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                            PHH MORTGAGE CAPITAL LLC,
                                    Depositor

                            PHH MORTGAGE CORPORATION,
                                 Master Servicer

                                 CITIBANK, N.A.,
                                     Trustee




                         POOLING AND SERVICING AGREEMENT

                            Dated as of March 1, 2005

             PHHMC Mortgage Pass-Through Certificates, Series 2005-2


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<TABLE>
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                                TABLE OF CONTENTS

                                                                                                               PAGE

                                    ARTICLE I

                                   DEFINITIONS

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   Section 1.01           Defined Terms...........................................................................4
   Section 1.02           Accounting.............................................................................41

                                   ARTICLE II

         CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

   Section 2.01           Conveyance of Mortgage Loans...........................................................42
   Section 2.02           Acceptance of Trust Fund by the Trustee................................................46
   Section 2.03           Repurchase or Substitution of Mortgage Loans by the Sellers-
                          Assignment of Interest in
                          Additional Collateral..................................................................47
   Section 2.04           Representations, Warranties and Covenants of the Master Servicer.......................50
   Section 2.05           Representations and Warranties of the Depositor........................................52
   Section 2.06           Purpose and Powers of the Trust........................................................54
   Section 2.07           Issuance of Certificates...............................................................54

                                   ARTICLE III

                 ADMINISTRATION AND SERVICING OF THE TRUST FUND

   Section 3.01           Master Servicer to Act as Master Servicer..............................................55
   Section 3.02           Sub-Servicing Agreements Between the Master Servicer and Sub-Servicers.................57
   Section 3.03           Successor Sub-Servicers................................................................58
   Section 3.04           Liability of the Master Servicer.......................................................59
   Section 3.05           No Contractual Relationship Between Sub-Servicers and Trustee or Certificateholders....59
   Section 3.06           Assumption or Termination of Sub-Servicing Agreements by Trustee.......................59
   Section 3.07           Collection of Certain Mortgage Loan Payments...........................................60
   Section 3.08           Sub-Servicing Accounts.................................................................60
   Section 3.09           Collection of Taxes, Assessments and Similar Items; Servicing Accounts.................61
   Section 3.10           Collection Account and Distribution Account............................................61
   Section 3.11           Withdrawals from the Collection Account and Distribution Account.......................63
   Section 3.12           Investment of Funds in the Collection Account, Servicing Accounts
                          and the Distribution Account...........................................................65
   Section 3.13           Maintenance of the Primary Insurance Policies; Collections Thereunder..................66
   Section 3.14           Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.........67
   Section 3.15           Enforcement of Due-On-Sale Clauses. Assumption Agreements..............................69
   Section 3.16           Realization Upon Defaulted Mortgage Loans..............................................70
   Section 3.17           Trustee to Cooperate; Release of Mortgage Files........................................72
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<TABLE>
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<S>                                                                                                             <C>
   Section 3.18           Servicing Compensation.................................................................73
   Section 3.19           Reports to the Trustee; Collection Account Statements..................................74
   Section 3.20           Statement as to Compliance.............................................................74
   Section 3.21           Independent Public Accountants' Servicing Report.......................................75
   Section 3.22           Access to Certain Documentation........................................................75
   Section 3.23           Title, Management and Disposition of REO Property......................................75
   Section 3.24           Obligations of the Master Servicer in Respect of Prepayment Interest Shortfalls........78
   Section 3.25           Administration of Buydown Funds........................................................79
   Section 3.26           Obligations of the Master Servicer in Respect of Loan Rates and Monthly Payments.......79

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

   Section 4.01           Distribution Account; Distributions....................................................80
   Section 4.02           Statements to Certificateholders.......................................................87
   Section 4.03           Remittance Reports; Advances by the Master Servicer....................................89
   Section 4.04           Allocation of Realized Losses..........................................................91
   Section 4.05           Information Reports to Be Filed by the Master Servicer.................................92
   Section 4.06           Compliance with Withholding Requirements...............................................92
   Section 4.07           [Reserved].............................................................................92
   Section 4.08           Limited Purpose Surety Bond............................................................92

                                    ARTICLE V

                                THE CERTIFICATES

   Section 5.01           The Certificates.......................................................................93
   Section 5.02           Registration of Transfer and Exchange of Certificates..................................93
   Section 5.03           Mutilated. Destroyed. Lost or Stolen Certificates.....................................100
   Section 5.04           Persons Deemed Owners.................................................................100
   Section 5.05           Appointment of Paying Agent...........................................................101

                                   ARTICLE VI

                      THE MASTER SERVICER AND THE DEPOSITOR

   Section 6.01           Liability of the Master Servicer and the Depositor....................................102
   Section 6.02           Merger or Consolidation of or Assumption of the Obligations
                          of the Master Servicer or the Depositor...............................................102
   Section 6.03           Limitation on Liability of the Master Servicer and Others.............................102
   Section 6.04           Master Servicer Not to Resign.........................................................103

   Section 6.05           Delegation of Duties..................................................................103

                                   ARTICLE VII

                                     DEFAULT

   Section 7.01           Master Servicer Events of Termination.................................................105
   Section 7.02           Trustee to Act: Appointment of Successor..............................................107
   Section 7.03           Waiver of Master Servicer Events of Termination.......................................108
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                                       ii
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<TABLE>
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<S>                                                                                                            <C>
   Section 7.04           Notification to Certificateholders....................................................108
   Section 7.05           Survivability of Master Servicer Liabilities..........................................109

                                  ARTICLE VIII


                                   THE TRUSTEE

   Section 8.01           Duties of Trustee.....................................................................110
   Section 8.02           Certain Matters Affecting the Trustee.................................................112
   Section 8.03           Trustee Not Liable for Certificates or Mortgage Loans.................................113
   Section 8.04           Trustee May Own Certificates..........................................................114
   Section 8.05           Master Servicer to Pay Trustee Expenses; Trustee Fees.................................114
   Section 8.06           Eligibility Requirements for Trustee..................................................115
   Section 8.07           Resignation or Removal of Trustee.....................................................115
   Section 8.08           Successor Trustee.....................................................................116
   Section 8.09           Merger or Consolidation of Trustee....................................................116
   Section 8.10           Appointment of Co-Trustee or Separate Trustee.........................................116
   Section 8.11           Limitation of Liability...............................................................118
   Section 8.12           Trustee May Enforce Claims Without Possession of Certificates.........................118
   Section 8.13           Suits for Enforcement.................................................................118
   Section 8.14           Waiver of Bond Requirement............................................................118
   Section 8.15           Waiver of Inventory. Accounting and Appraisal Requirement.............................119
   Section 8.16           Right of Trustee in Capacity of Certificate Registrar or Paying Agent.................119
   Section 8.17           Periodic Filings......................................................................119

                                   ARTICLE IX

                              REMIC ADMINISTRATION

   Section 9.01           REMIC Administration..................................................................120
   Section 9.02           Prohibited Transactions and Activities................................................122
   Section 9.03           Master Servicer and Trustee Indemnification...........................................123

                                    ARTICLE X

                                   TERMINATION
   Section 10.01          Termination...........................................................................124
   Section 10.02          Additional Termination Requirements...................................................125
                                   ARTICLE XI

                                   [RESERVED]
                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

   Section 12.01          Amendment.............................................................................128
   Section 12.02          Recordation of Agreement: Counterparts................................................129
   Section 12.03          Limitation on Rights of Certificateholders............................................129
   Section 12.04          Governing Law: Jurisdiction...........................................................130
   Section 12.05          Notices...............................................................................130

                                      iii
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   Section 12.06          Severability of Provisions............................................................131
   Section 12.07          Article and Section References........................................................131
   Section 12.08          Notice to the Rating Agency...........................................................131
   Section 12.09          Further Assurances....................................................................132
   Section 12.10          Benefits of Agreement.................................................................132
   Section 12.11          Acts of Certificateholders............................................................132
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                                       iv
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EXHIBITS:

Exhibit A         Form of Class A Certificates
Exhibit B         [reserved]
Exhibit C-1       Form of Class R Certificates
Exhibit C-2       Form of Class B Certificates
Exhibit D         Mortgage Loan Schedule
Exhibit E         Form of Request for Release
Exhibit F-1       Form of Rule 144A Representation Letter
Exhibit F-2       Form of Transferor Certificate
Exhibit F-3       Form of Transferee Representation Letter
Exhibit F-4       Form of Transfer Affidavit and Agreement
                     and Form of Transferor Affidavit
Exhibit G-1       Form of ERISA Representation Letter
                     (Class B-4, Class B-5 and Class B-6)
Exhibit G-2       Form of ERISA Representation Letter
                     (Class B-1, Class B-2 and Class B-3)
Exhibit H         Form of Lost Note Affidavit
Exhibit I-1       Form of Trustee's Initial Certification
Exhibit I-2       Form of Trustee's Final Certification
Exhibit J         Mortgage Loan Purchase Agreement
Exhibit K         Assignment, Assumption and Recognition Agreement
                     (Additional Collateral Servicing Agreement)
Exhibit L         [Reserved]
Exhibit M         Form of Form 10-K Certificate
Exhibit N         Form of Back-up Certification to Form 10-K Certificate



                                        v

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         This Pooling and Servicing Agreement is dated as of March 1, 2005 (the
"Agreement"), among PHH MORTGAGE CAPITAL LLC, as depositor (the "Depositor"),
PHH MORTGAGE CORPORATION, as master servicer (the "Master Servicer") and
CITIBANK, N.A., as trustee (the "Trustee").

                             PRELIMINARY STATEMENT:

         The Depositor intends to sell mortgage 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 Mortgage Loans (as defined herein). As provided herein, the Trustee will
make, in accordance with Section 9.01, an election to treat the entire
segregated pool of assets described in the definition of Trust Fund (as defined
herein), and subject to this Agreement (including the Mortgage Loans), as two
real estate mortgage investment conduits (each a "REMIC") for federal income tax
purposes.

                                     REMIC I

The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Uncertificated Principal Balance, for each Class of REMIC
I Regular Interest comprising the interests in REMIC I created hereunder:

REMIC I Regular    Uncertificated          Uncertificated        Assumed Final
    Interest      Principal Balance     Pass-Through Rate(1)   Maturity Date(2)

A-1               $  50,035,202.00        Variable Rate        April 18, 2035
A-2               $  43,229,633.00        Variable Rate        April 18, 2035
A-3               $   2,386,163.00        Variable Rate        April 18, 2035
A-4               $   2,958,278.00        Variable Rate        April 18, 2035
A-5               $   1,500,956.00        Variable Rate        April 18, 2035
A-6               $  14,650,307.00        Variable Rate        April 18, 2035
R-II Interest     $         100.00        Variable Rate        April 18, 2035
B-1               $   5,554,908.00        Variable Rate        April 18, 2035
B-2               $     732,515.00        Variable Rate        April 18, 2035
B-3               $     366,258.00        Variable Rate        April 18, 2035
B-4               $     305,215.00        Variable Rate        April 18, 2035
B-5               $     183,129.00        Variable Rate        April 18, 2035
B-6               $     183,128.14        Variable Rate        April 18, 2035

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

(2) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the maturity date for the Mortgage Loan
with the latest maturity date has been designated as the "latest possible
maturity date" for each REMIC I Regular Interest.



                                       1
<PAGE>

                                    REMIC II

The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Certificate Principal Balance for each Class of
Certificates comprising the interests in the Trust Fund created hereunder:

Class     Original Certificate   Initial Pass-Through   Assumed Final Maturity
            Principal Balance           Rate                    Dates(6)

A-1        $   50,035,202.00      Variable Rate(1)           April 18, 2035
A-2        $   43,229,633.00      Variable Rate(2)           April 18, 2035
A-3        $    2,386,163.00      Variable Rate(3)           April 18, 2035
A-4        $    2,958,278.00      Variable Rate(3)           April 18, 2035
A-5        $    1,500,956.00      Variable Rate(3)           April 18, 2035
A-6(4)     $   14,650,307.00      Variable Rate(5)           April 18, 2035
R-I        $          100.00      Variable Rate(3)           April 18, 2035
R-II       $          100.00      Variable Rate(3)           April 18, 2035
B-1        $    5,554,908.00      Variable Rate(3)           April 18, 2035
B-2        $      732,515.00      Variable Rate(3)           April 18, 2035
B-3        $      366,258.00      Variable Rate(3)           April 18, 2035
B-4        $      305,215.00      Variable Rate(3)           April 18, 2035
B-5        $      183,129.00      Variable Rate(3)           April 18, 2035
B-6        $      183,128.14      Variable Rate(3)           April 18, 2035

(1) Varies according to (i) the weighted average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.40% per annum.

(2) Varies according to (i) the weighted average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.45% per annum.

(3) Varies according to the weighted average of the Net Mortgage Rate on each
Mortgage Loan.

(4) For federal income tax purposes, the Class A-6 Certificates represent
ownership of three components which are regular interests in REMIC II: the Class
A-6A Component, the Class A-6B Component and the Class A-6C Component. The Class
A-6A Component has a principal balance equal to the Certificate Principal
Balance of the Class A-6 Certificates and a Pass-Through Rate as set forth
herein. The Class A-6B Component is an interest only component which has a
Pass-Through Rate as set forth herein and a notional amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest A-1. The Class A-6C
Component is an interest only component which has a Pass-Through Rate as set
forth herein and a notional amount equal to the Uncertificated Principal Balance
of REMIC I Regular Interest A-2.

(5) Varies according to the sum (i) the weighted average of the Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per annum multiplied by a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-1
Certificates and the denominator of which is the Certificate Principal Balance
of the Class A-6 Certificates and (iii) 0.45% per annum multiplied by a
fraction, the numerator of which is the Certificate Principal Balance of the


                                       2
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Class A-2 Certificates and the denominator of which is the Certificate Principal
Balance of the Class A-6 Certificates.

(6) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the maturity date for the REMIC I
Regular Interest with the latest maturity date has been designated as the
"latest possible maturity date" for each Regular Certificate.




                                       3
<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, interest
will be calculated for all Certificates on the basis of a 360-day year
consisting of twelve 30-day months.

