXHIBIT E-2

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICERS' CERTIFICATE AND TRUST RECEIPT
                     MORTGAGE LOAN PASS-THROUGH CERTIFICATES
                                  SERIES 2001-2

____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE HOME EQUITY LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.

LOAN NUMBER:                          BORROWER'S NAME:
            ------------------------                  --------------------------

COUNTY:
       -----------------------------

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
[3.10] OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

                                                DATED:
                                                      --------------------------

---------------------------------
/ / VICE PRESIDENT

/ / ASSISTANT VICE PRESIDENT



                                       E-4
<PAGE>


                                   EXHIBIT F-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                          [Date]

Long Beach Securities Corp.               Long Beach Mortgage Company
1100 Town & Country Road                  1100 Town & Country Road
Orange, California 92868                  Orange, California 92868

Radian Insurance Inc.
1601 Market Street
Philadelphia, Pennsylvania 19103

         Re:      Pooling and Servicing Agreement, dated as of July 1, 2001
                  among Long Beach Securities Corp., Long Beach Mortgage
                  Company, Freddie Mac and Bankers Trust Company of California,
                  N.A., Mortgage Loan Asset-Backed Certificates Series 2001-2

Ladies and Gentlemen:

         Pursuant to Section 2.02 of the Pooling and Servicing Agreement the
undersigned as Trustee hereby acknowledges receipt of each Mortgage File and
certifies 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 hereto as not being covered by this
certification), (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(e) of the Pooling Agreement)
required to be delivered to it pursuant to the Pooling and Servicing Agreement
are in its possession, (ii) such documents have been reviewed by it and are not
mutilated, torn or defaced unless initialed by the related borrower 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), (ii), (ix), (xii), (xiv) (to the extent of the
Periodic Rate Cap for the first Adjustment Date and Subsequent Adjustment Dates)
and (xvi) of the definition of "Mortgage Loan Schedule" of the Pooling Agreement
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
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability 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.

                                     BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

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



                                      F-1
<PAGE>



                                   EXHIBIT F-2

                       FORM OF TRUSTEE FINAL CERTIFICATION

                                                 [Date]

Long Beach Securities Corp.                      Long Beach Mortgage Company
1100 Town & Country Road                         1100 Town & Country Road
Orange, California 92868                         Orange, California 92868

Radian Insurance Inc.
1601 Market Street
Philadelphia, Pennsylvania 19103

         Re:      Pooling and Servicing Agreement, dated as of July 1, 2001
                  among Long Beach Securities Corp., Long Beach Mortgage
                  Company, Freddie Mac and Bankers Trust Company of California,
                  N.A., Mortgage Loan Asset-Backed Certificates, Series
                  -------------------------------------------------- 2001-2

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:

                  (a) the original Mortgage Note, endorsed in blank or in the
         following form: "Pay to the order of Bankers Trust Company of
         California, N.A., 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 or a copy of such original Mortgage Note with
         an accompanying Lost Note Affidavit executed by the Seller;

                  (b) the original Mortgage with evidence of recording thereon,
         and a copy, certified by the appropriate recording office, of the
         recorded power of attorney, if the Mortgage was executed pursuant to a
         power of attorney, with evidence of recording thereon;

                  (c) an original Assignment in blank;

                  (d) the original recorded Assignment or Assignments showing a
         complete chain of assignment from the originator to the Person
         assigning the Mortgage to the Trustee or in blank;

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

                  (f) the original lender's title insurance policy, together
         with all endorsements or riders issued with or subsequent to the
         issuance of such policy, insuring the priority of the Mortgage as a
         first lien or second lien on the Mortgaged Property represented therein
         as a fee interest vested in the Mortgagor,


                                      F-2
<PAGE>

         or in the event such original title policy is unavailable, a written
         commitment or uniform binder or preliminary report of title issued by
         the title insurance or escrow company.

         The Trustee 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.

                                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

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





                                       F-3
<PAGE>



                                    EXHIBIT G

                                   [Reserved]




                                       G-1
<PAGE>



                                    EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

         Personally appeared before me the undersigned authority to administer
oaths, ________________________ who first being duly sworn deposes and says:
Deponent is ___________________ of ___________________, successor by merger to
______________________ ("Seller") and who has personal knowledge of the facts
set out in this affidavit.

