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                                                                EXHIBIT 10.32(b)



                                    GUARANTY

        THIS GUARANTY (the "Guaranty") is made and dated as of the 8th day of
April, 1999 by AAMES FINANCIAL CORPORATION, a Delaware corporation
("Guarantor").


                                    RECITALS


        A. Pursuant to that certain Master Repurchase Agreement dated as of
April 8, 1999 by and between Aames Capital Corporation ("Seller") and
NationsBank, N.A. ("Buyer") (as amended, extended and replaced from time to
time, the "Agreement"), Buyer and Seller agreed to the terms and conditions on
which they may enter into Transactions from time to time, as set forth more
particularly therein. Capitalized terms used but not otherwise defined herein
are used with the meanings given such terms in the Agreement.


        B. As a condition precedent to the effectiveness of the Agreement,
Guarantor is required to execute and deliver this Guaranty to Buyer.


        NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees as follows:


                                    AGREEMENT


        1. Guaranty.


                (a) Guarantor hereby absolutely and unconditionally guarantees
the payment when due, whether prior to or upon termination of the Agreement and
all Transactions thereunder, upon the occurrence of an Event of Default or
otherwise, of the aggregate outstanding Repurchase Price and any and all other
obligations of Seller to Buyer under the Agreement, whether heretofore, now, or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, absolute or contingent, liquidated or unliquidated, determined
or undetermined (collectively and severally, the "Obligations"), whether or not
the Obligations are from time to time reduced, or extinguished and thereafter
increased or incurred, whether Seller may be liable individually or jointly with
others, whether or not recovery upon the Obligations may be or hereafter become
barred by any statute of limitations, and whether or not the Obligations may be
or hereafter become otherwise unenforceable.


                (b) Guarantor hereby absolutely and unconditionally guarantees
the payment of the Obligations, whether or not due or payable by Seller, upon:
(1) the dissolution, insolvency or business failure of, or any assignment for
benefit of creditors by, or commencement of any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceedings by or against, Seller
or Guarantor, or (2) the appointment of a receiver for, or the attachment,
restraint of or making or levying of any order of court or legal process
affecting, the property of Seller or Guarantor, and unconditionally



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promises to pay the Obligations to Buyer, or order, on demand, in lawful money
of the United States.


                (c) The liability of Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Obligations, whether
executed by Guarantor or by any other party, and the liability of Guarantor
hereunder is not affected or impaired by (1) any direction of application of
payment by Seller or by any other party, or (2) any other guaranty, undertaking
or maximum liability of Guarantor or of any other party as to the Obligations,
or (3) any payment on or in reduction of any such other guaranty or undertaking,
or (4) any revocation or release of any obligations of any other guarantor of
the Obligations, or (5) any dissolution, termination or increase, decrease or
change in personnel of Guarantor, or (6) any payment made to Buyer on the
Obligations which Buyer repays to Seller pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and Guarantor waives any right to the deferral or modification of
Guarantor's obligations hereunder by reason of any such proceeding. This
Guaranty and Guarantor's payment obligations hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any of
the Obligations is rescinded or must otherwise be restored or returned by Buyer,
all as though such payment had not been made. Buyer's good faith determination
as to whether a payment must be restored or returned shall be binding on
Guarantor.


                (d) (1) The obligations of Guarantor hereunder are independent
        of the Obligations of Seller, and a separate action or actions may be
        brought and prosecuted against Guarantor whether or not action is
        brought against Seller and whether or not Seller be joined in any such
        action or actions. Guarantor waives, to the fullest extent permitted by
        law, the benefit of any statute of limitations affecting its liability
        hereunder or the enforcement thereof. Any payment by Seller or other
        circumstance which operates to toll any statute of limitations as to
        Seller shall operate to toll the statute of limitations as to Guarantor.


                        (2) All payments made by Guarantor under this Guaranty
        shall be made without set-off or counterclaim and free and clear of and
        without deductions for any present or future taxes, fees, withholdings
        or conditions of any nature ("Taxes"). Guarantor shall pay any such
        Taxes, including Taxes on any amounts so paid, and will promptly furnish
        Buyer copies of any tax receipts or such other evidence of payment as
        Buyer may require.