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

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

         "Accretion Termination Date": With respect to the Class A-3
Certificates, the Class A-3 Accretion Termination Date, with respect to the
Class A-4 Certificates, the Class A-4 Accretion Termination Date, with respect
to the Class A-5 Certificates, the Class A-5 Accretion Termination Date and with
respect to the Class A-6 Certificates, the Class A-6 Accretion Termination Date.

         "Accrual Distribution Amount": With respect to the Class A-3
Certificates, the Class A-3 Accrual Distribution Amount, with respect to the
Class A-4 Certificates, the Class A-4 Accrual Distribution Amount, with respect
to the Class A-5 Certificates, the Class A-5 Accrual Distribution Amount and
with respect to the Class A-6 Certificates, the Class A-6 Accrual Distribution
Amount.

         "Additional Collateral": (i) With respect to any Mortgage 100(sm) Loan,
the Securities Account and the financial assets held therein subject to a
security interest pursuant to the related Mortgage 100(sm) Pledge Agreement, or
(ii) with respect to any Parent Power(R) Mortgage Loan, the related Parent
Power(R) Agreement and collateral pledged pursuant thereto.

         "Additional Collateral Agreements": Each Mortgage 100(sm) Pledge
Agreement, Parent Power(R) Guaranty and Security Agreement for Securities
Account and Control Agreement, as applicable, for each Additional Collateral
Mortgage Loan.

         "Additional Collateral Mortgage Loan": A Mortgage Loan that is
supported by Additional Collateral.

         "Additional Collateral Servicer": MLCC.

         "Additional Collateral Servicing Agreement": The Additional Collateral
Transfer and Servicing Agreement, dated as of November 1, 2001, between MLCC and
the Master Servicer.

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

         "Adverse REMIC Event": As defined in Section 9.01(f) hereof.



                                       4
<PAGE>

         "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
and supplements hereto.

         "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, 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.

         "Assumed Final Maturity Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.

         "Available Distribution Amount": With respect to any Distribution Date
and the Mortgage Loans, an amount equal to the excess of (i) the sum of (a) the
aggregate of the related Monthly Payments received on or prior to the related
Determination Date, (b) Liquidation Proceeds, Insurance Proceeds, Subsequent
Recoveries and other unscheduled recoveries of principal and interest in respect
of the Mortgage Loans, and Principal Prepayments during the related Prepayment
Period, (c) the aggregate of any amounts received in respect of a related REO
Property 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 for such Distribution Date and (e) the aggregate of any
related Advances made by the Master Servicer for such Distribution Date, over
(ii) the sum of (a) related amounts reimbursable or payable to the Master
Servicer pursuant to Section 3.10, (b) related Stayed Funds, (c) related amounts
deposited in the Collection Account or the Distribution Account, as the case may
be, in error, (d) any Extraordinary Trust Fund Expenses and (e) the Trustee Fee.
The Available Distribution Amount shall also be increased by any Required Surety
Payment.

         "Bankruptcy Amount": As of any date of determination prior to the first
anniversary of the Cut-off Date, an amount equal to the excess, if any, of (A)
$50,000 over (B) the aggregate amount of Bankruptcy Losses allocated solely to
one or more specific Classes of Certificates in accordance with Section 4.02. As
of any date of determination on or after the first anniversary of the Cut-off
Date, an amount equal to the excess, if any, of (1) the lesser of (a) the
Bankruptcy Amount calculated as of the close of business on the Business Day
immediately preceding the most recent anniversary of the Cut-off Date coinciding
with or preceding such date of determination (or, if such date of determination
is an anniversary of the Cut-off Date, the Business Day immediately preceding
such date of determination) (for purposes of this definition, the "Relevant
Anniversary") and (b) the greater of:

                  (A) the greater of (i) 0.0006 times the aggregate principal
         balance of all the Mortgage Loans in the Mortgage Pool as of the
         Relevant Anniversary having a Loan-to-Value Ratio at origination which
         exceeds 75% and (ii) $50,000; and (B) the greater of (i) the product of
         (x) an amount equal to the largest difference in the related Monthly
         Payment for any Non-Primary Residence Loan remaining in the Mortgage
         Pool which had an original Loan-to-Value Ratio greater than 80% that
         would result if the Net


                                       5
<PAGE>

         Mortgage Rate thereof was equal to the greater of (I) 5% or (II) the
         weighted average (based on the principal balance of the Mortgage Loans
         as of the Relevant Anniversary) of the Net Mortgage Rates of all
         Mortgage Loans as of the Relevant Anniversary less 1.25% per annum, (y)
         a number equal to the weighted average remaining term to maturity, in
         months, of all Mortgage Loans with a Loan-to-Value Ratio of greater
         than 80% remaining in the Mortgage Pool as of the Relevant Anniversary,
         and (z) one plus the quotient of the number of all Non-Primary
         Residence Loans with a Loan-to-Value Ratio of greater than 80%
         remaining in the Mortgage Pool divided by the total number of
         outstanding Mortgage Loans in the Mortgage Pool as of the Relevant
         Anniversary, and (ii) $50,000,

over (2) the aggregate amount of Bankruptcy Losses allocated solely to one or
more specific Classes of Certificates in accordance with Section 4.02 since the
Relevant Anniversary.

         The Bankruptcy Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from the Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by the Rating Agency below the
lower of the then current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.

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

         "Bankruptcy Losses": Losses that are incurred as a result of Debt
Service Reductions and Deficient Valuations.

         "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 Certificates (other than the Class R, Class B-4, Class B-5 and Class
B-6 Certificates) shall be Book-Entry Certificates.

         "Business Day": Any day other than (a) a Saturday or Sunday, (b) a
legal holiday in the State of New Jersey or the State of New York, or (c) a day
on which banking or savings and loan institutions in the State of New Jersey or
the State of New York are authorized or obligated by law or executive order to
be closed.

         "Buydown Account": The custodial account or accounts created and
maintained pursuant to Section 3.25.

         "Buydown Agreement": An agreement between the applicable originator and
a Mortgagor, or an agreement among such originator, a Mortgagor and an employer
of a relocated Mortgagor which, in each case, provides for the application of
Buydown Funds.



                                       6
<PAGE>

         "Buydown Funds": In respect of any Buydown Mortgage Loan, any amount
contributed by the related originator or the employer of a relocated borrower in
order to enable the Mortgagor to reduce the payments required to be made from
the Mortgagor's funds during the Buydown Period. The Buydown Funds are not part
of the Trust Fund prior to deposit into the Collection Account or the
Distribution Account.

         "Buydown Mortgage Loan": Any Mortgage Loan in respect of which,
pursuant to a Buydown Agreement, (i) the Mortgagor pays less than the full
monthly payment specified in the Mortgage Note during the Buydown Period and
(ii) the difference between the payments required under such Buydown Agreement
and the Mortgage Note is paid from the related Buydown Funds.

         "Buydown Period": The period during which Buydown Funds are required to
be applied to the related Buydown Mortgage Loans as provided in Section 3.25.

         "Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which were more than 2% or $2,000 in excess of the principal balance of any
existing first mortgage or seasoned subordinate mortgage on the related
Mortgaged Property and related closing costs.

         "Cash Liquidation": As to any defaulted Mortgage Loan other than REO
Property which has been acquired by the Master Servicer on behalf of the Trustee
for the benefit of the Certificateholders, a determination by the Master
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds and
other payments or cash recoveries which the Master Servicer reasonably or in
good faith expects to be finally recoverable with respect to such Mortgage Loan,
plus, with respect to a defaulted Mortgage Loan that is an Additional Collateral
Mortgage Loan, the amount realized on the related Additional Collateral with
respect to such Mortgage Loan in accordance with Section 3.16.

         "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 non-U.S. Person shall not be a Holder of a Class R Certificate
for any purpose hereof.

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

         "Certificate Principal Balance": With respect to any Certificate as of
any date of determination, (x) the Certificate Principal Balance of such
Certificate on the Distribution Date immediately prior to such date of
determination, plus (y) (i) in the case of the Class A-3 Certificates, an amount
equal to the Monthly Interest Distributable Amount added to the Certificate
Principal Balance of the Class A-3 Certificates on the Distribution Date
immediately prior to such date of determination on or prior to the Class A-3
Accretion Termination Date and (ii) in the case of the Class A-4 Certificates,
an amount equal to the Monthly Interest Distributable Amount added to the
Certificate Principal Balance of the Class A-4 Certificates on the Distribution
Date immediately prior to such date of determination on or prior to the Class
A-4 Accretion Termination Date, (iii) in the case of the Class A-5 Certificates,
an amount equal to the Monthly Interest Distributable Amount added to the
Certificate Principal Balance of the Class A-5 Certificates on the Distribution
Date immediately prior to such date of determination


                                       7
<PAGE>

on or prior to the Class A-5 Accretion Termination Date and (iv) in the case of
the Class A-6 Certificates, an amount equal to the Monthly Interest
Distributable Amount added to the Certificate Principal Balance of the Class A-6
Certificates on the Distribution Date immediately prior to such date of
determination on or prior to the Class A-6 Accretion Termination Date plus (z)
in the case of the Class B Certificates, any Subsequent Recoveries added to the
Certificate Principal Balance of any such Certificate pursuant to Section
4.01(g), reduced by the aggregate of (a) all distributions of principal made
thereon on such immediately prior Distribution Date and (b) without duplication
of amounts described in clause (a) above, reductions in the Certificate
Principal Balance thereof in connection with allocations thereto of Realized
Losses on the Mortgage Loans and Extraordinary Trust Fund Expenses on such
immediately prior Distribution Date (or, in the case of any date of
determination up to and including the initial Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereon); provided, however, that the Certificate Principal Balance of each
Subordinate Certificate of the Class of Subordinate Certificates outstanding
with the highest numerical designation at any given time shall be calculated to
equal the Percentage Interest evidenced by such Certificate multiplied by the
excess, if any, of (A) the then aggregate Stated Principal Balance of the
Mortgage Loans over (B) the then aggregate Certificate Principal Balances of all
other Classes of Certificates then outstanding.

         "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 of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 or Class A-6 Certificates as designated on the face thereof
substantially in the form annexed hereto as Exhibit A, executed by the Trustee
and authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein.

         "Class A Certificateholder": Any Holder of a Class A Certificate.

         "Class A-3 Accretion Termination Date": The earlier to occur of (i) the
Distribution Date on which the Certificate Principal Balance of the Class A-2
Certificates has been reduced to zero and (ii) the Credit Support Depletion
Date.

         "Class A-3 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-3 Accretion Termination Date, an amount
equal to the aggregate amount of Monthly Interest Distributable Amount on the
Class A-3 Certificates, for such date, to the extent added to the Certificate
Principal Balance thereof pursuant to Section 4.01(i); provided that, with
respect to each Distribution Date on or after the Class A-3 Accretion
Termination Date, the Monthly Interest Distributable Amount on the Class A-3
Certificates for such date remaining after reduction of the Certificate
Principal Balance of the Class A-2 Certificates to zero on the Class A-3
Accretion Termination Date will be payable to the Class A-3 Certificateholders
pursuant to Section 4.01(c)(i) hereof; and provided further, that if the Class
A-3 Accretion Termination Date is the Credit Support Depletion Date, the entire
amount of Monthly Interest Distributable Amount on the Class A-3 Certificates
for that date will be payable to the Class A-3 Certificateholders pursuant to
Section 4.01(c)(i) hereof.



                                       8
<PAGE>

         "Class A-4 Accretion Termination Date": The earlier to occur of (i) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A-1, Class A-2 and Class A-3 Certificates has been reduced to zero and
(ii) the Credit Support Depletion Date.

         "Class A-4 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-4 Accretion Termination Date, an amount
equal to the aggregate amount of Monthly Interest Distributable Amount on the
Class A-4 Certificates, for such date, to the extent added to the Certificate
Principal Balance thereof pursuant to Section 4.01(j); provided that, with
respect to each Distribution Date on or after the Class A-4 Accretion
Termination Date, the Monthly Interest Distributable Amount on the Class A-4
Certificates for such date remaining after reduction of the aggregate
Certificate Principal Balance of the Class A-1, Class A-2 and Class A-3
Certificates to zero on the Class A-4 Accretion Termination Date will be payable
to the Class A-4 Certificateholders pursuant to Section 4.01(c)(i) hereof; and
provided further, that if the Class A-4 Accretion Termination Date is the Credit
Support Depletion Date, the entire amount of Monthly Interest Distributable
Amount on the Class A-4 Certificates for that date will be payable to the Class
A-4 Certificateholders pursuant to Section 4.01(c)(i) hereof.

         "Class A-5 Accretion Termination Date": The earlier to occur of (i) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A-1, Class A-2, Class A-3 and Class A-4 Certificates has been reduced to
zero and (ii) the Credit Support Depletion Date.

         "Class A-5 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-5 Accretion Termination Date, an amount
equal to the aggregate amount of Monthly Interest Distributable Amount on the
Class A-5 Certificates, for such date, to the extent added to the Certificate
Principal Balance thereof pursuant to Section 4.01(k); provided that, with
respect to each Distribution Date on or after the Class A-5 Accretion
Termination Date, the Monthly Interest Distributable Amount on the Class A-5
Certificates for such date remaining after reduction of the aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates to zero on the Class A-5 Accretion Termination Date will be
payable to the Class A-5 Certificateholders pursuant to Section 4.01(c)(i)
hereof; and provided further, that if the Class A-5 Accretion Termination Date
is the Credit Support Depletion Date, the entire amount of Monthly Interest
Distributable Amount on the Class A-5 Certificates for that date will be payable
to the Class A-4 Certificateholders pursuant to Section 4.01(c)(i) hereof.

         "Class A-6 Accretion Termination Date": The earliest to occur of (i)
the Distribution Date on which the aggregate Certificate Principal Balance of
the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates has
been reduced to zero, (ii) the Credit Support Depletion Date and (iii) the
Distribution Date occurring in April 2010.