On _____________________, _______________________ did execute and deliver a
promissory note in the principal amount of $_________________.

         That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.

         Seller executes this Affidavit for the purpose of inducing Bankers
Trust Company of California, N.A., as Trustee on behalf of Long Beach Mortgage
Loan Trust 2001-2, to accept the transfer of the above described loan from
Seller.

         Seller agrees to indemnify Bankers Trust Company of California, N.A.,
Long Beach Securities Corp. and Long Beach Mortgage Corporation harmless for any
losses incurred by such parties resulting from the above described promissory
note has been lost or misplaced.

By:
   -----------------------------

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


STATE OF                                    )
                                            )        SS:
COUNTY OF                                   )

         On this ______ day of ______________, 20_, before me, a Notary Public,
in and for said County and State, appeared ____________________, who
acknowledged the extension of the foregoing and who, having been duly sworn,
states that any representations therein contained are true.

         Witness my hand and Notarial Seal this _________ day of 20__.

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

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


My commission expires________________________.



                                       H-1
<PAGE>


                                    EXHIBIT I
                          FORM OF ERISA REPRESENTATION

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

         Re:      Long Beach Mortgage Loan Trust 2001-2, Asset-Backed
                  Certificates, Series 2001-2

Ladies and Gentlemen:

         ___________________ (the "Transferee") intends to acquire from
__________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of Long Beach Mortgage Loan Trust 2001-2, Asset-Backed
Certificates, Series 2001-2, [Class C, Class P, Class R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of July 1, 2001
(the "Agreement") among the Depositor, Long Beach Mortgage Company, as master
servicer (the "Master Servicer"), Freddie Mac, as guarantor with respect to the
Class A-1 Certificates and the Class A-2 Certificates, and Bankers Trust Company
of California, N.A. 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, Freddie Mac and the
Master Servicer that the following statements in either (1) or (2) are accurate:

         _____ (1) 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; or

         _____ (2) The Transferee will provide an Opinion of Counsel to the
         Depositor, the Trustee, the Trustee and the Master Servicer 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 prohibited
         transaction under ERISA or Section 4975 of the Code and will not
         subject the Depositor, the Master Servicer, the Trustee, 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.

         IN WITNESS WHEREOF, the Transferee executed this certificate.


                                      [Transferee]

                                      By:
                                         ---------------------------------


                                      Name:
                                           -------------------------------


                                       I-1
<PAGE>

                                      Title:
                                            ------------------------------




                                       I-2
<PAGE>


                                    EXHIBIT J

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

         Re:      Long Beach Mortgage Loan Trust 2001-2, Asset-Backed
                  Certificates Series 2001-2

Ladies and Gentlemen:

         In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                            Very truly yours,

                                            [NAME OF TRANSFEREE]


                                            By:
                                               -----------------------------
                                                    Authorized Officer



                                       J-1
<PAGE>



                       FORM OF RULE 144A INVESTMENT LETTER

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

Bankers Trust Company of California, N.A.
1761 East St. Andrew Place
Santa Ana, California 92705

         Re:      Long Beach Mortgage Loan Trust 2001-2, Asset-Backed
                  Certificates Series 2001-2

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

                                            Very truly yours,

                                            [NAME OF TRANSFEREE]


                                            By:
                                               -----------------------------
                                                    Authorized Officer



                                       J-2
<PAGE>



                                                            ANNEX 1 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

         _____ Corporation, etc. The Buyer is a corporation (other than a bank,
         savings and loan association or similar institution), Massachusetts or
         similar business trust, partnership, or charitable organization
         described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
         amended.

         _____ Bank. The Buyer (a) is a national bank or banking institution
         organized under the laws of any State, territory or the District of
         Columbia, the business of which is substantially confined to banking
         and is supervised by the State or territorial banking commission or
         similar official or is a foreign bank or equivalent institution, and
         (b) has an audited net worth of at least $25,000,000 as demonstrated in
         its latest annual financial statements, a copy of which is attached
         hereto.