                (e) Guarantor authorizes Buyer (whether or not after termination
of this Guaranty), without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability hereunder, from time to time to (1) renew, compromise, extend,
increase, accelerate or otherwise change the time for payment of, or otherwise
change the terms of Obligations or any part thereof, including increase or
decrease of the Pricing Rate thereon; (2) take and hold security for the payment
of this Guaranty or the Obligations and exchange, enforce, waive and release any
such security; (3) apply such security and direct the order or manner of sale
thereof as Buyer in its discretion may determine; and (4) release or substitute
any one or more endorsers, guarantors, Seller or other obligors. Buyer may,



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without notice to or the further consent of Seller or Guarantor, assign this
Guaranty in whole or in part to any person acquiring an interest in the
Obligations.


                (f) It is not necessary for Buyer to inquire into the capacity
or power of Seller or the officers acting or purporting to act on its behalf,
and Obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.


                (g) Guarantor waives any right to require Buyer to (1) proceed
against Seller or any other party; (2) proceed against or exhaust any security
held from Seller; or (3) pursue any other remedy whatsoever. Guarantor waives
any personal defense based on or arising out of any personal defense of Seller
other than payment in full of the Obligations, including, without limitation,
any defense based on or arising out of the disability of Seller, or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of Seller other than payment in full
of the Obligations. Buyer may, at its election, foreclose on any security held
for the Obligations by one or more judicial or nonjudicial sales, or exercise
any other right or remedy they may have against Seller, or any security, without
affecting or impairing in any way the liability of Guarantor hereunder except to
the extent the Obligations have been paid. Guarantor waives all rights and
defenses arising out of an election of remedies, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed the Guarantor's rights of subrogation and
reimbursement against the principal by operation of law.


                (h) Guarantor hereby waives any claim or other rights which
Guarantor may now have or may hereafter acquire against the Seller or any other
guarantor of all or any of the Obligations that arise from the existence or
performance of the Guarantor's obligations under this Guaranty or any other of
the Repurchase Documents (all such claims and rights being referred to as the
"Guarantor's Conditional Rights"), including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, or indemnification, any
right to participate in any claim or remedy which Buyer has against the Seller
or any collateral which Buyer now has or hereafter acquires for the Obligations,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from the Seller, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment or security on account of such claim or other rights. If,
notwithstanding the foregoing provisions, any amount shall be paid to the
Guarantor on account of the Guarantor's Conditional Rights and either (1) such
amount is paid to the Guarantor at any time when the Obligations shall not have
been paid or performed in full, or (2) regardless of when such amount is paid to
the Guarantor any payment made by Seller to Buyer is at any time determined to
be a preferential payment, then such amount paid to the Guarantor shall be
deemed to be held in trust for the benefit of Buyer and shall forthwith be paid
to Buyer to be credited and applied upon the Obligations, whether matured or
unmatured, in such order and manner as Buyer, in its sole discretion, shall
determine. To the extent that any of the provisions of this Paragraph 1(h) shall
not be enforceable, the



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Guarantor agrees that until such time as the Obligations have been paid and
performed in full and the period of time has expired during which any payment
made by the Seller or the Guarantor may be determined to be a preferential
payment, the Guarantor's Conditional Rights to the extent not validly waived
shall be subordinate to the Buyer's right to full payment and performance of the
Obligations and the Guarantor shall not seek to enforce the Guarantor's
Conditional Rights during such period.


                (i) Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Obligations. Guarantor assumes all responsibility for being and keeping itself
informed of Seller's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks which Guarantor assumes and incurs
hereunder, and agrees that Buyer shall not have a duty to advise Guarantor of
information known to it regarding such circumstances or risks.


                (j) All indebtedness of Seller to Guarantor shall be and such
indebtedness hereby is, deferred, postponed and subordinated to payment and
performance of the Obligations. Any payment made to Guarantor by Seller or any
third party with respect to the indebtedness subordinated hereunder while any
Obligations or any part thereof shall remain outstanding shall be held in trust
by Guarantor for the benefit of Buyer and shall be turned over to Buyer
immediately upon receipt thereof. Any lien, charge or claim which Guarantor now
has or hereafter may have on or to any real or personal property of Seller, the
personal property located thereon, any rights therein and related thereto, and
the revenue and/or income to be realized therefrom, as security for any loans,
advances or other indebtedness of Seller to Guarantor shall be, and, in any such
lien, claim or charge hereby is, subordinated to (1) the lien of any security
interest heretofore or hereafter granted to the Buyer by Seller, without regard
to the order of perfection of such liens or security interests and whether or
not Buyer's lien or security interest is perfected, and (2) the payment and
performance of the Obligations. Any payment made to Buyer under the terms of
this section shall not, as between Buyer and Seller, be deemed a payment by
Seller on the Obligations. This section only defines the relative rights of
Buyer, on the one hand, and Guarantor, on the other hand.