         "Class A-6 Accrual Distribution Amount": With respect to each
Distribution Date prior to the Class A-6 Accretion Termination Date, an amount
equal to the aggregate amount of Monthly Interest Distributable Amount on the
Class A-6 Certificates, for such date, to the extent added to the Certificate
Principal Balance thereof pursuant to Section 4.01(l); provided that, with
respect to each Distribution Date on or after the Class A-6 Accretion
Termination Date, the Monthly Interest Distributable Amount on the Class A-6
Certificates for such date remaining after reduction of the aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates to zero on the Class A-6 Accretion Termination Date
will be payable to the Class A-6 Certificateholders pursuant to Section
4.01(c)(i) hereof; and provided further, that if the Class A-6 Accretion
Termination Date is the Credit Support


                                       9
<PAGE>

Depletion Date or the distribution date occurring in April 2010, the entire
amount of Monthly Interest Distributable Amount on the Class A-6 Certificates
for that date will be payable to the Class A-6 Certificateholders pursuant to
Section 4.01(c)(i) hereof.

          "Class A-6A Component": A regular interest in REMIC II which has a
principal amount which will at all times be equal to the Certificate Principal
Balance of the Class A-6 Certificates and a per annum Pass-Through Rate as set
forth herein.

         "Class A-6A Component Principal Amount": An amount equal to the
Certificate Principal Balance of the Class A-6 Certificates.

         "Class A-6B Component": A regular interest in REMIC II which has a
notional amount which will at all times be equal to the Uncertificated Principal
Balance of REMIC I Regular Interest A-1, a per annum Pass-Through Rate as set
forth herein, and no principal amount.

         "Class A-6B Component Notional Amount": An amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest A-1.

         "Class A-6C Component": A regular interest in REMIC II which has a
notional amount which will at all times be equal to the Uncertificated Principal
Balance of REMIC I Regular Interest A-2, a per annum Pass-Through Rate as set
forth herein, and no principal amount.

         "Class A-6C Component Notional Amount": An amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest A-2.

         "Class B Certificate": Any one of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 or Class B-6 Certificates as designated on the face thereof
substantially in the form annexed hereto as Exhibit C-2, executed by the Trustee
and authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein.

         "Class B Certificateholder": Any Holder of a Class B Certificate.

         "Class B Percentage": The Class B-1 Percentage, Class B-2 Percentage,
Class B-3 Percentage, Class B-4 Percentage, Class B-5 Percentage or Class B-6
Percentage.

         "Class B-1 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-1 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-1
Percentage is approximately 4.55%.

         "Class B-2 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-2 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-2
Percentage is approximately 0.60%.



                                       10
<PAGE>

         "Class B-3 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-3 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-3
Percentage is approximately 0.30%.

         "Class B-4 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-4 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-4
Percentage is approximately 0.25%.

         "Class B-5 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-5 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-5
Percentage is approximately 0.15%.

         "Class B-6 Percentage": With respect to any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class B-6 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date. The initial Class B-6
Percentage is approximately 0.15%.

         "Class R Certificates": The Class R-I and Class R-II Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1 and each
evidencing the ownership of an interest designated as the Residual Interest in
the related REMIC.

         "Class Subordination Percentage": With respect to any Distribution Date
and each Class of Subordinate Certificates, the fraction (expressed as a
percentage) the numerator of which is the Certificate Principal Balance of such
Class of Subordinate Certificates immediately prior to such Distribution Date
and the denominator of which is the aggregate of the Certificate Principal
Balances of all Classes of Certificates immediately prior to such Distribution
Date.

         "Closing Date": March 29, 2005.

         "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, which shall be entitled "PHH
Mortgage Corporation, as Master Servicer for Citibank, N.A., as Trustee, in
trust for registered Holders of PHHMC Mortgage Pass-Through Certificates, Series
2005-2", and which must be an Eligible Account.

         "Commission": The Securities and Exchange Commission.



                                       11
<PAGE>

         "Compensating Interest": As defined in Section 3.24 hereof.

         "Condemnation Proceeds": All awards or settlements in respect of a
taking of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.

         "Control Agreement": With respect to each Mortgage 100(sm) Loan, the
Merrill Lynch Pledged Collateral Account Control Agreement between the guarantor
or mortgagor, as applicable, the Additional Collateral Servicer and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, pursuant to which the guarantor or
mortgagor, as applicable, has granted a security interest in a Securities
Account.

         "Cooperative": A corporation that has been formed for the purpose of
cooperative apartment ownership.

         "Cooperative Assets": Shares issued by Cooperatives, the related
Cooperative Lease and any other collateral securing the Cooperative Loans.

         "Cooperative Building": The building and other property owned by a
Cooperative.

         "Cooperative Lease": With respect to a Cooperative Loan, the
proprietary lease or occupancy agreement with respect to the Cooperative
Apartment occupied by the Mortgagor and relating to the related Cooperative
Assets, which lease or agreement confers an exclusive right to the holder of
such Cooperative Assets to occupy such apartment.

         "Cooperative Loan": The indebtedness of a Mortgagor evidenced by a
Mortgage Note which is secured by Cooperative Assets and which is being sold to
the Depositor pursuant to this Agreement, the Mortgage Loans so sold being
identified in the Mortgage Loan Schedule.

         "Cooperative Unit": A specific dwelling unit in a Cooperative Building
as to which exclusive occupancy rights have been granted pursuant to a Lease.

         "Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located, for Certificate transfer
purposes, at 111 Wall Street, 15th Floor, Attn: Securities Window, New York, New
York 10005, Attention: PHHMC, Series 2005-2, 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 Certificated Interests": With respect to each REMIC I
Regular Interest, the Class with the same designation.

         "Credit Support Depletion Date": The first Distribution Date on which
the Senior Percentage equals 100%.

         "Curtailment": Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in Full.

         "Cut-off Date": March 1, 2005.


                                       12
<PAGE>

         "Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date (or as of the
applicable date of substitution with respect to a Eligible Substitute Mortgage
Loan).

         "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.

         "Defective Mortgage Loan": A Mortgage Loan replaced or to be replaced
by one or more Eligible Substitute Mortgage Loans.

         "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 5.02(c) hereof.

         "Delinquent": As used herein, a Mortgage Loan is considered to be: "one
month" delinquent when a payment due on any scheduled due date remains unpaid as
of the close of business on the last Business Day immediately prior to the next
following monthly scheduled due date; "two months" delinquent when a payment due
on any scheduled due date remains unpaid as of the close of business on the last
Business Day immediately prior to the second following monthly scheduled due
date; and so on. The determination as to whether a Mortgage Loan falls into
these categories is made as of the close of business on the last Business Day of
each month. For example, a Mortgage Loan with a payment due on July 1 that
remained unpaid as of the close of business on July 31 would then be considered
to be one month delinquent. Delinquency information as of the Cut-off Date is
determined and prepared as of the close of business on the last Business Day
immediately prior to the Cut-off Date.

         "Depositor": PHH Mortgage Capital LLC, a Delaware limited liability
company, or any successor in interest.

         "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 Agreement": With respect to any Book-Entry Certificates,
either of the agreements among the Depositor, the Trustee and the initial
Depository, to be dated on or about the Closing Date.

         "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.



                                       13
<PAGE>

         "Determination Date": With respect to any Distribution Date, the 8th
day of the calendar month in which such Distribution Date occurs or, if such 8th
day is not a Business Day, the Business Day immediately preceding such 8th 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 Trust Fund other than
through an Independent Contractor, provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.

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

         "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Citibank, N.A., as Trustee, in trust for the registered
Holders of the PHHMC Mortgage Pass-Through Certificates, Series 2005-2" and
which must be an Eligible Account.

         "Distribution Date": The 18th day of any calendar month, or if such
18th day is not a Business Day, the Business Day immediately following such 18th
day, commencing in April 2005.

         "Due Date": With respect to each Mortgage Loan and any Distribution
Date, the first day of the calendar month in which such Distribution Date occurs
on which the Monthly Payment for such Mortgage Loan was due, 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 (or with respect to


                                       14
<PAGE>

the first Due Period, the day following the Cut-off Date) occurs and ending on
the first day of the month in which such Distribution Date occurs.

         "Effective Loan-to-Value Ratio": With respect to an Additional
Collateral Mortgage Loan, the ratio, expressed as a percentage, of (A) the
principal amount of the Mortgage Loan at origination less the value of any
Additional Collateral securing the Mortgage Loan, to (B) the lesser of (1) the
appraised value determined in an appraisal or other collateral assessment tool
obtained at origination of the Mortgage Loan and (2) the sales price for the
related Mortgaged Property.

         "Eligible Account": Any of (i) an account or accounts maintained with a
depository institution the short-term debt obligations of which have been rated
by the Rating Agency in its highest rating available, (ii) in a depository
institution in which such accounts are fully insured to the limits established
by the FDIC, provided that any deposits not so insured shall, to the extent
acceptable to the Rating Agency, as evidenced in writing, be maintained such
that (as evidenced by an Opinion of Counsel delivered to the Trustee and the
Rating Agency) the registered Holders of Certificates have a claim with respect
to the funds in such account or a perfected first security interest against any
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, (iv) an account or accounts of a depository
institution acceptable to the Rating Agency (as evidenced in writing by the
Rating Agency that use of any such account will not reduce the rating assigned
to any Class of Certificates by the Rating Agency below the lower of the
then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency) or (v) an account or accounts maintained
with a federal or state chartered depository institution or trust company that
meet the depository requirements of Fannie Mae or Freddie Mac. Eligible Accounts
may bear interest.

         "Eligible Funds": With respect to each Distribution Date, the portion,
if any, of the Available Distribution Amount remaining after reduction by the
sum of the Senior Interest Distribution Amount, the Senior Principal
Distribution Amount, determined without regard to clause (D) of its definition,
and the aggregate amount of the Monthly Interest Distributable Amount on the
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates.

         "Eligible Substitute Mortgage Loan": A mortgage loan substituted for a
Defective Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the outstanding principal
balance of the Defective Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, the amount of any shortfall to be
deposited by the Master Servicer in the Collection Account in the month of
substitution, (ii) have a Loan Rate, not less than the Loan Rate of the
Defective Mortgage Loan and not more than 1% in excess of the Loan Rate of such
Defective Mortgage Loan, (iii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Defective Mortgage Loan,
(iv) be current as of the date of substitution, (v) have a Loan-to-Value Ratio
as of the date of substitution equal to or lower than the Loan-to-Value Ratio of
the Defective Mortgage Loan as of such date and (vi) conform to each
representation and warranty set forth in Section 2.04 hereof applicable to the
Defective Mortgage Loan. In the event that one or more mortgage loans


                                       15
<PAGE>

are substituted for one or more Defective Mortgage Loans, the amounts described
in clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Loan Rates described in clause (ii) hereof shall be determined on
the basis of weighted average Loan Rates, the terms described in clause (iii)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Loan-to-Value Ratios described in clause (v) 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 (vi) hereof must be satisfied as to each Eligible Substitute Mortgage
Loan or in the aggregate, as the case may be. Any Mortgage Loan substituted for
a Mortgage Loan which has an arrearage due to the application of any related
forbearance plan with respect to such Mortgage Loan, will be treated as having
such an arrearage due to the application of any related forbearance plan with
respect to such Mortgage Loan.

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

         "ERISA-Restricted Certificates": Any of the Class B-4, Class B-5, Class
B-6 and Class R Certificates.

         "Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.

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

         "Excess Losses": (i) Special Hazard Losses in excess of the Special
Hazard Amount, (ii) Bankruptcy Losses in excess of the Bankruptcy Amount, (iii)
Fraud Losses in excess of the Fraud Loss Amount and (iv) Extraordinary Losses.

         "Excess Subordinate Principal Amount": With respect to any Distribution
Date on which the Certificate Principal Balance of the Class or Classes of
Certificates then outstanding with the Lowest Priority is to be reduced to zero
and on which Realized Losses are to be allocated to that Class or those Classes,
the amount, if any, by which (i) the amount of principal that would otherwise be
distributable on that Class or those Classes of Certificates on such
Distribution Date is greater than (ii) the excess, if any, of the aggregate
Certificate Principal Balance of that Class or those Classes of Certificates
immediately prior to such Distribution Date over the aggregate amount of
Realized Losses to be allocated to that Class or those Classes of Certificates
on such Distribution Date.

         "Exchange Act": The Securities and Exchange Act of 1934, as amended.

         "Extraordinary Loss": Any Realized Loss or portion thereof caused by or
resulting from:

                  (i) nuclear or chemical reaction or nuclear radiation or
         radioactive or chemical contamination, all whether controlled or
         uncontrolled and whether such loss be direct or indirect, proximate or
         remote or be in whole or in part caused by, contributed to or
         aggravated by a peril covered by the definition of the term "Special
         Hazard Loss";

                  (ii) hostile or warlike action in time of peace or war,
         including action in hindering, combating or defending against an
         actual, impending or expected attack by any government or sovereign
         power, de jure or de facto, or by any authority maintaining


                                       16
<PAGE>

         or using military, naval or air forces, or by military, naval or air
         forces, or by an agent of any such government, power, authority or
         forces;

                  (iii) any weapon of war employing atomic fission or
         radioactive forces whether in time of peace or war, and

                  (iv) insurrection, rebellion, revolution, civil war, usurped
         power or action taken by governmental authority in hindering, combating
         or defending against such an occurrence, seizure or destruction under
         quarantine or customs regulations, confiscation by order of any
         government or public authority, or risks of contraband or illegal
         transactions or trade.

         "Extraordinary Trust Fund Expenses": Any amounts reimbursable to the
Master Servicer or the Depositor pursuant to Section 6.03, any amounts
reimbursable to the Trustee from the Trust Fund pursuant to this Agreement,
including but not limited to Section 8.05, and any other costs, expenses,
liabilities and losses borne by the Trust Fund (exclusive of any cost, expense,
liability or loss that is specific to a particular Mortgage Loan or REO Property
and is taken into account in calculating a Realized Loss in respect thereof) for
which the Trust Fund has not and, in the reasonable good faith judgment of the
Trustee, shall not, obtain reimbursement or indemnification from any other
Person.

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

         "FDIC": Federal Deposit Insurance Corporation or any successor thereto.

         "Fidelity Bond": Shall have the meaning assigned thereto in Section
3.14.

         "Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by a 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 Officer, of each Final Recovery
Determination made thereby.

         "Fitch": Fitch, Inc., doing business as Fitch Ratings, and any
successor thereto or its successor in interest.