         _____ Savings and Loan. The Buyer (a) is a savings and loan
         association, building and loan association, cooperative bank, homestead
         association or similar institution, which is supervised and examined by
         a State or Federal authority having supervision over any such
         institutions or is a foreign savings and loan association or equivalent
         institution and (b) has an audited net worth of at least $25,000,000 as
         demonstrated in its latest annual financial statements, a copy of which
         is attached hereto.

         _____ Broker-dealer. The Buyer is a dealer registered pursuant to
         Section 15 of the Securities Exchange Act of 1934.

         _____ Insurance Company. The Buyer is an insurance company whose
         primary and predominant business activity is the writing of insurance
         or the reinsuring of risks underwritten by insurance companies and
         which is subject to supervision by the insurance commissioner or a
         similar official or agency of a State, territory or the District of
         Columbia.

         _____ State or Local Plan. The Buyer is a plan established and
         maintained by a State, its political subdivisions, or any agency or
         instrumentality of the State or its political subdivisions, for the
         benefit of its employees.

         _____ ERISA Plan. The Buyer is an employee benefit plan within the
         meaning of Title I of the Employee Retirement Income Security Act of
         1974.


---------------
1        Buyer must own and/or invest on a discretionary basis at least
         $100,000,000 in securities unless Buyer is a dealer, and, in that case,
         Buyer must own and/or invest on a discretionary basis at least
         $10,000,000 in securities.


                                       J-3
<PAGE>

         _____ Investment Advisor. The Buyer is an investment advisor registered
         under the Investment Advisors Act of 1940.

         _____ Small Business Investment Company. Buyer is a small business
         investment company licensed by the U.S. Small Business Administration
         under Section 301(c) or (d) of the Small Business Investment Act of
         1958.

         _____ Business Development Company. Buyer is a business development
         company as defined in Section 202(a)(22) of the Investment Advisors Act
         of 1940.

         3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

         5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

         6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.



                                      -----------------------------------------
                                                  Print Name of Buyer

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

                                      Date:
                                           ------------------------------------




                                       J-4
<PAGE>



                                                            ANNEX 2 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

         2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

         _____ The Buyer owned $_________ in securities (other than the excluded
         securities referred to below) as of the end of the Buyer's most recent
         fiscal year (such amount being calculated in accordance with Rule
         144A).

         _____ The Buyer is part of a Family of Investment Companies which owned
         in the aggregate $___________ in securities (other than the excluded
         securities referred to below) as of the end of the Buyer's most recent
         fiscal year (such amount being calculated in accordance with Rule
         144A).

         3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

         4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

         5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

         6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.



                                       J-5
<PAGE>

                                      ----------------------------------------
                                           Print Name of Buyer or Adviser

                                      By:
                                         -------------------------------------
                                      Name:
                                      Tide:

                                      IF AN ADVISER:


                                      ----------------------------------------
                                                Print Name of Buyer

                                      Date:
                                           -----------------------------------




                                       J-6
<PAGE>



                                    EXHIBIT K

                        TRANSFER AFFIDAVIT AND AGREEMENT

                     LONG BEACH MORTGAGE LOAN TRUST 2001-2,
                    ASSET-BACKED CERTIFICATES, SERIES 2001-2

STATE OF CALIFORNIA   )
                      ) ss.:
COUNTY OF ORANGE      )

         The undersigned, being first duly sworn, deposes and says as follows:

         1. The undersigned is an officer of ________________________, the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Certificates, among Long Beach
Securities Corp., as depositor (the "Depositor"), Long Beach Mortgage Company,
as master servicer (the "Master Servicer"), Freddie Mac, a guarantor with
respect to the Class A-1 Certificates and Class S-1 Certificates, and Bankers
Trust Company of California, N.A., as trustee (the "Trustee"). Capitalized terms
used, but not defined herein shall have the meanings ascribed to such terms in
the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.

         2. The Transferee is, as of the date hereof and will be, as of the date
of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

         3. The Transferee has been advised and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) of
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.

         4. The Transferee has been advised and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

         5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the



                                       K-1
<PAGE>

provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section
5.02(d) of the Agreement and the restrictions noted on the face of the
Certificate. The Transferee understands and agrees that any breach of any of the
representations included herein shall render the Transfer to the Transferee
contemplated hereby null and void.