        2. Representations and Warranties.


                (a) The financial statements most recently furnished to the
Buyer are complete and correct in all material respects and present fairly in
accordance with GAAP the consolidated financial condition of the Guarantor and
its consolidated Subsidiaries at such dates and the consolidated and
consolidating results of its operations and changes in cash flows for the fiscal
periods then ended.

                (b) Since the date of the most recently furnished financial
statements, there has been no material adverse change in the business,
operations, assets or financial or other condition of Seller, Guarantor or the
Guarantor and its consolidated Subsidiaries taken as a whole.



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                (c) Each of Seller and Guarantor: (1) is duly organized, validly
existing and in good standing as a corporation under the States of California
and Delaware, respectively and is qualified to do business in each jurisdiction
where its ownership of property or conduct of business requires such
qualification and where failure to qualify would have a material adverse effect
on Seller, Guarantor or their respective property and/or business or on the
ability of Seller to pay or perform its obligations under the Agreement or
Guarantor to pay or perform the Guaranty, (2) has the corporate power and
authority and the legal right to own and operate its property and to conduct
business in the manner in which it does and proposes so to do, and (3) is in
compliance with all Requirements of Law and Contractual Obligations, the failure
to comply with which could have a material adverse effect on the business,
operations, assets or financial or other condition of Seller, Guarantor or
Guarantor and its consolidated Subsidiaries taken as a whole or on the Purchased
Repo Assets.

                (d) Each of Seller and Guarantor has the corporate power and
authority and the legal right to execute, deliver and perform the Agreement and
the Guaranty, respectively, and to enter into the transactions contemplated
hereby and thereby, and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Agreement and the Transactions
thereunder, and the Guaranty and the transactions contemplated hereby,
respectively. The Agreement has been duly executed and delivered on behalf of
Seller and constitutes legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with its terms, subject to the effect
of applicable bankruptcy and other similar laws affecting the rights of
creditors generally and the effect of equitable principles whether applied in an
action at law or a suit in equity. This Guaranty has been duly executed and
delivered on behalf of Guarantor and constitutes legal, valid and binding
obligations of Guarantor, enforceable against Guarantor in accordance with its
terms, subject to the effect of applicable bankruptcy and other similar laws
affecting the rights of creditors generally and the effect of equitable
principles whether applied in an action at law or a suit in equity.

                (e) The execution, delivery and performance of this Guaranty,
the Agreement, the Transactions thereunder and the use of the proceeds thereof,
will not violate any Requirement of Law or any Contractual Obligation of Seller
and/or Guarantor or create or result in the creation of any lien (except the
security interest purported to be created under this Agreement) on any assets of
Seller.

                (f) No litigation, investigation or proceeding of or before any
arbitrator, court or governmental authority is pending (or, to the knowledge of
Seller or Guarantor, threatened) by or against Guarantor or any of its
Subsidiaries or against any of such parties' properties or revenues which is
likely to be adversely determined and which, if adversely determined, could have
a material adverse effect on the business, operations, property or financial or
other condition of Guarantor or any of its Subsidiaries or on the Purchased Repo
Assets or is likely to have a material adverse effect on the validity or
enforceability of the Agreement or this Guaranty.

                (g) Guarantor and each of its Subsidiaries has filed or caused
to be filed all tax returns that are required to be filed and have paid all
taxes shown to be due



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and payable on said returns or on any assessments made against them or any of
their property other than taxes which are being contested in good faith by
appropriate proceedings and as to which Guarantor or the applicable Subsidiary
has established adequate reserves in conformity with GAAP.

                (h) Neither Seller nor the Guarantor is an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

                (i) Neither Guarantor nor any of its Subsidiaries is engaged or
will engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of such terms under Regulation U. No part
of the proceeds of any Transaction will be used for "purchasing" or "carrying"
"margin stock" as so defined or for any purpose which violates, or which would
be inconsistent with, the provisions of the Regulations of the Board of
Governors of the Federal Reserve System.