         "Foreclosure Price": The amount reasonably expected to be received from
the sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.

         "Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition (net of all
amounts reimbursable therefrom pursuant to Section 3.11(a)(iii)) in respect of
each Mortgage Loan or REO Property for which a Cash Liquidation or REO
Disposition occurred in the related Prepayment Period over the sum of the unpaid
principal balance of such Mortgage Loan or REO Property (determined, in the case
of an REO Disposition, in accordance with Section 3.16) plus accrued and unpaid
interest at the Mortgage Rate on such unpaid principal balance from the Due Date
to which interest was last paid by the


                                       17
<PAGE>

Mortgagor to the first day of the month following the month in which such Cash
Liquidation or REO Disposition occurred.

         "Fraud Loss Amount": As of any date of determination after the Cut-off
Date, prior to the third anniversary of the Cut-off Date, an amount equal to
1.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans as of the Cut-off Date minus the Fraud Losses allocated solely to one or
more specific Classes of Certificates in accordance with Section 4.02 since the
most recent anniversary of the Cut-off Date up to such date of determination. On
and after the third anniversary of the Cut-off Date, the Fraud Loss Amount shall
be zero.

         The Fraud Loss Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
conformation from the Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written conformation to the Trustee.

         "Fraud Losses": Losses sustained on a Liquidated Mortgage Loan by
reason of a default arising from fraud, dishonesty or misrepresentation.

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

         "Highest Priority": As of any date of determination, the Class of
Subordinate Certificates then outstanding with the earliest priority for
payments pursuant to Section 4.01(c), in the following order: Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates.

         "HUD": The United States Department of Housing and Urban Development,
or any successor thereto and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.

         "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, 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 the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship


                                       18
<PAGE>

between such Person and the Trust Fund 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, which Opinion of Counsel shall be an expense of the Trust Fund, 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.

         "Initial Certificate Principal Balance": With respect to any Regular
Certificate, the amount designated "Initial Certificate Principal Balance" 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 Accrual Period": With respect to any Distribution Date and
any Class of Certificates, the calendar month immediately preceding the month in
which such Distribution Date occurs.

         "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.

         "Limited Purpose Surety Bond": The Limited Purpose Surety Bond (Policy
No. AB0039BE), dated February 28, 1996 in respect to certain Additional
Collateral Mortgage Loans, issued by Ambac Assurance Corporation (f/k/a Ambac
Indemnity Corporation) for the benefit of certain beneficiaries, including the
Trustee for the benefit of the Certificateholders, but only to the extent that
such Limited Purpose Surety Bond covers any Additional Collateral Mortgage
Loans.

         "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 Due
Period, that all Liquidation Proceeds and Insurance 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 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery


                                       19
<PAGE>

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 10.01.

         "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 (including, with respect to a defaulted Mortgage
Loan that is an Additional Collateral Mortgage Loan, the amount realized on the
related Additional Collateral with respect to such Mortgage Loan in accordance
with Section 3.16), or (iii) the repurchase, substitution or sale of a Mortgage
Loan or an REO Property pursuant to or as contemplated by Section 2.03, Section
3.16 or Section 10.01.

         "Loan Balance": As of any date, the aggregate Stated Principal Balance
of all of the Mortgage Loans as of such date.

         "Loan-to-Value Ratio": As of any date and Mortgage Loan (other than an
Additional Collateral Mortgage Loan), the fraction, expressed as a percentage,
the numerator of which is the Stated Principal Balance of the Mortgage Loan, and
the denominator of which is the Value of the related Mortgaged Property. As of
any date and any Additional Collateral Mortgage Loan, the related Effective
Loan-to-Value Ratio.

         "Loan Rate": With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate shall remain
constant at the rate set forth in the Mortgage Loan Schedule as the Loan Rate in
effect immediately following the Cut-off Date. 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.

         "Lockout Percentage": With respect to any Distribution Date, the
Certificate Principal Balance of the Class A-6 Certificates, divided by the
aggregate Certificate Principal Balance of the Senior Certificates, in each case
immediately prior to any allocations of losses or distributions on that
Distribution Date.

         "Lockout Prepayment Percentage": With respect to any Distribution Date,
the product of (i) the Lockout Percentage and (ii) the Stepdown Percentage.

         "Lockout Scheduled Percentage": With respect to any Distribution Date
(i) occurring prior to April 2010, 0% and (ii) occurring in or after April 2010,
the Lockout Percentage.

         "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 Depositor as applicable certifying that the
original Mortgage Note has been lost, misplaced 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.



                                       20
<PAGE>

         "Lower Priority": As of any date of determination and with respect to
any Class of Subordinate Certificates, any other Class of Subordinate
Certificates then outstanding with a later priority for payments pursuant to
Section 4.01(c).

         "Lowest Priority": As of any date of determination, the Class of
Subordinate Certificates then outstanding with the latest priority for payments
pursuant to Section 4.01(c), in the following order: Class B-6, Class B-5, Class
B-4, Class B-3, Class B-2 and Class B-1 Certificates.

         "Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.

         "Master Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Master Servicer or which is 50% or more owned by
the Master Servicer and (ii) which is qualified to service residential mortgage
loans.

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

         "Master Servicer Remittance Date": With respect to any Distribution
Date, the Business Day prior to such Distribution Date.

         "MERS": Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

         "MERS(R) System": The system of recording transfers of Mortgages
electronically maintained by MERS.

         "MIN": The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.

         "MLCC": Merrill Lynch Credit Corporation and its successors in
interest.

         "MOM Loan": With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.

         "Monthly Interest Distributable Amount": An amount equal to the
interest accrued during the related Interest Accrual Period on the Certificate
Principal Balance of each Class of Certificates at the then-applicable
Pass-Through Rate. The Monthly Interest Distributable Amount on any Class of
Certificates will be reduced by the amount of (i) Prepayment Interest Shortfalls
(to the extent not offset by the Master Servicer with a payment of Compensating
Interest as provided in Section 3.24), (ii) the interest portion (adjusted to
the Net Mortgage Rate) of Realized Losses (including Excess Losses and
Extraordinary Losses) not allocated solely to one or more specific Classes of
Certificates pursuant to Section 4.02, (iii) the interest portion of Advances
previously made with respect to a Mortgage Loan or REO Property which remained
unreimbursed following the Cash Liquidation or REO Disposition of such Mortgage
Loan or REO Property that were made with respect to delinquencies that were
ultimately determined to be Excess Losses or Extraordinary Losses and (iv) any
other interest shortfalls not covered by


                                       21
<PAGE>

the subordination provided by the Class B Certificates, including Relief Act
Shortfalls, with all such reductions allocated among all of the Certificates in
proportion to their respective amounts of Monthly Interest Distributable Amount
payable on such Distribution Date which would have resulted absent such
reductions.

         "Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.01; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.

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

         "Mortgage 100(sm) Loan": A Mortgage Loan secured by Additional
Collateral in the form of a security interest in the Securities Account and the
financial assets held therein and having a value, as of the date of origination
of such Mortgage Loan, of at least equal to the related Original Additional
Collateral Requirement.

         "Mortgage 100(sm) Pledge Agreement": With respect to each Mortgage
100(sm) Loan, the Pledge Agreement for Securities Account between the related
mortgagor and the Additional Collateral Servicer pursuant to which such
mortgagor granted a security interest in the related securities and other
financial assets held therein.

         "Mortgage File": The mortgage documents listed in Section 2.01(A) and
(B) 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 (including the Cooperative Loans)
transferred and assigned to the Trustee pursuant to Section 2.01 or Section
2.03(d) as from time to time held as a part of the Trust Fund, the Mortgage
Loans so held being identified in the Mortgage Loan Schedule.

         "Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated as of March 1, 2005, among the Sellers and the Depositor,
regarding the transfer of the Mortgage Loans.

         "Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
identifying the Mortgage Loans transferred from the Sellers, and attached hereto
as Exhibit D. The Mortgage Loan Schedule shall set forth the following
information with respect to each Mortgage Loan:

                  (i)      the Sellers' Mortgage Loan identifying number;

                  (ii)     [reserved];

                  (iii)    the zip code of the related Mortgaged Property;



                                       22
<PAGE>

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

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

                  (vi)     the original months to maturity;

                  (vii)    the original date of the mortgage;

                  (viii)   the Loan-to-Value Ratio or Effective Loan-to-Value
                           Ratio, as applicable, at origination;

                  (ix)     the loan rate;

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

                  (xi)     the stated maturity date;

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

                  (xiii)   the amount of the Monthly Payment as of the Cut-off
                           Date;

                  (xiv)    the next Due Date on which a Monthly Payment is due;

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

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

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

                  (xviii)  a code indicating the documentation style (i.e.,
                           full, alternative or reduced);

                  (xix)    a code indicating if the Mortgage Loan is subject to
                           a Primary Insurance Policy;

                  (xx)     the name of the Qualified Insurer and the certificate
                           number for any Primary Insurance Policy, if
                           applicable;

                  (xxi)    the depth of coverage of any Primary Insurance
                           Policy, if applicable;

                  (xxii)   the Value of the Mortgaged Property;

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

                  (xxiv)   the Servicing Fee;

                  (xxv)    whether the Mortgage Loan is a Buydown Mortgage Loan;
                           and

                                       23
<PAGE>

                  (xxvi)   the amount of the Original Additional Collateral
                           Requirement, if any.

         The Mortgage Loan Schedule shall set forth the following information
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Loan 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 Eligible 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.

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

         "Mortgagor": The obligor on a Mortgage Note.

         "Net 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 Rate.

         "Net Mortgage Rate": With respect to any Mortgage Loan, (x) the Loan
Rate minus (y) the Servicing Fee Rate and the Trustee Fee Rate.

         "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.

         "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 or Servicing Advance, would not be ultimately
recoverable from Late Collections on such Mortgage Loan or REO Property as
provided herein.

         "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 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,
acceptable to the Trustee, except that


                                       24
<PAGE>

any opinion of counsel relating to (a) the qualification of any 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
Master Servicer may opt to terminate the Trust Fund pursuant to Section 10.01.

         "Original Additional Collateral Requirement': With respect to any
Additional Collateral Mortgage Loan, an amount equal to the Additional
Collateral required at the time of the origination of such Additional Collateral
Mortgage Loan in order to achieve an Effective Loan-to-Value Ratio for such
Additional Collateral Mortgage Loan, generally equal to seventy percent (70%);
for purposes of the Required Surety Payment, in no event shall the Original
Additional Collateral Requirement for an Additional Collateral Mortgage Loan
exceed thirty percent (30%) of its original principal balance.

         "Original Certificate Principal Balance": With respect to each Class of
the Certificates, the Certificate Principal Balance thereof on the Closing Date,
as set forth opposite such Class above in the Preliminary Statement.

         "Original Subordinated Principal Balance": The aggregate of the
Certificate Principal Balances of the Subordinate Certificates as of the Cut-off
Date.

         "Other Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, other than the Primary
Insurance Policy, if any, 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.

         "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.

         "Parent Power(R) Agreement": With respect to each Parent Power(R)
Mortgage Loan, a Parent Power(R) Guaranty and Security Agreement for Securities
Account.

         "Parent Power(R) Guaranty and Security Agreement for Securities
Account": With respect to a Parent Power(R) Mortgage Loan, an agreement between
the Additional Collateral Servicer and a guarantor on behalf of the mortgagor
under such Parent Power(R) Mortgage Loan pursuant to which such guarantor
guarantees the payment of certain losses under such Parent Power(R) Mortgage
Loan and has granted a security interest to the Additional Collateral Servicer
in certain marketable securities to collateralize such guaranty. The required
amount of such collateral is at least equal to the Original Additional
Collateral Requirement for such Parent Power(R) Mortgage Loan.

         "Parent Power(R) Mortgage Loan": A Mortgage Loan having at the time of
origination a Loan-to-Value Ratio generally in excess of the Master Servicer's
maximum acceptable Loan-to-Value Ratio for such Mortgage Loan as set forth in
the Underwriting Guide, which Mortgage Loan is supported by a Parent Power(R)
Agreement.



                                       25
<PAGE>

         "Pass-Through Rate": With respect to the Certificates (other than the
Class A-1, Class A-2 and Class A-6 Certificates) and any Distribution Date, a
per annum rate equal to the weighted average of the Net Mortgage Rates on each
Mortgage Loan. With respect to the Class A-1 Certificates and any Distribution
Date, a per annum rate equal to (i) the weighted average of the Net Mortgage
Rate on each Mortgage Loan minus (ii) 0.40%. For federal income tax purposes,
however, the Class A-1 Certificates will have a per annum rate equal to (i) the
Uncertificated Pass-Through Rate on the REMIC I Regular Interest A-1 minus (ii)
0.40%. With respect to the Class A-2 Certificates and any Distribution Date, a
per annum rate equal to (i) the weighted average of the Net Mortgage Rate on
each Mortgage Loan minus (ii) 0.45%. For federal income tax purposes, however,
the Class A-2 Certificates will have a per annum rate equal to (i) the
Uncertificated Pass-Through Rate on the REMIC I Regular Interest A-2 minus (ii)
0.45%. With respect to the Class A-6 Certificates and any Distribution Date, a
per annum rate equal to the sum of (i) the weighted average of the Net Mortgage
Rate on each Mortgage Loan, (ii) 0.40% per annum multiplied by a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-1
Certificates and the denominator of which is the Certificate Principal Balance
of the Class A-6 Certificates and (iii) 0.45% per annum multiplied by a
fraction, the numerator of which is the Certificate Principal Balance of the
Class A-2 Certificates and the denominator of which is the Certificate Principal
Balance of the Class A-6 Certificates. For federal income tax purposes, the
Class A-6 Certificates will represent ownership of the Class A-6A Component,
Class A-6B Component and Class A-6C Component; the Pass-Through Rate with
respect to the Class A-6A Component is a per annum rate equal to the
Uncertificated Pass-Through Rate on REMIC I Regular Interest A-6, which will be
applied to the Class A-6A Component Principal Amount, the Pass-Through Rate with
respect to the Class A-6B Component is 0.40% per annum, which will be applied to
the Class A-6B Component Notional Amount and the Pass-Through Rate with respect
to the Class A-6C Component is 0.45% per annum, which will be applied to the
Class A-6C Component Notional Amount.