         6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit L to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

         7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.

         8. The Transferee's taxpayer identification number is 33-0882187.

         9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

         10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, if a significant purpose of the transfer was to impede the assessment
or collection of tax. The Transferee understands that, as the holder of a
noneconomic residual interest, the Transferee may incur tax liabilities in
excess of any cash flows generated by the Certificate. The Transferee intends to
pay taxes associated with holding the Certificate as they become due.

         11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.



                                       K-2
<PAGE>




         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
Vice President, attested by its Assistant Secretary, this ___ day of July, 2001.

                                      [Transferee NAME]


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

[Corporate Seal]

ATTEST:

---------------------------------
[Assistant] Secretary

         Personally appeared before me the above-named ____________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Transferee.

         Subscribed and sworn before me this ____ day of July, 2001.


                                 -----------------------------------------------
                                                 NOTARY PUBLIC

                                 My Commission expires the __ day of ____, 20__.


                                      K-3
<PAGE>


                                    EXHIBIT L

                         FORM OF TRANSFEROR CERTIFICATE

                                     [DATE]

Long Beach Securities Corp.
1100 Town & Country Road
Orange, California 92868

         Re:      Long Beach Mortgage Loan Trust 2001-2, Asset-Backed
                  Certificates Series 2001-2

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.

                                       Very truly yours,

                                       TRANSFEROR

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



                                       L-1
<PAGE>


                                    EXHIBIT M

                    BOND SUMMARY REPORTING - BND FILE FORMAT

DETAIL RECORD FIELDS:                                  FILE NAME:
T0nnMMYY.BND

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
      FIELD NAME         FLD        FORMAT                                       DEFINITION
                         NBR
-----------------------------------------------------------------------------------------------------------------------------
<S>                      <C>   <C>               <C>
Series#  (Deal           1         10 (x)        As defined by issuer or as assigned - T0nn
Identifier)
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Class#                   2          2 (x)        As assigned or determined by issuer.  Input default value if not
                                                 applicable.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               5 (x)
-----------------------------------------------------------------------------------------------------------------------------
CUSIP#                   3          9 (x)        If not available, Input default value.  Freddie Mac may provide dummy
                                                 numbers, if CUSIP numbers are not assigned by the issuer.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Coupon - Current         4          6.3          Bond Coupon Rate
Pass-through Rate
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Original Face Value      5         13.2          Par Value, original issue amount, of Class
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Beginning Unpaid         6         13.2          Beginning Class UPB as of beginning of cycle
Principal Balance
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Principal payment        7         13.2          Dollar amount of class principal payment
amount
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Interest payment amount  8         13.2          Dollar amount of class interest payment
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Total Distribution       9         13.2          Dollar amount of principal & interest payment
-----------------------------------------------------------------------------------------------------------------------------
Blank                                1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Deferred Interest        10        13.2          Dollar amount of overcollateralization  (Difference between security
                                                 principal and mortgage principal balances applied this period.  This can
                                                 include non-cash allocations)
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Principal Loss           11        13.2          Dollar amount of principal losses applied this period
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Interest Loss            12        13.2          Dollar amount of interest losses applied this period
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Ending Unpaid            13        13.2          Ending Class UPB as of beginning of cycle
Principal Balance
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Principal Distribution   14         9.7          Factor representing the principal payment divided by the Original UPB of
Factor                                           the class.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Interest Distribution    15         9.7          Factor representing the interest payment divided by the Beginning UPB of
Factor                                           the class.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Prepayment Interest      16         9.7          If loans were prepaid and an interest shortfall arose in this period, it
Shortfall                                        should be entered in this field.  If not applicable, a zero should be
                                                 used.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Total Distribution       17         9.7          Factor representing the combined principal and interest payment divided
Factor                                           by the Original UPB of the class.
-----------------------------------------------------------------------------------------------------------------------------


                                       I-1
<PAGE>

-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Deferred Interest        18         9.7          Factor representing any increase in residual class due to credit
Factor                                           enhancement requirements.  This is determined by dividing the increase
                                                 amount by the original UPB.
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Ending Principal         19         9.7          Ending UPB divided by original UPB.
Balance Factor
-----------------------------------------------------------------------------------------------------------------------------
Blank                               1 (x)
-----------------------------------------------------------------------------------------------------------------------------
Remaining Unpaid         20        13.2          If interest should be due, but not received on a given amount, then that
Interest                                         amount should be entered.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


Notes:   File must be a text file (either space or tab delimited).