                (j) Guarantor and each of its Subsidiaries are in compliance in
all respects with the requirements of ERISA and no Reportable Event has occurred
under any Plan maintained by Guarantor or any of its Subsidiaries which is
likely to result in the termination of such Plan for purposes of Title IV of
ERISA.

                (k) Guarantor and each of its Subsidiaries have good and
marketable title to all material property and assets reflected in the financial
statements referred to in Paragraph 2(a) above, except property and assets sold
or otherwise disposed of in the ordinary course of business or for fair market
value subsequent to the date thereof.

                (l) Neither Guarantor nor any of its Subsidiaries has issued any
unregistered securities in violation of the registration requirements of Section
5 of the Securities Act of 1933, as amended (the "Act"), or any other law, and
is not violating any rule, regulation or requirement under the Act or the
Securities Exchange Act of 1934, as amended.

                (m) No consent, approval or authorization of, or registration,
declaration or filing with, any Person is required on the part of Seller or
Guarantor in connection with the execution and delivery of the Agreement or the
Transactions thereunder, and this Guaranty, respectively (other than filings to
perfect the security interest purported to be granted by Seller pursuant to the
Agreement) or the performance of or compliance with the terms, provisions and
conditions hereof or thereof.


                (n) Guarantor has (1) initiated a review and assessment of all
areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Guarantor or any of its Subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after



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December 31, 1999), (2) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (3) to date, implemented that plan in
accordance with that timetable, except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect. Guarantor
reasonably believes that all computer applications (including those of its
suppliers and vendors) that are material to its or any of its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect.

        3. Affirmative Covenants. The Guarantor hereby covenants and agrees with
the Buyer that the Guarantor shall:

                (a) Financial Statements. Furnish or cause to be furnished to
Buyer:

                        (1) Within: (i) ninety (90) days after the last day of
        each fiscal year of Guarantor, consolidated statements of income and
        statements of cash flow of Guarantor for such year and a consolidated
        balance sheet of Guarantor as of the end of such year presented fairly
        in accordance with GAAP and accompanied by an unqualified report of a
        firm of independent certified public accountants reasonably acceptable
        to Buyer, and (ii) ninety (90) days after the last day of each fiscal
        year end of Seller, statements of income and statements of cash flow of
        Seller for such year and a balance sheet of Seller as of the end of such
        year presented fairly in accordance with GAAP and accompanied by an
        unqualified report of a firm of independent certified public accountants
        reasonably acceptable to Buyer;

                        (2) Within forty-five (45) days after the last day of
        each calendar quarter other than the last quarter of each fiscal year,
        statements of income of Seller for such quarter and a balance sheet of
        Seller as of the end of such quarter, and statements of income and
        statements of cash flow of Guarantor for such quarter and a balance
        sheet of Guarantor as of the end of such quarter;

                        (3) Within thirty (30) days after the last day of each
        calendar month other than the last month of each calendar quarter,
        consolidated statements of income for such month and a consolidated
        balance sheet as of the end of such month of Guarantor and its
        Subsidiaries;

                        (4) Concurrently with each delivery of the financial
        statements referred to in subparagraphs (2) and (3) above, a certificate
        of a Responsible Financial Officer of Guarantor or Seller, as
        applicable, in form satisfactory to Buyer stating that such financial
        statements are presented fairly in accordance with GAAP and
        demonstrating in detail satisfactory to Buyer the Guarantor's or
        Seller's, as applicable, compliance with the financial covenants set
        forth in Paragraphs 4(i), 4(j), 4(k), 4(l) and 4(m) below as of and at
        the date of such financial statements;



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                        (5) As soon as is available any written report
        pertaining to material items in respect of the internal control matters
        of Guarantor submitted to Guarantor by its independent accountants in
        connection with each annual or interim special audit of the financial
        condition of Guarantor made by such independent public accountants; and

                        (6) Copies of all proxy statements, financial
        statements, and reports which Guarantor sends to its stockholders, and
        copies of all regular, periodic and special reports, and all
        registration statements under the Act which Guarantor files with the
        Securities and Exchange Commission or any Governmental Authority which
        may be substituted therefor, or with any national securities exchange,
        and copies of all prospectuses for any debt or equity offerings as well
        as asset-based securitizations by Guarantor or any of its Subsidiaries.