         "Paying Agent": Any paying agent appointed pursuant to Section 5.05.

         "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, represented by such
Certificate and the denominator of which is the Original Certificate Principal
Balance of the related Class. With respect to any Class of Class R Certificates,
the portion of such Class evidenced thereby, expressed as a percentage, as
stated on the face of such Certificate; provided, however, that the sum of all
such percentages for each such Class totals 100%.

         "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 Trustee
or any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:

                  (i) obligations of or guaranteed as to principal and interest
         by the United States or any agency or instrumentality thereof when such
         obligations are backed by the full faith and credit of the United
         States;

                  (ii) repurchase agreements on obligations specified in clause
         (i) maturing not more than one month from the date of acquisition
         thereof, provided that the unsecured


                                       26
<PAGE>

         obligations of the party agreeing to repurchase such obligations are at
         the time rated by the Rating Agency in its highest short-term rating
         available;

                  (iii) federal funds, certificates of deposit, demand deposits,
         time deposits and bankers' acceptances (which shall each have an
         original maturity of not more than 90 days and, in the case of bankers'
         acceptances, shall in no event have an original maturity of more than
         365 days or a remaining maturity of more than 30 days) denominated in
         United States dollars of any U.S. depository institution or trust
         company incorporated under the laws of the United States or any state
         thereof or of any domestic branch of a foreign depository institution
         or trust company; provided that the debt obligations of 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) at the date of acquisition thereof have
         been rated by the Rating Agency in its highest short-term rating
         available; 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;

                  (iv) commercial paper and demand notes (having original
         maturities of not more than 365 days) of any corporation incorporated
         under the laws of the United States or any state thereof which on the
         date of acquisition has been rated by the Rating Agency in its highest
         short-term rating available; provided that such commercial paper shall
         have a remaining maturity of not more than 30 days;

                  (v) a money market fund or a qualified investment fund rated
         by the Rating Agency in its highest long-term rating available; and

                  (vi) other obligations or securities that are acceptable to
         the Rating Agency as a Permitted Investment hereunder and will not
         reduce the rating assigned to any Class of Certificates by such Rating
         Agency below the lower of the then-current rating or the rating
         assigned to such Certificates as of the Closing Date by such Rating
         Agency, as evidenced in writing;

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 Person other than a Disqualified
Organization, an "electing large partnership" as defined in Section 775(a) of
the Code, or a non-U.S. Person.

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



                                       27
<PAGE>

         "Prepayment Distribution Trigger": With respect to any Distribution
Date and any Class of Subordinate Certificates (other than the Class B-1
Certificates), a test that shall be satisfied if the fraction (expressed as a
percentage) equal to the sum of the Certificate Principal Balances of such Class
and each Class of Subordinate Certificates with a Lower Priority than such Class
immediately prior to such Distribution Date divided by the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
immediately prior to such Distribution Date is greater than or equal to the sum
of the related initial Class B Percentages of such Classes of Subordinate
Certificates.

         "Prepayment Interest Shortfall": As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of one month's interest at the Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for
such Prepayment Period to the date of such Principal Prepayment in Full or (b) a
Curtailment during the prior calendar month, an amount equal to one month's
interest at the Net Mortgage Rate on the amount of such Curtailment. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.

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

         "Primary Insurance Policy": Each policy of primary guaranty mortgage
insurance issued by a Qualified Insurer in effect with respect to any Mortgage
Loan, or any replacement policy therefor obtained by the Master Servicer
pursuant to Section 3.13.

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

         "Private Certificates": Any of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates.

         "Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Master Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the Master Servicer's servicing procedures, subject to the terms
and conditions of the related Mortgage Note and Mortgage.

         "Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
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 10.01),
(ii) in the case of (x) a Mortgage Loan, accrued interest on such Stated
Principal Balance at the applicable Loan Rate in effect from time to time from
the Due Date as to which interest was last covered by a payment by the Mortgagor
or an advance by the Master Servicer, which payment or advance had as of the
date of purchase been distributed pursuant to Section 4.01, through the end of
the calendar month in which the purchase is to be effected, and (y) an REO
Property, the sum of (1) accrued interest on such Stated Principal Balance at
the applicable Loan Rate in effect from time to time from the Due Date as to
which


                                       28
<PAGE>

interest was last covered by a payment by the Mortgagor or an advance by the
Master Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and Advances that as
of the date of purchase had been distributed as or to cover REO Imputed Interest
pursuant to Section 4.07, (iii) any unreimbursed Servicing Advances and 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 3.23, and (v) in the case
of a Mortgage Loan required to be purchased pursuant to Section 2.03, expenses
reasonably incurred or to be incurred by the Master Servicer or the Trustee in
respect of the breach or defect giving rise to the purchase obligation.

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

         "Rate/Term Refinancing": A Refinanced Mortgage Loan which is not a
Cash-Out Refinancing.

         "Rating Agency": Fitch or its successor. If such agency or its
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating agency, or other comparable Persons, designated by
the Depositor, notice of which designation shall be given to the Trustee and
Master Servicer.

         "Realized Loss": With respect to a Liquidated Mortgage Loan, the amount
by which the remaining unpaid principal balance of the Mortgage Loan exceeds the
amount of Liquidation Proceeds applied to the principal balance of the related
Mortgage Loan. To the extent the Master Servicer receives Subsequent Recoveries
with respect to any Mortgage Loan, the amount of the Realized Loss with respect
to that Mortgage Loan will be reduced to the extent such recoveries are applied
to reduce the Certificate Principal Balance of any Class of Certificates on any
Distribution Date.

         "Record Date": With respect to all of the Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs.

         "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
used to satisfy an existing mortgage loan on the Mortgaged Property.

         "Regular Certificate": Any of the Class A Certificates and Class B
Certificates.

         "Related Documents": With respect to any Mortgage Loan, the related
Mortgage Notes, Mortgages and other related documents.

         "Relief Act": The Servicemembers Civil Relief Act.



                                       29
<PAGE>

         "Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan as 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 Stated Principal Balance of such Mortgage Loan at the
Loan 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 I": The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of: (i) each Mortgage Loan (exclusive of
payments of principal and interest due on or before the Cut-off Date, if any,
received by the Master Servicer which shall not constitute an asset of the Trust
Fund) as from time to time are subject to this Agreement and all payments under
and proceeds of such Mortgage Loans (exclusive of any prepayment fees and late
payment charges received on the Mortgage Loans), together with all documents
included in the related Mortgage File, subject to Section 2.01; (ii) such funds
or assets as from time to time are deposited in the Collection Account or the
Distribution Account and belonging to the Trust Fund; (iii) any REO Property;
(iv) the Primary Hazard Insurance Policies, if any, the Primary Insurance
Policies, if any, and all other Insurance Policies with respect to the Mortgage
Loans; (v) the Depositor's rights in respect of the Additional Collateral and
the Limited Purpose Surety Bond, including the assignment of the Depositor's
rights under the Additional Collateral Servicing Agreement; and (vi) the
Depositor's interest in respect of the representations and warranties made by
the Sellers in the Mortgage Loan Purchase Agreement as assigned to the Trustee
pursuant to Section 2.04 hereof. The Trust Fund shall not include the Buydown
Account.

         "REMIC I Regular Interests": The uncertificated partial undivided
beneficial ownership interests in REMIC I, designated as REMIC I Regular
Interests A-1, A-2, A-3, A-4, A-5, A-6, B-1, B-2, B-3, B-4, B-5, B-6 and R-II,
with respect to which a REMIC election is to be made.

         "REMIC II": The segregated pool of assets consisting of the REMIC I
Regular Interests conveyed in trust to the Trustee for the benefit of the
holders of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class R-II
Certificates pursuant to Section 9.01, with respect to which a separate REMIC
election is to be made pursuant to Section 9.01.

         "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 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.

         "Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.03.

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



                                       30
<PAGE>

         "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 Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan if appropriate) as of the close of business on the
Distribution Date in such calendar month.

         "REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 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 hereto.

         "Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit E attached

         "Required Surety Payment": With respect to any Additional Collateral
Mortgage Loan that becomes a Liquidated Mortgage Loan, the lesser of (i) the
principal portion of the Realized Loss with respect to such Mortgage Loan and
(ii) the excess, if any, of (a) the Original Additional Collateral Requirement
with respect to such Mortgage Loan over (b) the net proceeds realized by the
Additional Collateral Servicer from the related Additional Collateral as set
forth in Section 3.16.

         "Residential Dwelling": Any one of the following: (i) an attached or
detached one-family dwelling unit, (ii) two- to four-family dwelling unit, (iii)
condominium, (iv) townhouse, (v) row house, or (vi) individual unit in a planned
unit development.

         "Residual Certificate": Any of 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.



                                       31
<PAGE>

         "Responsible Officer": When used with respect to the Trustee, any
officer, including any Vice President, Assistant Vice President, Trust Officer,
any Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and in each case having direct responsibility for the
administration of this Agreement.

         "Restricted Classes": With respect to any Class of Certificates, any
Classes of Certificates with a lower priority of payment relative to such Class.

         "S&P": Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., and its successors.

         "Securities Account": With respect to any Additional Collateral
Mortgage Loans, the account, together with the financial assets held therein,
that is the subject of the related Mortgage 100(sm) Pledge Agreement.

         "Security Agreement": With respect to a Cooperative Loan, the agreement
creating a security interest in favor of the originator in the related
Cooperative Assets.

         "Seller": Either of (i) PHH Mortgage Corporation, a New Jersey
corporation, or any successor in interest or (ii) Bishop's Gate Residential
Mortgage Trust, a Delaware business trust, or any successor in interest.

         "Senior Certificates": The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class R Certificates.

         "Senior Interest Distribution Amount": With respect to each
Distribution Date, the aggregate amount of the Monthly Interest Distributable
Amount to be distributed to the Holders of the Senior Certificates for such
Distribution Date.

         "Senior Percentage": As of any Distribution Date, the lesser of 100%
and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class A Certificates and Class R
Certificates immediately prior to such Distribution Date and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage Loans or
related REO Properties immediately prior to such Distribution Date.

         "Senior Prepayment Percentage": With respect to any Distribution Date,
the percentage indicated below:

<TABLE>
<CAPTION>
DISTRIBUTION DATE                       SENIOR PREPAYMENT PERCENTAGE
<S>                                     <C>
April 2005 through March 2010           100%
April 2010 through March 2011           Senior Percentage, plus 70% of the Subordinate
                                        Percentage
April 2011 through March 2012           Senior Percentage, plus 60% of the Subordinate
                                        Percentage
April 2012 through March 2013           Senior Percentage, plus 40% of the Subordinate
                                        Percentage
April 2013 through March 2014           Senior Percentage, plus 20% of the Subordinate
                                        Percentage
April 2014 and thereafter               Senior Percentage
</TABLE>


                                       32
<PAGE>


provided, however, (i) that any scheduled reduction to the Senior Prepayment
Percentage described above shall not occur as of any Distribution Date unless
either (a)(1)(x) the outstanding principal balance of Mortgage Loans Delinquent
60 days or more (including Mortgage Loans in foreclosure and REO Property)
averaged over the last six months as a percentage of the aggregate outstanding
Certificate Principal Balance of the Class B Certificates as of such
Distribution Date, is less than 50%, or (y) the outstanding principal balance of
Mortgage Loans Delinquent 60 days or more (including Mortgage Loans in
foreclosure and REO Property) averaged over the last six months, as a percentage
of the aggregate outstanding principal balance of all Mortgage Loans as of such
Distribution Date, does not exceed 2% and (2) Realized Losses on the Mortgage
Loans to date for such Distribution Date if occurring during the sixth, seventh,
eighth, ninth or tenth year (or any year thereafter) after the Closing Date are
less than 30%, 35%, 40%, 45% or 50%, respectively, of the sum of the Initial
Certificate Principal Balances of the Class B Certificates or (b) (1) the
aggregate outstanding principal balance of the Mortgage Loans Delinquent 60 days
or more (including Mortgage Loans in foreclosure and REO Property) averaged over
the last six months, as a percentage of the aggregate outstanding principal
balance of all Mortgage Loans as of such Distribution Date, does not exceed 4%
and (2) Realized Losses on the Mortgage Loans to date for such Distribution Date
if occurring during the sixth, seventh, eighth, ninth or tenth year (or any year
thereafter) after the Closing Date are less than 10%, 15%, 20%, 25% or 30%,
respectively, of the sum of the Initial Certificate Principal Balances of the
Class B Certificates and (ii) that for any Distribution Date on which the Senior
Percentage is greater than the Original Senior Percentage, the Senior Prepayment
Percentage for such Distribution Date shall be 100%. Notwithstanding the
foregoing, upon the reduction of the aggregate Certificate Principal Balance of
the Senior Certificates to zero, the Senior Prepayment Percentage will equal 0%.