         Any dates should be in YYYYMMDD format. They should not contain slashes
(/) or dashes (-). Number fields should NOT include commas.

         Any negative number should be denoted by a "-" in front of the number,
do not put the "-" after the number or use parentheses.


                                       I-2

<PAGE>



                                    EXHIBIT N

                     LOAN LEVEL REPORTING - LNS FILE FORMAT

DETAIL RECORD FIELDS:                                FILE NAME:  T0##MMYY.LNS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
   DATA: T0nnMMYY.LNS     FIELD     FORMAT          DEFINITION
                           NBR
--------------------------------------------------------------------------------------------------------------------------
<S>                     <C>     <C>               <C>
Servicer Loan No.         1       13(X)             Unique loan number assigned to the mortgage by the Seller/Servicer
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Due Date of Last Paid     2       YYYYMMDD          DUE DATE of last full payment received from the borrower.
Installment  (DDLPI)
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Last Payment Received     3       YYYYMMDD          RECEIPT DATE of the last fully paid monthly installment of
Date (LPRD)                                         principal, interest, and escrow  (if any) that was received from the
                                                    borrower.  Note:  Dates of partial payments should not be entered
                                                    here.  {Data is when payment was actually received from the
                                                    borrower)  IF THIS INFORMATION IS NOT AVAILABLE, THEN  POPULATE THE
                                                    FIELD WITH THE DEFAULT VALUE OF 19000101.
                                                    THIS INFORMATION SHOULD BE AVAILABLE.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Unpaid Principal          4       13.2              Unpaid Principal balance should be reported as follows:
Balance (UPB) 100%                                  *  For loans in the REMIC trust, the mortgage UPB reduced by normal
                                                    principal reduction, principal advances or prepayments.
                                                    * For loans that are paid in full by the mortgagor, repurchased from
                                                    the REMIC trust, or liquidated, report the UPB as zero.
                                                    * For loans paid off in a prior cycle, but reversed in the current
                                                    cycle will report the UPB prior to the payoff. The UPB should match
                                                    the whole number of principal being reversed.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Interest Paid             5       13.2              Gross / Coupon Interest payment amount
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Principal Paid            6       13.2              Total principal paid on the mortgage, including any losses or
                                                    advances.  If the loan is repurchased or liquidated from the trust,
                                                    it should be equivalent to the full remaining loan balance.
                                                    *  For approved payoff reversals or principal applied incorrectly in
                                                    a prior cycle the amount of negative principal to bring the mortgage
                                                    balance in line with the correct UPB reported.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Exception Code            7       2(x)              This field should contain an exception code only when exception
                                                    activity occurs for that period, otherwise this field should contain
                                                    a 0.
                                                    DEFAULT VALUE IS 0.
                                                    40  Inactivate loan, deemed the loan non-recoverable
                                                    60  Payoff - mortgage matured
                                                    61  Payoff - mortgage prepaid
                                                    65  Payoff - mortgage repurchased
                                                    69  Payoff - mortgage liquidated
                                                    70  Transfer to REO (status change exception)
                                                    72  Foreclosure (change of status from Active to Foreclosure)
                                                    80  Substituted Loan - Loan is added as a substitute for another loan
                                                    81  Reinstated Loan - Loan was previously delinquent, but the
                                                        borrower has brought it current.
                                                    90  Loan Modified - This is an exceptional activity code which is
                                                        reserved for future use. Modifications typically require
                                                        repurchase from the trust prior to modifying the loan.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Exception Date            8       YYYYMMDD          Date the exception occurred.  If an exception has not occurred, this
                                                    field should contain the default value of 19000101.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Mortgage Note Rate        9       6.3               Rate associated with the borrower's scheduled payment
</TABLE>