                (b) Certificates; Reports; Other Information. Furnish or cause
to be furnished to Buyer promptly, such financial and other information,
including, without limitation, financial statements of Seller, Guarantor, any
Subsidiary of Seller or Guarantor or any Approved Investor, and information
regarding the Purchased Repo Assets as Buyer may from time to time reasonably
request.

                (c) Payment of Indebtedness. Pay, discharge or otherwise satisfy
at or before maturity or before it becomes delinquent, defaulted or accelerated,
as the case may be, all its Indebtedness (including taxes), except Indebtedness
(other than the Obligations) in an aggregate amount not to exceed $1,000,000.

                (d) Maintenance of Existence and Properties. Maintain its
corporate existence and obtain and maintain all rights, privileges, licenses,
approvals, franchises, properties and assets necessary in the normal conduct of
its business (other than such rights, privileges, licenses, approvals,
franchises, properties and assets the failure to so obtain and maintain would
not in the aggregate have a Material Adverse Effect) and comply with all
Contractual Obligations and Requirements of Law.

                (e) Inspection of Property; Books and Records; Audits.

                        (1) Keep proper books of record and account in which
        full, true and correct entries in conformity with GAAP and all
        Requirements of Law shall be made of all dealings and transactions in
        relation to its business and activities; and

                        (2) Permit representatives of Buyer to: (i) visit and
        inspect any of its properties and examine and make abstracts from any of
        its books and records at any reasonable time and as often as may
        reasonably be desired by Buyer, (ii) discuss the business, operations,
        properties and financial and other condition of Guarantor and its
        Subsidiaries with officers and employees of such parties, and with their
        independent certified public accountants, and (iii) conduct periodic
        operational audits of Seller's business and/or operations.



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                (f) Notices. Promptly give written notice to Buyer of:

                        (1) The occurrence of any Potential Default or Event of
        Default;

                        (2) Any litigation or proceeding affecting Guarantor or
        any of its Subsidiaries or the Purchased Repo Assets which Guarantor
        reasonably believes could have a material adverse effect on the
        Purchased Repo Assets or the business, operations, property, or
        financial or other condition of Guarantor or any of its Subsidiaries, or
        could have a material adverse effect on the validity or enforceability
        of this Agreement;

                        (3) A material adverse change in the business,
        operations, property or financial or other condition of Guarantor or any
        of its Subsidiaries;

                        (4) Any change in the chief executive officer of Seller;

                        (5) The incurrence by Seller or Guarantor of any
        obligation in connection with any derivatives transaction outside of the
        normal course of business of Seller or Guarantor; and

                        (6) Any event or anticipated event, including, without
        limitation, the unavailability of pool insurance or other forms of
        credit enhancement, which Seller or Guarantor anticipates is likely to
        adversely affect the timely planned issuance of any Mortgage-Backed
        Security which would have been supported by Mortgage Loans owned by
        Seller.

                (g) Repo Documents. Comply with and observe all terms and
conditions of this Guaranty, the Agreement and all agreements and other
documents related hereto and thereto.

                (h) Insurance. Obtain and maintain insurance with responsible
companies in such amounts and against such risks as are usually carried by
corporations engaged in similar businesses similarly situated, including,
without limitation, errors and omissions coverage and fidelity coverage, and
furnish Buyer on request full information as to all such insurance.

                (i) Indemnification. Indemnify, defend and hold harmless Buyer
("Indemnified Party") from and against any and all claims, obligations,
penalties, actions, suits, judgments, reasonable costs and disbursements,
losses, liabilities and damages (including, without limitation, reasonable
attorneys' fees) of any kind whatsoever (collectively and severally, "Claims")
which may at any time be imposed on, assessed against or incurred by Indemnified
Party in any way relating to or arising out of the Agreement, this Guaranty or
the Custody Agreement or the transactions contemplated thereby or any action
reasonably taken or omitted to be taken by Indemnified Party in connection with
the foregoing; provided, however, that neither Seller nor Guarantor shall be
liable for any portion of any Claims arising out of or resulting from the gross
negligence or willful misconduct of Indemnified Party. Indemnified Party agrees
that it



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will promptly notify Seller of any claim, action or suit asserted or commenced
against it and that Seller may assume the defense thereof with counsel
reasonably satisfactory to Indemnified Party at Seller's sole expense, that
Indemnified Party will cooperate with Seller on such defense, and that
Indemnified Party will not settle any such claim, action or suit without the
consent of Seller; provided, however, that in the event Indemnified Party is not
reasonably satisfied with such defense, Indemnified Party may assume such
defense with counsel satisfactory to Indemnified Party at Seller's sole expense.
The indemnification obligations of Seller and Guarantor under this Paragraph
3(i) shall survive termination of the Agreement and payment in full of all
outstanding Repurchase Price.