         "Senior Principal Distribution Amount": As to any Distribution Date,
the lesser of (a) the balance of the Available Distribution Amount remaining
after the distribution of all amounts required to be distributed pursuant to
Section 4.01(c)(i) and (b) the sum of the following:

                  (A) the Senior Percentage for such Distribution Date times the
         sum of the following:

                           (1) the principal portion of each Monthly Payment due
                  during the related Due Period on each Outstanding Mortgage
                  Loan whether or not received on or prior to the related
                  Determination Date, minus the principal portion of any Debt
                  Service Reduction, which together with other Bankruptcy Losses
                  exceeds the Bankruptcy Amount;

                           (2) the Stated Principal Balance of any Mortgage Loan
                  repurchased during the related Prepayment Period pursuant to
                  Section 2.02, 2.03, 3.15 or 3.16; and

                           (3) the principal portion of all other unscheduled
                  collections (other than Principal Prepayments in Full and
                  Curtailments and amounts received in connection with a Cash
                  Liquidation or REO Disposition of a Mortgage Loan,


                                       33
<PAGE>

                  including without limitation Insurance Proceeds, Liquidation
                  Proceeds, Subsequent Recoveries and REO Proceeds), received
                  during the related Prepayment Period to the extent applied by
                  the Master Servicer as recoveries of principal of the related
                  Mortgage Loan pursuant to Section 3.16;

                  (B) with respect to each Mortgage Loan for which a Cash
         Liquidation or a REO Disposition occurred during the related Prepayment
         Period and did not result in any Excess Special Hazard Losses, Excess
         Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses, an
         amount equal to the lesser of (a) the Senior Percentage for such
         Distribution Date times the Stated Principal Balance of such Mortgage
         Loan and (b) the Senior Prepayment Percentage for such Distribution
         Date times the related unscheduled collections (including without
         limitation Insurance Proceeds, Liquidation Proceeds and REO Proceeds)
         to the extent applied by the Master Servicer as recoveries of principal
         of the related Mortgage Loan pursuant to Section 3.16;

                  (C) the Senior Prepayment Percentage for such Distribution
         Date times the aggregate of all Principal Prepayments in Full and
         Curtailments received in the related Prepayment Period with respect to
         the Mortgage Loans;

                  (D) any Excess Subordinate Principal Amount for such
         Distribution Date; and

                  (E) any amounts described in clauses (A), (B) or (C) of this
         definition, as determined for any previous Distribution Date, which
         remain unpaid after application of amounts previously distributed
         pursuant to this clause (E) to the extent that such amounts are not
         attributable to Realized Losses which have been allocated to the Class
         B Certificates;

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

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

         "Servicing Advances": The reasonable "out-of-pocket" costs and expenses
incurred by the Master Servicer in connection with a default, delinquency or
other unanticipated event by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, (a) reasonable attorneys'
fees and (b) the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, in respect of a particular Mortgage Loan, including any expenses
incurred in relation to any such proceedings that result from the Mortgage Loan
being registered on the MERS System, (iii) the management (including reasonable
fees in connection therewith) and liquidation of any REO Property, and (iv) the
performance of its obligations under Section 3.01, Section 3.09, Section 3.13,
Section 3.14, Section 3.16 and Section 3.23. The Master Servicer shall not be
required to make any Servicing Advance in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, would
not be ultimately recoverable from related Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.

         "Servicing Officer": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear


                                       34
<PAGE>

on a list of servicing officers famished by the Master Servicer to the Trustee
and the Depositor on the Closing Date, as such list may from time to time be
amended.

         "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 applicable Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month.

         "Servicing Fee Rate": With respect to each Mortgage Loan, a rate equal
to 0.25% per annum.

         "Special Hazard Amount": As of any Distribution Date, an amount equal
to $708,098 minus the sum of (i) the aggregate amount of Special Hazard Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.02 and (ii) the Adjustment Amount (as defined below) as most
recently calculated. For each anniversary of the Cut-off Date, the Adjustment
Amount shall be equal to the amount, if any, by which the amount calculated in
accordance with the preceding sentence (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greater of (A) the
greatest of (i) twice the outstanding principal balance of the Mortgage Loan in
the Trust Fund which has the largest outstanding principal balance on the
Distribution Date immediately preceding such anniversary, (ii) the product of
1.00% multiplied by the outstanding principal balance of all Mortgage Loans on
the Distribution Date immediately preceding such anniversary and (iii) the
aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of the Mortgage Loans in any single five-digit California zip
code area with the largest amount of Mortgage Loans by aggregate principal
balance as of such anniversary and (B) the greater of (i) the product of 0.50%
multiplied by the outstanding principal balance of all Mortgage Loans on the
Distribution Date immediately preceding such anniversary multiplied by a
fraction, the numerator of which is equal to the aggregate outstanding principal
balance (as of the immediately preceding Distribution Date) of all of the
Mortgage Loans secured by Mortgaged Properties located in the State of
California divided by the aggregate outstanding principal balance (as of the
immediately preceding Distribution Date) of all of the Mortgage Loans, expressed
as a percentage, and the denominator of which is equal to 16.75% (which
percentage is equal to the percentage of Mortgage Loans initially secured by
Mortgaged Properties located in the State of California) and (ii) the aggregate
outstanding principal balance (as of the immediately preceding Distribution
Date) of the largest Mortgage Loan secured by a Mortgaged Property located in
the State of California.

         The Special Hazard Amount may be further reduced by the Master Servicer
(including accelerating the manner in which coverage is reduced) provided that
prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from the Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.

         "Special Hazard Losses": Realized Losses in respect of Special Hazard
Mortgage Loans.



                                       35
<PAGE>

         "Special Hazard Mortgage Loan": A Liquidated Mortgage Loan as to which
the ability to recover the full amount due thereunder was substantially unpaired
by a hazard not insured against under a standard hazard insurance policy.

         "Startup Day": As defined in Section 9.01(b) hereof.

         "Stated Principal Balance": With respect to any Mortgage Loan and Due
Date, the unpaid principal balance of such Mortgage Loan as of such Due Date, as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period), after giving effect to any previous partial prepayments
and Liquidation Proceeds received and to the payment of principal due on such
Due Date and irrespective of any delinquency in payment by the related
Mortgagor.

         "Stayed Funds": If the Master Servicer is the subject of a proceeding
under the federal Bankruptcy Code and the mailing of a remittance by the Master
Servicer pursuant to this Agreement is prohibited by Section 362 of the federal
Bankruptcy Code, funds which 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.

         "Stepdown Percentage": With respect to any Distribution Date, the
percentage indicated below:

Distribution Date                               Stepdown Percentage
-----------------                               -------------------
April 2005 through March 2010                   0%
April 2010 through March 2011                   30%
April 2011 through March 2012                   40%
April 2012 through March 2013                   60%
April 2013 through March 2014                   80%
April 2014 and thereafter                       100%

         "Subordinate Certificates": The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.

         "Subordinate Percentage": For any Distribution Date, the difference
between 100% and the Senior Percentage for such date.

         "Subordinate Prepayment Percentage": With respect to any Distribution
Date and each Class of Subordinate Certificates, under the applicable
circumstances set forth below, the respective percentages set forth below:

                  (i) For any Distribution Date prior to the Distribution Date
         in April 2010, 0%.

                  (ii) For any Distribution Date for which clause (i) does not
         apply, and on which any Class of Subordinate Certificates are
         outstanding:

                           (a) in the case of the Class of Subordinate
                  Certificates then outstanding with the Highest Priority and
                  each other Class of Subordinate


                                       36
<PAGE>

                  Certificates for which the related Prepayment Distribution
                  Trigger has been satisfied, a fraction, expressed as a
                  percentage, the numerator of which is the Certificate
                  Principal Balance of such Class immediately prior to such date
                  and the denominator of which is the sum of the Certificate
                  Principal Balances immediately prior to such date of (1) the
                  Class of Subordinate Certificates then outstanding with the
                  Highest Priority and (2) all other Classes of Subordinate
                  Certificates for which the respective Prepayment Distribution
                  Triggers have been satisfied; and

                           (b) in the case of each other Class of Subordinate
                  Certificates for which the Prepayment Distribution Triggers
                  have not been satisfied, 0%; and

                  (iii) Notwithstanding the foregoing, if the application of the
         foregoing percentages on any Distribution Date as provided in Section
         4.01(c) of this Agreement (determined without regard to the proviso to
         the definition of "Subordinate Principal Distribution Amount") would
         result in a distribution in respect of principal of any Class or
         Classes of Subordinate Certificates in an amount greater than the
         remaining Certificate Principal Balance thereof (any such class, a
         "Maturing Class"), then: (a) the Subordinate Prepayment Percentage of
         each Maturing Class shall be reduced to a level that, when applied as
         described above, would exactly reduce the Certificate Principal Balance
         of such Class to zero; (b) the Subordinate Prepayment Percentage of
         each other Class of Subordinate Certificates (any such Class, a
         "Non-Maturing Class") shall be recalculated in accordance with the
         provisions in paragraph (ii) above, as if the Certificate Principal
         Balance of each Maturing Class had been reduced to zero (such
         percentage as recalculated, the "Recalculated Percentage"); (c) the
         total amount of the reductions in the Subordinate Prepayment
         Percentages of the Maturing Class or Classes pursuant to clause (a) of
         this sentence, expressed as an aggregate percentage, shall be allocated
         among the Non-Maturing Classes in proportion to their respective
         Recalculated Percentages (the portion of such aggregate reduction so
         allocated to any Non-Maturing Class, the "Adjustment Percentage"); and
         (d) for purposes of such Distribution Date, the Subordinate Prepayment
         Percentage of each Non-Maturing Class shall be equal to the sum of (1)
         the Subordinate Prepayment Percentage thereof, calculated in accordance
         with the provisions in paragraph (ii) above as if the Certificate
         Principal Balance of each Maturing Class had not been reduced to zero,
         plus (2) the related Adjustment Percentage.

         "Subordinate Principal Distribution Amount": With respect to any
Distribution Date and each Class of Class B Certificates, the sum of the
following:

                  (i) the product of (x) the related Class B Percentage for such
         Class and (y) the aggregate of the following amounts:

                           (1) the principal portion of each Monthly Payment due
                  during the related Due Period on each Outstanding Mortgage
                  Loan, whether or not received on or prior to the related
                  Determination Date minus the principal portion of any Debt
                  Service Reduction, which together with other Bankruptcy Losses
                  exceeds the Bankruptcy Amount;



                                       37
<PAGE>

                           (2) the Stated Principal Balance of any Mortgage Loan
                  repurchased during the related Prepayment Period pursuant to
                  Section 2.02, 2.03, 3.15 or 3.16; and

                           (3) the principal portion of all other unscheduled
                  collections (other than Principal Prepayments in Full and
                  Curtailments and amounts received in connection with a Cash
                  Liquidation or REO Disposition of a Mortgage Loan, including
                  without limitation Insurance Proceeds, Liquidation Proceeds,
                  Subsequent Recoveries and REO Proceeds) received during the
                  related Prepayment Period to the extent applied by the Master
                  Servicer as recoveries of principal of the related Mortgage
                  Loan pursuant to Section 3.16;

                  (ii) such Class's pro rata share, based on the Certificate
         Principal Balance of each Class of Class B Certificates then
         outstanding, of, with respect to each Mortgage Loan, for which a Cash
         Liquidation or a REO Disposition occurred during the related Prepayment
         Period and did not result in any Excess Special Hazard Losses, Excess
         Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses, an
         amount equal to the related unscheduled collections (including without
         limitation Insurance Proceeds, Liquidation Proceeds and REO Proceeds)
         to the extent applied by the Master Servicer as recoveries of principal
         of the related Mortgage Loan pursuant to Section 3.16, to the extent
         such collections are not otherwise distributed to the Senior
         Certificates;

                  (iii) the product of (x) the related Subordinate Prepayment
         Percentage for such Distribution Date and (y) the aggregate of all
         Principal Prepayments in Full and Curtailments on the Mortgage Loans
         received in the related Prepayment Period, to the extent not payable to
         the Senior Certificates; and

                  (iv) if such Class is the Class of Class B Certificates then
         outstanding with the Highest Priority, an amount equal to the Excess
         Subordinate Principal Amount; and

                  (v) any amounts described in clauses (i), (ii) and (iii) as
         determined for any previous Distribution Date, that remain
         undistributed to the extent that such amounts are not attributable to
         Realized Losses which have been allocated to a Class of Subordinate
         Certificates;

provided, however, that such amount shall in no event exceed the outstanding
Certificate Principal Balance of such Class of Certificates immediately prior to
such date.

         "Subsequent Recoveries": Any amount recovered by the Master Servicer
(net of reimbursable expenses) with respect to a Liquidated Mortgage Loan with
respect to which a Realized Loss was incurred after the liquidation or
disposition of such Mortgage Loan.

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

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



                                       38
<PAGE>

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

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

         "Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(c) 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 on behalf of the Trust in its capacity as a REMIC under the
REMIC Provisions, together with any and all other information reports or returns
that may be required to be famished 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.

         "Termination Price": As defined in Section 10.01(a) hereof.

         "Transition Cost: Any documented fees, expenses and allocated costs
reasonably incurred by a successor master servicer or the Trustee in connection
with a transfer of servicing from the Master Servicer to a successor master
servicer, including without limitation, any costs or expenses associated with
the complete transfer of all master servicing data and the completion,
correction or manipulation of such master servicing data as may be required by
the Trustee to correct any errors or insufficiencies in the master servicing
data or otherwise to enable the Trustee to master service the Mortgage Loans
properly and effectively.

         "Trustee Fee": With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest at the applicable Trustee Fee
Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month. Notwithstanding the foregoing, in no event
shall the aggregate Trustee Fee in a calendar year be less than $7,000.

         "Trustee Fee Rate": With respect to any Mortgage Loan, a rate equal to
0.0125% per annum.

         "Trust Fund": REMIC I and REMIC II.

         "Uncertificated Monthly Interest Distributable Amount": An amount equal
to the interest accrued during the related Interest Accrual Period on the
Uncertificated Principal Balance of each Class of REMIC I Regular Interest at
the then-applicable Uncertificated Pass-Through Rate. The Uncertificated Monthly
Interest Distributable Amount on any Class of REMIC I Regular Interest will be
reduced by the amount of (i) Prepayment Interest Shortfalls (to the extent not
offset by the Master Servicer with a payment of Compensating Interest as
provided in Section 3.24), (ii) the interest portion (adjusted to the Net
Mortgage Rate) of Realized Losses (including Excess Losses) not allocated solely
to one or more specific Classes of Certificates pursuant to Section 4.02, (iii)
the interest portion of Advances previously made with respect to a Mortgage Loan
or REO Property which remained unreimbursed following the Cash Liquidation or
REO


                                       39
<PAGE>

Disposition of such Mortgage Loan or REO Property that were made with respect to
delinquencies that were ultimately determined to be Excess Losses and (iv) any
other interest shortfalls not covered by the subordination provided by the Class
B Certificates, including Relief Act Shortfalls, with all such reductions
allocated among all of the REMIC I Regular Interests in proportion to their
respective amounts of Uncertificated Monthly Interest Distributable Amount
payable on such Distribution Date which would have resulted absent such
reductions.