                                       I-1
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
   DATA: T0NNMMYY.LNS     FIELD     FORMAT          DEFINITION
                           NBR
--------------------------------------------------------------------------------------------------------------------------
<S>                     <C>     <C>               <C>
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Mortgage P&I Amount       10      13.2              Principal and interest portion of the borrowers scheduled
                                                    installment.  Note:  100% of the principal and interest amount
                                                    should be entered in this field, including servicing and guarantee
                                                    fees.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Realized Losses           11      13.2              Amount of realized losses for that period.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Cumulative Principal      12      13.2              Total principal payments advanced by the Servicer and not repaid by
Advances                                            the borrower.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Interest Advances         13      13.2              Amount of interest payment advanced by the Servicer for that period.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Loan Status               14      1(X)              Pertains to activity in the prior reporting cycle.
                                                    0 - Active
                                                    4 - Foreclosure
                                                    5 - REO
                                                    6 - Closed  (PAYOFFS & REPURCHASES)
                                                    9 - Bankruptcy (OVERRIDES ACTIVE STATUS)
                                                    Note: 30,60 & 90 day delinquency status will be derived from the
                                                    DDLPI field.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Subservicer No.           15       6                Subservicer ID# - S/S# assigned by Freddie Mac - 6 digits
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Actual Loan Balance       16      13.2              Actual loan balance outstanding from the borrower and does not
                                                    include advances made by the servicer.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Next Interest Rate        17      YYYYMMDD          Applies only to ARM loans and reflects the next pending interest
Change Date                                         rate adjustment date. DEFAULT IS 19000101.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Next Interest Payment     18      YYYYMMDD          Applies only to payment capped ARM loans and reflects the next
Change Date                                         pending payment adjustment date. DEFAULT IS 19000101.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Index Value at Reset      19      6.3               The index rate used in determining the ARM coupon.
Date                                                DEFAULT VALUE IS 0 FOR AN ARM LOAN IF THE INDEX IS NOT CHANGING IN
                                                    THE CURRENT PERIOD.  ALSO POPULATE 0 IF THE LOAN IS A FIXED RATE
                                                    LOAN.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Next Mortgage Rate        20      6.3               Should be populated in advance of the rate adjustment. DEFAULT
expected at reset date                              VALUE IS 0 FOR AN ARM LOAN IF THE RATE IS NOT CHANGING.  DEFAULT
                                                    VALUE IS 0 IF THE LOAN IS A FIXED RATE LOAN.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Collateral Group No.#     21      2                 This is a collateral grouping number for whole loan directed
                                                    collateral deals. DEFAULT VALUE IS 0.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Current Arrearage Paid    22      13.2              The current amount of cashflow applied to the arrearage balance.
                                                    Applies to loans that have been or are currently in default. DEFAULT
                                                    VALUE IS 0.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Outstanding Arrearage     23      13.2              The total amount of outstanding interest accrued under forbearance
Balance                                             period, after current arrearage payment. DEFAULT VALUE IS 0.
--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Freddie Mac Loan Number   24      13(X)             Unique & permanent loan number assigned to the mortgage by Freddie
                                                    Mac.  Used for disclosure.




                                       I-2
<PAGE>



--------------------------------------------------------------------------------------------------------------------------
Blank                             1(x)
--------------------------------------------------------------------------------------------------------------------------
Prepayment Premium        25      13.2              The borrowers penalty payment for prepaying his mortgage.  This
Amount                                              amount is allocated  in aggregate as a directed collateral amount to
                                                    a specific bond.  DEFAULT VALUE IS 0.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

Notes:   File must be a text file (either space or tab delimited).
         Any dates should be in YYYYMMDD format. They should not contain slashes
         (/) or dashes (-). Number fields should NOT include commas.

         Any negative number should be denoted by a "-" in front of the number,
do not put the "-" after the number or use parentheses.




                                       I-3
<PAGE>







                                   SCHEDULE I

                           PREPAYMENT PREMIUM SCHEDULE

                            [AVAILABLE UPON REQUEST]




                                      I-1
<PAGE>



                                   SCHEDULE II

                               PMI MORTGAGE LOANS

                            [AVAILABLE UPON REQUEST]



                                      II-1