                (j) Custodian. Utilize the same financial institution as
"custodian" or "collateral agent" for all of its credit and repo facilities
secured by Mortgage Loans owned by Seller or Guarantor.

                (k) Year 2000 Compliance. Guarantor shall promptly notify the
Buyer in the event Guarantor discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
its or any of its subsidiaries' business and operations will not be Year 2000
compliant on a timely basis, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.

                (l) Additional Information. At any reasonable time Guarantor
shall permit Buyer, its agents or attorneys, to inspect and copy any and all
documents and data in their possession pertaining to each Purchased Repo Asset
that is the subject of any Transaction. Such inspection shall occur upon the
request of Buyer at a mutually agreeable location during regular business hours
on the date of such request.

                (m) Confidentiality. Guarantor acknowledges that the Agreement
and the Custody Agreement are confidential in nature and Guarantor agrees that,
unless otherwise directed by a court of competent jurisdiction or as may be
required by federal or state law, it shall limit the distribution of such
documents to its officers, employees, attorneys, accountants and agents as
required in order to conduct its business with Buyer and to Lehman Commercial
Paper Inc. and Greenwich Capital Financial Products, Inc.

                (n) Further Assurances. Guarantor shall promptly provide and
cause to be provided to the Buyer such further assurances, documents,
instruments and agreements as the Buyer may reasonably request in order to
effect the purposes of this Guaranty and the Agreement.

        4. Negative Covenants. The Guarantor hereby covenants and agrees with
the Buyer that the Guarantor shall not:

                (a) Liens. Create, incur, assume or suffer to exist, any Lien
upon the Purchased Repo Assets except as contemplated hereby or create, incur,
assume or



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suffer to exist any Lien upon any of its other property and assets (including
servicing rights) except:

                        (1) Liens or charges for current taxes, assessments or
        other governmental charges which are not delinquent or which remain
        payable without penalty, or the validity of which are contested in good
        faith by appropriate proceedings upon stay of execution of the
        enforcement thereof, provided Seller or Guarantor, as applicable, shall
        have set aside on its books and shall maintain adequate reserves for the
        payment of same in conformity with GAAP;

                        (2) Liens, deposits or pledges made to secure statutory
        obligations, surety or appeal bonds, or bonds for the release of
        attachments or for stay of execution, or to secure the performance of
        bids, tenders, contracts (other than for the payment of borrowed money),
        leases or for purposes of like general nature in the ordinary course of
        Seller's or Guarantor's business;

                        (3) Purchase money security interests for property
        hereafter acquired, conditional sale agreements, or other title
        retention agreements, with respect to property hereafter acquired;
        provided, however, that no such security interest or agreement shall
        affect any servicing rights or extend to any property other than the
        property acquired; and

                        (4) Liens securing Permitted Secured Debt.

                (b) Indebtedness. Create, incur, assume or suffer to exist, or
otherwise become or be liable in respect of, any Indebtedness except:

                        (1) The "Obligations" under the Warehouse Agreement;

                        (2) Indebtedness reflected in the financial statements
        referred to in Paragraph 3(a) above;

                        (3) Trade debt incurred in the ordinary course of
        business;

                        (4) Indebtedness secured by Liens permitted under
        Paragraph 4(a) above;

                        (5) Capitalized Lease Obligations in an aggregate amount
        not to exceed at any one time outstanding $10,000,000.00;

                        (6) Unsecured Indebtedness consisting of direct
        borrowings from independent third parties incurred in the ordinary
        course of business, including Indebtedness incurred pursuant to public
        debt offerings; and

                        (7) Permitted Secured Debt.