         "Uncertificated Pass-Through Rate": With respect to each REMIC I
Regular Interest and any Distribution Date, a per annum rate equal to the
weighted average of the Net Mortgage Rates on each mortgage loan as of the Due
Date in the related Due Period, weighted on the basis of the respective Stated
Principal Balances of such Mortgage Loans as of the day immediately preceding
such Distribution Date (or, with respect to the initial Distribution Date, at
the close of business on the Cut-off Date).

         "Uncertificated Principal Balance": The principal amount of any REMIC I
Regular Interest outstanding as of any date of determination. The Uncertificated
Principal Balance of each REMIC I Regular Interest initially shall be equal to
the amount set forth in the Preliminary Statement with respect to such REMIC I
Regular Interest, and thereafter shall be reduced by all distributions of
principal made on such REMIC I Regular Interest and shall be further reduced by
Realized Losses allocated thereto. The Uncertificated Principal Balance of each
REMIC I Regular Interest shall never be less than zero.

         "Underwriting Guide": The underwriting guide of the Master Servicer, as
revised from time to time.

         "Uninsured Cause" Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.

         "United States Person" or "U.S. Person": A citizen or resident of the
United States, a corporation or partnership (including an entity treated as a
corporation or partnership for federal income tax purposes) created or organized
in, or under the laws of, the United States or any state thereof or the District
of Columbia (except, in the case of a partnership, to the extent provided in
regulations), provided that, for purposes solely of the Class R Certificates, no
partnership or other entity treated as a partnership for United States federal
income tax purposes shall be treated as a United States Person unless all
persons that own an interest in such partnership either directly or through any
entity that is not a corporation for United States federal income tax purposes
are United States Persons, or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if (i) a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more such United States Persons have the
authority to control all substantial decisions of the trust or (ii) it is a
trust which was in existence on August 20, 1996, and was treated as a United
States person, for federal income tax purposes, on the previous day, and elected
to continue to be so treated.

         "Value": With respect to any Mortgaged Property, the value thereof as
determined by an independent appraisal (or other collateral assessment,
permitted by the Underwriting Guide) made at the time of the origination of the
related Mortgage Loan; except that, with respect to any Mortgage Loan that is a
purchase money mortgage loan, the lesser of (i) the value thereof as determined
by an independent appraisal (or other collateral assessment, permitted by the


                                       40
<PAGE>

Underwriting Guide) made at the time of the origination of such Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged Property.

         "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of such Certificates outstanding shall be the fraction, expressed
as a percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the Certificates of such Class then outstanding and the
denominator of which is the aggregate Certificate Principal Balance of all the
Certificates then outstanding. 99% of all Voting Rights will be allocated among
all holders of the Certificates (other than the Class R Certificates) in
proportion to their then outstanding Certificate Principal Balances, 0.50% and
0.50% of all Voting Rights will be allocated to the holders of the Class R-I
Certificates and Class R-II Certificates, respectively, in proportion to the
Percentage Interests evidenced by their respective Certificates; provided,
however, that any Certificate registered in the name of the Master Servicer, the
Depositor or the Trustee or any of their respective affiliates shall not be
included in the calculation of Voting Rights.

         "Written Order to Authenticate": A written order by which the Depositor
directs the Trustee to issue the Certificates.

         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.



                                       41
<PAGE>


                                   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 Mortgage Loans identified on the
Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan
Purchase Agreement (except Section 3.2 thereof), the interest in the Limited
Purpose Surety Bond transferred to the Trustee pursuant to Section 2.03(e) and
all other assets included or to be included in the Trust Fund. Such assignment
includes all interest and principal received by the Depositor or the Master
Servicer on or with respect to the Mortgage Loans (but excluding any payments of
principal and interest due on or prior to the Cut-off Date). The Depositor
herewith delivers to the Trustee an executed copy of the Mortgage Loan Purchase
Agreement.

         The parties hereto agree that it is not intended that any mortgage loan
be included in the Trust that is (i) a "High-Cost Home Loan" as defined in the
New Jersey Home Ownership Act effective November 27, 2003, (ii) a "High-Cost
Home Loan" as defined in the New Mexico Home Loan Protection Act effective
January 1, 2004, (iii) a "High Cost Home Mortgage Loan" as defined in the
Massachusetts Predatory Home Practices Act effective November 7, 2004 or (iv) a
"High-Cost Home Loan" as defined in the Indiana High Cost Home Loan Law
effective January 1, 2005.

         In connection with the transactions contemplated by this Agreement, PHH
Mortgage Corporation and the Trustee shall enter into an Assignment, Assumption
and Recognition Agreement with MLCC, in the form of Exhibit K hereto, pursuant
to which PHH Mortgage Corporation shall assign to the Trustee, for the benefit
of the Certificateholders, all of its right, title and interest in and to the
Additional Collateral Servicing Agreement with respect to the Additional
Collateral Mortgage Loans, and the Trustee shall assume all of PHH Mortgage
Corporation's obligations under the Additional Collateral Servicing Agreement
with respect to the Additional Collateral Mortgage Loans from and after the date
hereof.

         In connection with the transfer and assignment described herein, the
Master Servicer on behalf of the Depositor, shall deliver to, and deposit with,
the Trustee, the following documents or instruments:

         (A) with respect to each Mortgage Loan, other than a Cooperative Loan:

                  (i) the original Mortgage Note endorsed "Pay to the order of
         Citibank, N.A., as Trustee for the registered holders of the PHHMC
         Mortgage Pass-Through Certificates, Series 2005-2, without recourse",
         or endorsed "Pay to the order of_____________________ without
         recourse," and signed in the name of the last named endorsee by an
         authorized officer, together with all prior and intervening


                                       42
<PAGE>

         endorsements showing a complete chain of endorsement from the
         originator to the Person so endorsing to the last endorsee;

                  (ii) the original Mortgage, noting the presence of the MIN of
         the Mortgage Loan and language indicating that the Mortgage Loan is a
         MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of recording
         thereon which have been recorded, with evidence of recording thereon or
         a copy of the Mortgage certified by the public recording office in
         which such Mortgage has been recorded;

                  (iii) Unless the Mortgage Loan is registered on the MERS(R)
         System, an original Assignment of the Mortgage (A) executed in the
         following form "Citibank, N.A., as Trustee for the registered holders
         of the PHHMC Mortgage Pass-Through Certificates, Series 2005-2", or (B)
         in blank, which assignment appears to be in form and substance
         acceptable for recording;

                  (iv) the original recorded Assignment or Assignments of the
         Mortgage showing a complete chain of assignment from the originator to
         the Person assigning the Mortgage to the Trustee (or to MERS, if the
         Mortgage Loan is registered on the MERS(R) System and noting the
         presence of a MIN) as contemplated by the immediately preceding clause
         (iii), if applicable and only to the extent available to the Depositor
         with evidence of recording thereon;

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

                  (vi) a copy of any guarantee (other than Additional
         Collateral) executed in connection with the Mortgage Note;

                  (vii) the original of any security agreement, chattel mortgage
         or equivalent document executed in connection with the Mortgage;

                  (viii) the original power of attorney, if applicable; and

                  (ix) if such Mortgage Loan is a Buydown Mortgage Loan (as
         shown in the Mortgage Loan Schedule), the original Buydown Agreement or
         a copy thereof; and

         (B) in addition, with respect to each Mortgage Loan that is an
Additional Collateral Mortgage Loan (as indicated on the Mortgage Loan
Schedule):

                  (i) a copy of the related Mortgage 100(sm) Pledge Agreement or
         Parent Power Agreement, as applicable; and

                  (ii) a copy of the related UCC-1, to the extent that MLCC was
         required to deliver such UCC-1 to the Master Servicer, and an original
         form UCC-3, if applicable, to the extent that MLCC was required to
         deliver such UCC-3 to the Master Servicer; or

         (C) with respect to each Mortgage Loan that is a Cooperative Loan (as
indicated on the Mortgage Loan Schedule):



                                       43
<PAGE>

                  (i) the original Mortgage Note endorsed "Pay to the order of
         Citibank, N.A., as Trustee for the registered holders of the PHHMC
         Mortgage Pass-Through Certificates, Series 2005-2, without recourse",
         or endorsed "Pay to the order of _____________________ without
         recourse," and signed in the name of the last named endorsee by an
         authorized officer, together with all prior and intervening
         endorsements showing a complete chain of endorsement from the
         originator to the Person so endorsing to the last endorsee;

                  (ii) the original duly executed assignment of Security
         Agreement to the Trustee;

                  (iii) the acknowledgment copy of the original executed Form
         UCC-1 (or certified copy thereof) with respect to the Security
         Agreement, and any required continuation statements;

                  (iv) the acknowledgment copy of the original executed Form
         UCC-3 with respect to the security agreement, indicating the Trustee as
         the assignee of the secured party;

                  (v) the stock certificate representing the Cooperative Assets
         allocated to the cooperative unit, with a stock power in blank
         attached;

                  (vi) the original collateral assignment of the proprietary
         lease by Mortgagor to the originator;

                  (vii) a copy of the recognition agreement;

                  (viii) if applicable and to the extent available, the original
         intervening assignments, including warehousing assignments, if any,
         showing, to the extent available, an unbroken chain of the related
         Mortgage Loan to the Trustee, together with a copy of the related Form
         UCC-3 with evidence of filing thereon; and

                  (ix) the originals of each assumption, modification or
         substitution agreement, if any, relating to the Mortgage Loan;

provided, however, that in lieu of the foregoing, the Depositor may deliver the
following documents, under the circumstances set forth below: (x) in lieu of the
original Mortgage, assignments to the Trustee or intervening assignments thereof
which have been delivered, are being delivered or will, upon receipt of
recording information relating to the Mortgage required to be included thereon,
be delivered to recording offices for recording and have not been returned to
the Depositor within 270 days of the Closing Date, the Depositor may deliver a
true copy thereof with an Officer's Certificate certifying that such Mortgage,
assignment to the Trustee or intervening assignment has been delivered to the
appropriate recording office for recording; and (y) in lieu of the Mortgage,
assignment to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from the Depositor or the Master Servicer, to such effect) the
Depositor may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and provided, further, however,
that in the case of Mortgage Loans which have been prepaid in full after the
Cut-off


                                       44
<PAGE>

Date and prior to the Closing Date, the Depositor, in lieu of delivering the
above documents, may deliver to the Trustee a certification to such effect and
shall deposit all amounts paid in respect of such Mortgage Loans in the
Distribution Account on the Closing Date. The Depositor shall deliver such
original documents (including any original documents as to which certified
copies had previously been delivered) to the Trustee promptly after they are
received.

         The Depositor may, in lieu of delivering the original of the documents
set forth in Section 2.01(A), (B) and (C) (other than Section 2.01(A)(i) and
Section 2.01(C)(i)) (or copies thereof as permitted by this Section 2.01) to the
Trustee, deliver such documents to the Master Servicer, and the Master Servicer
shall hold such documents in trust for the use and benefit of all present and
future Certificateholders until such time as is set forth in the next sentence.
Within 60 days following the earlier of (i) the receipt of the original of all
of the documents or instruments set forth in Section 2.01(A), (B) and (C) (other
than Section 2.01(A)(i) and Section 2.01(C)(i)) (or copies thereof as permitted
by such Section) for any Mortgage Loan and (ii) a written request by the Trustee
to deliver those documents with respect to any or all of the Mortgage Loans then
being held by the Master Servicer, the Master Servicer shall deliver a complete
set of such documents to the Trustee.

         The Depositor shall, at its expense, cause the Assignment of the
Mortgage to the Trustee to be recorded not later than 270 days after the Closing
Date, unless (a) such recordation is not required by the Rating Agency or an
Opinion of Counsel has been provided as set forth below in this Section 2.01 or
(b) MERS is identified on the Mortgage or on a properly recorded assignment of
the Mortgage as the mortgagee of record. With respect to the Cooperative Loans,
the Depositor will, promptly after the Closing Date, cause the related financing
statements (if not yet filed) and an assignment thereof from the Depositor to
the Trustee to be filed in the appropriate offices. The Depositor need not cause
to be recorded any assignment in any jurisdiction under the laws of which, as
evidenced by an Opinion of Counsel delivered by the Depositor to the Trustee and
the Rating Agency, the recordation of such assignment is not necessary to
protect the Trustee's interest in the related Mortgage Loan; provided, however,
notwithstanding the delivery of any Opinion of Counsel, each assignment shall be
submitted for recording by the Depositor 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 the Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust Fund, (ii) the
occurrence of a Master Servicer Event of Termination, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Depositor, (iv) the
occurrence of a servicing transfer as described in Section 7.02 hereof and (v)
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 Depositor fails to pay the cost of
recording the assignments, such expense will be paid by the Trustee and the
Trustee shall be reimbursed for such expenses by the Trust Fund in accordance
with Section 8.05.

         In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Depositor further agrees that it will cause, at the
Depositor's own expense, within 30 Business Days after the Closing Date, the
MERS(R) System to indicate that such Mortgage Loans have been assigned by the
Depositor to the Trustee in accordance with this Agreement for the benefit of
the Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
(a) the code in the field which identifies the specific Trustee and (b) the code
in the field "Pool Field" which


                                       45
<PAGE>

identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Depositor further agrees that it will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will not,
alter the codes referenced in this paragraph with respect to any Mortgage Loan
during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement.

         If any original Mortgage Note referred to in Section 2.01(A)(i) or
2.01(C)(i) above cannot be located, the obligations of the Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to the Trustee of a
photocopy of such Mortgage Note, if available, with a Lost Note Affidavit. If
any of the original Mortgage Notes for which a Lost Note Affidavit was delivered
to the Trustee is subsequently located, such original Mortgage Note shall be
delivered to the Trustee within three Business Days.