                (c) Consolidation and Merger. Liquidate or dissolve, or enter
into any consolidation, merger, partnership, joint venture, syndicate or other
combination



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unless: (1) Seller and Guarantor remain as separate surviving corporations
following any such consolidation, merger, partnership, joint venture, syndicate
or other combination by either Seller or Guarantor, respectively, (2) the fair
market value of the total assets of the other Person party to such
consolidation, merger, partnership, joint venture, syndicate or other
combination when combined with the fair market value of the total assets
acquired through any other consolidation, merger, partnership, joint venture
syndicate or other combination after the date hereof, does not exceed twenty
percent (20%) of the total assets of Guarantor (determined in accordance with
GAAP on a consolidated basis) immediately prior to the proposed effective date
of such consolidation, merger, partnership, joint venture, syndicate or other
combination, and (3) no Potential Default or Event of Default exists immediately
prior to, or will occur as a result of, such consolidation, merger, partnership,
joint venture, syndicate or other combination.

                (d) Acquisitions. Purchase or acquire or incur liability for the
purchase or acquisition of any or all of the assets or business of any Person if
the fair market value of assets being acquired when combined with the fair
market value of all assets similarly acquired after the effective date hereof,
exceeds twenty percent (20%) of total assets of Guarantor (determined in
accordance with GAAP on a consolidated basis) immediately prior to the proposed
effective date of such acquisition.

                (e) Payment of Dividends. Declare or pay any dividends upon any
shares of Guarantor's stock now or hereafter outstanding, except dividends
payable in the capital stock of Guarantor, or make any distribution of assets to
its stockholders as such, whether in cash, property or securities if upon the
payment thereof there would exist an Event of Default or Potential Default.

                (f) Purchase or Retirement of Stock. From and after the date of
the Agreement, acquire, purchase, redeem or retire any shares of Guarantor's
capital stock now or hereafter outstanding (other than the conversion of Series
B preferred stock and Series C preferred stock into common stock contemplated by
the Cap Z Agreement); provided, however, that as long as both before and
following the consummation of such acquisition, purchase, redemption or
retirement there does not exist an Event of Default or Potential Default,
Guarantor may enter into such transactions in an aggregate fair market dollar
amount not to exceed $5,000,000.00.

                (g) Investments; Advances. Make or commit to make any advance,
loan or extension of credit (other than Mortgage Loans and reimbursable
servicing advances made in the ordinary course of Seller's or Guarantor's or any
Subsidiary's business) or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of, or make any other investment in, any
Person if such investment, advance or commitment to advance, when combined with
all other such investments, advances and commitments to advance, exceeds twenty
percent (20%) of the total equity of Guarantor (determined in accordance with
GAAP on a consolidated basis) immediately prior to the proposed effective date
of such investment, advance or commitment to advance.



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<PAGE>   13

                (h) Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its assets (other than obsolete or worn out property), whether
now owned or hereafter acquired, other than in the ordinary course of business
and at fair market value or otherwise in accordance with the Seller's business
plan projection known as the "Project Angel Projection" dated as of February 15,
1999, a copy of which having been delivered to the Buyer.

                (i) Leverage. Permit at any time the Leverage Ratio of Guarantor
and its consolidated Subsidiaries to exceed 4.00:1.00.

                (j) Minimum Tangible Net Worth. Permit at any time:

                        (1) Guarantor's Tangible Net Worth to be less than the
        sum of: (i) $135,000,000, plus (ii) eighty percent (80%) of net income
        (if positive), determined in accordance with GAAP, during each calendar
        quarter ending after the date hereof, plus (iii) eighty-five percent
        (85%) of contributions to equity of Guarantor (other than the "Rights
        Offering" under (and as defined in) the Cap Z Agreement) made at any
        time after the date hereof, plus (iv) one hundred percent (100%) of
        contributions to equity of Guarantor in connection with the "Rights
        Offering" under (and as defined in) the Cap Z Agreement, or

                        (2) Seller's Tangible Net Worth to be less than the sum
        of: (i) $400,000,000, plus (ii) eighty percent (80%) of net income (if
        positive), determined in accordance with GAAP, during each calendar
        quarter ending after the date hereof, plus (iii) eighty-five percent
        (85%) of contributions to equity of Seller (other than the "Rights
        Offering" under (and as defined in) the Cap Z Agreement) made at any
        time after the date hereof, plus (iv) one hundred percent (100%) of
        contributions to equity of Seller in connection with the "Rights
        Offering" under (and as defined in) the Cap Z Agreement.

                (k) Minimum Profitability. Permit at the end of any calendar
quarter (commencing with the calendar quarter ending September 30, 1999)
Guarantor's consolidated net income, determined in accordance with GAAP, for
such calendar quarter and the immediately preceding calendar quarter, taken
together, to be less than $1.00.

                (l) Non-Warehouse Debt. Permit at any time the Non-Warehouse
Debt Ratio of Guarantor and its consolidated Subsidiaries to exceed 1.55:1.00
for the calendar quarters ending March 31, 1999 and June 30, 1999, and 1.40:1.00
for any other calendar quarter thereafter.

                (m) Maintenance of Liquidity and Committed Working Capital Line.
Permit:

                        (1) The aggregate amount of the Guarantor's cash, Cash
        Equivalents and available borrowing capacity on unencumbered assets that
        could be drawn against (taking into account required haircuts) under
        committed warehouse or working capital facilities, on a consolidated
        basis and on any given day, to be less than: (i) prior to July 1, 1999,
        $5,000,000, and (ii) on and after July 1, 1999,



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<PAGE>   14

        $15,000,000; provided, however, that the liquidity of the Guarantor, on
        a consolidated basis and on any given day, may fall below the foregoing
        thresholds one time in any given calendar month and such noncompliance
        shall not last for more than three Business Days, but may in no event
        fall below $1,000,000 at any time; or

                        (2) Seller to have less than $25,000,000 of commitment
        under a committed working capital line at any time; provided, however,
        that Seller may have less commitment than the foregoing threshold if
        Seller can otherwise satisfy the Buyer as to the availability of working
        capital to meet its servicing advance obligations.

                (n) Subsidiaries. Create or permit the creation of any
Subsidiary not in existence as of the date hereof unless such Subsidiary is in
the same line of business as the Seller and the total capitalization thereof
does not exceed $1,000,000.

                (o) Transactions with Affiliates. Purchase, acquire or lease any
property from, or sell, transfer or lease any property to, lend or advance any
money to, borrow any money from, guarantee any obligation of, acquire any stock,
obligations or securities of, or enter into any management or similar fee
arrangement with, any Affiliate, other than (i) on an arms-length basis upon
terms and conditions comparable to those that could be reached with a third
party, and (ii) Mortgage Loans on the books of Guarantor or Seller with original
principal amounts in the aggregate not to exceed $5,000,000 at any one time
extended to executives of the Guarantor or Seller, which Mortgage Loans can and
will be securitized.


        5. Miscellaneous.


                (a) In addition to the Obligations, Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses incurred by Buyer in
enforcing this Guaranty in any action or proceeding arising out of, or relating
to, this Guaranty.


                (b) Guarantor agrees to execute any and all further documents,
instruments and agreements as Buyer from time to time reasonably requests to
evidence Guarantor's obligations hereunder.


                (c) This Guaranty and the liability and obligations of Guarantor
hereunder are binding upon Guarantor and Guarantor's successors and assigns, and
this Guaranty inures to the benefit of and is enforceable by Buyer and its
successors, transferees and assigns.


                (d) No right or power of Buyer hereunder shall be deemed to have
been waived by any act or conduct on the part of Buyer, or by any neglect to
exercise such right or power, or by any delay in so doing, and every right or
power shall continue in full force and effect until specifically waived or
released by an instrument in writing executed by Buyer.



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<PAGE>   15

                (e) Guarantor has reviewed and approved the Agreement and all
the Repurchase Documents.


                (f) This Guaranty shall be governed by and construed in
accordance with the substantive laws of the State of California.


                (g) The terms and provisions hereof may not be waived, altered,
modified or amended except in writing duly signed by Buyer and by Guarantor.


                (h) If any of the provisions of this Guaranty shall contravene
or be held invalid under the laws of any jurisdiction, this Guaranty shall be
construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.


                Executed as of the day and year first above written.

                                            AAMES FINANCIAL CORPORATION,
                                            a Delaware corporation



                                            By: /s/  David A. Sklar
                                               ---------------------------------
                                            Name: David A. Sklar
                                                 -------------------------------
                                            Title: EVP & CFO
                                                  ------------------------------


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