         Section 2.02 ACCEPTANCE OF TRUST FUND 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
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage File, and that it holds or will hold
all such assets and such other assets included in the definition of the "Trust
Fund" and the rights of the Sellers with respect to any Additional Collateral
and the Limited Purpose Surety Bond assigned to the Trustee pursuant to Section
2.03(e) 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 on the
Closing Date in substantially the form attached hereto as Exhibit I-1 that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
exception report annexed thereto as not being covered by such certification),
(i) all documents constituting part of such Mortgage File required to be
delivered to it pursuant to this Agreement are in its possession, provided that
with respect to the documents described in Section 2.01(A)(v), (vi) and (vii)
and 2.01(C)(ix) to the extent the Trustee has actual knowledge that such
documents exist, (ii) such documents have been reviewed by it and are not torn,
mutilated, defaced or otherwise altered (except if initialed by the obligor) and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i) through (iii) (except the ZIP Code), (ix) and (xv) of
the definition of "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. Notwithstanding anything to the contrary in this
Agreement, it is herein acknowledged that, in conducting such review, the
Trustee is under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine whether they
are genuine, enforceable, or appropriate for the represented purpose or whether
they have actually been recorded or that they are other than what they purport
to be on their face, or to determine whether any Person executing any documents
is authorized to do so or whether any signature is genuine.

         The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File within 60 days following the Closing Date and to
certify in substantially the form attached hereto as Exhibit I-2 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


                                       46
<PAGE>

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(A)(v)) required to be delivered to it
pursuant to this Agreement are in its possession, provided that with respect to
the documents described in Section 2.01(A)(v), (vi) and (vii) and 2.01(C)(ix) to
the extent the Trustee has actual knowledge that such documents exist, (ii) such
documents have been reviewed by it and are not tom, mutilated, defaced or
otherwise altered (except if initialed by the obligor) and appear regular on
their face and relate to such Mortgage Loan, (iii) based on its examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule that corresponds to items (i) through (iii)(except the ZIP code), (ix)
and (xv) 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 is under no duty or obligation (i) to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine whether they are genuine, enforceable, or appropriate
for the represented purpose or whether they have actually been recorded or that
they are other than what they purport to be on their face, or to determine
whether any Person executing any documents is authorized to do so or whether any
signature is genuine.

         Prior to the first anniversary date of this Agreement the Trustee shall
deliver to the Depositor and the Master Servicer a final certification in the
form annexed hereto as Exhibit I-2 evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon, except with respect to the
documents described in Section 2.01(A)(v), (vi) and (vii) and 2.01(C)(ix), to
the extent the Trustee has actual knowledge that such documents exist.

         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 and the Master Servicer. In addition,
upon the discovery by the Depositor, the Master Servicer or the Trustee of a
breach of any of the representations and warranties made by the Sellers in the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.

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

         Section 2.03  REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY THE
                       SELLERS- ASSIGNMENT OF INTEREST IN ADDITIONAL COLLATERAL.

         (a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the
breach by a Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, by the Trustee, the Master Servicer or the
Depositor shall promptly notify such Seller and the Trustee, the Master Servicer
and the Depositor of such defect, missing document or breach and request that
such Seller deliver such missing document or cure such defect or breach within
90 days from the date such Seller was notified of such missing document, defect
or breach, and if such Seller does not deliver such missing document


                                       47
<PAGE>

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 such Seller under the Mortgage Loan Purchase
Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price within 90 days after the date on which such Seller was notified (subject
to Section 2.03(d)) of such missing document, defect or breach, if and to the
extent that such Seller is obligated to do so under the Mortgage Loan Purchase
Agreement. If such defect or breach can ultimately be cured but is not
reasonably expected to be cured within the 90-day period, then the applicable
Seller shall have such additional time, if any, as is reasonable, to cure such
defect or breach, provided that the applicable Seller has commenced curing or
correcting such defect or breach and is diligently pursuing same. The Purchase
Price for the repurchased Mortgage Loan shall be deposited in the Collection
Account, within three Business Days of expiration of the applicable time period
referred to above, and the Trustee, upon receipt of written certification from
the Master Servicer of such deposit, shall release to the applicable Seller the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, as such Seller shall furnish to it
and as shall be necessary to vest in such Seller any Mortgage Loan released
pursuant hereto, and the Trustee shall have no further responsibility with
regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as
provided above, if so provided in the related Mortgage Loan Purchase Agreement,
a Seller may cause such Mortgage Loan to be removed from the Trust Fund (in
which case it shall become a Defective Mortgage Loan) and substitute one or more
Eligible Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.03(d). If the breach of representation and warranty that
gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant
to Section 3.2 of the Mortgage Loan Purchase Agreement was the representation
and warranty set forth in clause (xlvi) of Section 3.1 thereof, then the Master
Servicer shall request that PHH Mortgage pay to the Trust Fund, concurrently
with and in addition to the remedies provided in the preceding four sentences,
an amount equal to any liability, penalty or expense that was actually incurred
and paid out of or on behalf of the Trust Fund, and that directly resulted from
such breach, or if incurred and paid by the Trust Fund thereafter, concurrently
with such payment. In furtherance of the foregoing, if the Seller that
repurchases the Mortgage Loan is not a member of MERS and the Mortgage is
registered on the MERS(R) System, the Master Servicer, at its own expense and
without any right of reimbursement, shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to such Seller and shall cause such Mortgage to be removed from registration on
the MERS(R) System in accordance with MERS' rules and regulations. It is
understood and agreed that the obligation of a 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 Depositor, the Master Servicer or
the Trustee on behalf of the Certificateholders.

         (b) Within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.04 which
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.



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<PAGE>

         (c) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a), in the case of a
Seller, must be effected prior to the date which is two years after the Closing
Date.

         As to any Defective Mortgage Loan for which a Seller substitutes a
Eligible Substitute Mortgage Loan or Loans, such substitution shall be effected
by such Seller delivering to the Trustee, for such Eligible 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 Eligible 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 of the original Mortgage Note for such Eligible
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents in the manner specified in Section 2.02 and deliver to the
Depositor and the Master Servicer, with respect to such Eligible Substitute
Mortgage Loan or Loans, a certification substantially in the form attached
hereto as Exhibit I-1, with any applicable exceptions noted thereon. Within one
year of the date of substitution, the Trustee shall deliver to the Depositor and
the Master Servicer a certification substantially in the form of Exhibit I-2
hereto with respect to such Eligible Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the related Seller. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Defective Mortgage Loan on or before the Due Date in the
month of substitution, and the related Seller shall thereafter be entitled to
retain all amounts subsequently received in respect of such Defective Mortgage
Loan. The Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Eligible 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, in the case of a
substitution effected by a Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by a Seller, all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement in each case as of the date of substitution.

         For any month in which a Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate principal balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Defective Mortgage Loans (in each case after
application of the principal portion of the Monthly Payments due in the month of
substitution that are to be distributed to the Certificateholders in the month
of substitution). On the date of such substitution, the applicable 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 Eligible Substitute Mortgage Loan
or Loans and certification by the Master Servicer of such deposit, shall release
to the applicable Seller the related Mortgage File or Files and shall execute
and deliver such instruments of


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<PAGE>

transfer or assignment, in each case without recourse, as such Seller shall
deliver to it and as shall be necessary to vest therein any Defective Mortgage
Loan released pursuant hereto.

         In addition, the applicable Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on the Trust Fund,
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 REMIC to fail
to qualify as a REMIC at any time that any Certificate is outstanding.

         (d) Upon discovery by the Depositor, a 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 related Seller shall repurchase or,
subject to the limitations set forth in Section 2.03(c), substitute one or more
Eligible Substitute Mortgage Loans for the affected Mortgage Loan within 60 days
of the earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Such repurchase or substitution shall be made by the
related Seller, as the case may be, if the affected Mortgage Loan's status as a
non-qualified mortgage is or results from a breach of any representation,
warranty or covenant made by the related Seller under the Mortgage Loan Purchase
Agreement. Any such repurchase or substitution shall be made in the same manner
as set forth in Sections 2.03(a), if made by the related Seller. The Trustee
shall reconvey to the related 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.

         (e) The Depositor hereby assigns to the Trustee its security interest
in and to any Additional Collateral, its right to receive amounts due or to
become due in respect of any Additional Collateral, all of its rights in each
Additional Collateral Agreement, and its rights as beneficiary under the Limited
Purpose Surety Bond in respect of any Additional Collateral Mortgage Loans. With
respect to any Additional Collateral Mortgage Loan, the Additional Collateral
Servicer shall cause to be filed in the appropriate recording office a Form
UCC-3 giving notice of the assignment of the related security interest to the
Trust Fund and shall thereafter cause the timely filing of all necessary
continuation statements with regard to such financing statements.

         Section 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
                      SERVICER.

         The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each 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
         New Jersey and is duly authorized and qualified to transact any and all
         business contemplated by this Agreement to be conducted by the Master
         Servicer in any state in which a Mortgaged Property is located or is
         otherwise not required under applicable law to effect such
         qualification and, in any event, is in compliance with the doing
         business laws of any such State, to the extent


                                       50
<PAGE>

         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 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 Master Servicer the execution, delivery and
         performance of this Agreement; and this Agreement, assuming the due
         authorization, execution and delivery thereof by the Depositor 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 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 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;

                  (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 of the transactions
         contemplated by this Agreement, except for such


                                       51
<PAGE>

         consents, approvals, authorizations or orders, if any, that have been
         obtained prior to the Closing Date; and

                  (vii) The Master Servicer is a member of MERS in good
         standing, and will comply in all material respects with the rules and
         procedures of MERS in connection with the servicing of the Mortgage
         Loans that are registered with MERS.

         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 or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 7.01, the obligation of the Master Servicer
set forth in Section 2.03(c) to cure breaches shall constitute the sole remedies
against the Master Servicer available to the Certificateholders, the Depositor
or the Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.04.

         Section 2.05 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

         The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders as follows:

                  (i) This 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 and 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
         (insofar as such title was conveyed to it by a Seller, as set forth in
         the Mortgage Loan Purchase Agreement) 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 and interest in the Mortgage Loans to the Trustee on
         behalf of the Trust;

                  (iv) The Depositor has not transferred the Mortgage Loans to
         the Trustee on behalf of the Trust with any intent to hinder, delay or
         defraud any of its creditors;

                  (v) The Depositor has been duly formed and is validly existing
         as a limited liability company 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;



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<PAGE>

                  (vi) The Depositor is not in violation of its certificate of
         formation or limited liability company agreement 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 by the Depositor, and the consummation of the transactions
         contemplated thereby, do not and will not result in a material breach
         or 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
         certificate of formation or limited liability company agreement 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);

                  (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,
         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; and

                  (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 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, as the case may be; (d) which might
         materially and adversely affect the performance by the Depositor of its
         obligations under, or the validity or enforceability of, this
         Agreement.

         Section 2.06 PURPOSE AND POWERS OF THE TRUST.

         The purpose of the trust, as created hereunder, is to engage in the
following activities:



                                       53
<PAGE>

                  (i) to issue the Certificates to or at the direction of the
         Depositor in exchange for the Mortgage Loans;

                  (ii) to perform the activities of the trust that are expressly
         set forth in this Agreement;

                  (iii) to engage in those activities that are reasonably
         necessary, suitable or convenient to accomplish the foregoing or are
         incidental thereto or connected therewith; and

                  (iv) subject to compliance with this Agreement, to engage in
         such other activities as may be required in connection with
         conservation of the Trust Fund and the making of distributions to the
         Certificateholders.

         The trust is hereby authorized to engage in the foregoing activities.

         Section 2.07 ISSUANCE OF CERTIFICATES.

         (a) The Trustee acknowledges the assignment to it on behalf of the
Trust Fund of the Mortgage Loans and the other assets comprising the Trust Fund
and, concurrently therewith, has signed, and authenticated and delivered to the
Depositor, in exchange therefor, Certificates in such authorized denominations
representing such Percentage Interests as the Depositor has requested. The
Trustee agrees that it will hold the Mortgage Loans and such other assets as may
from time to time be delivered to it segregated on the books of the Trustee in
trust for the benefit of the Certificateholders.

         (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 assets of REMIC I for the benefit of the holders of the REMIC I
Regular Interests. The Trustee acknowledges receipt of the assets of REMIC I and
declares that it holds and will hold the same in trust for the exclusive use and
benefit of the holders of the REMIC I Regular Interests.

         (c) 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 I Regular Interests and the other assets of REMIC II for the
benefit of the Certificateholders. The Trustee acknowledges receipt of the REMIC
I Regular Interests (which are uncertificated) and the other assets of REMIC II
and declares that it holds and will hold the same in trust for the exclusive use
and benefit of the Certificateholders.



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<PAGE>


                                  ARTICLE III

                 ADMINISTRATION AND SERVICING OF THE TRUST FUND

         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 prudent 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 of any Certificate by the Master Servicer
         or any Affiliate of the Master Servicer;

                  (iii) 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 also seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment in accordance with the servicing standards set
forth above, to execute and deliver, on behalf of the 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 comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under each Primary
Insurance Policy and 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


                                       55
<PAGE>

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. The Trustee shall not be liable for the actions of the Master Servicer
or any Sub-Servicers under such powers of attorney.

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

         The Master Servicer further is authorized and empowered by the Trustee,
on behalf of the Certificateholders and the Trustee, in its own name or in the
name of the Sub-Servicer, when the Master Servicer or the Sub-Servicer, as the
case may be, believes it is appropriate in its best judgment to register any
Mortgage Loan on the MERS(R) System, or cause the removal from the registration
of any Mortgage Loan on the MERS(R) System, to execute and deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and all instruments
of assignment and other comparable instruments with respect to such assignment
or re-recording of a Mortgage in the name of MERS, solely as nominee for the
Trustee and its successors and assigns. Any expenses incurred in connection with
the actions described in the preceding sentence shall be borne by the Master
Servicer in accordance with Section 3.18, with no right of reimbursement;
provided, that if, as a result of MERS discontinuing or becoming unable to
continue operations in connection with the MERS System, it becomes necessary to
remove any Mortgage Loan from registration on the MERS System and to arrange for
the assignment of the related Mortgages to the Trustee, then any related
expenses shall be reimbursable to the Master Servicer.

         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 4.06) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Loan 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 either the Trust Fund to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions
after the startup date" under the REMIC Provisions.

         Notwithstanding any other provision of this Agreement or the Additional
Collateral Servicing Agreement to the contrary, except as provided below, the
Master Servicer shall have no duty or obligation to service and administer the
Additional Collateral and the Master Servicer shall not be deemed to be the
Additional Collateral Servicer, unless and until MLCC's obligations to
administer the Additional Collateral under the Additional Collateral Servicing


                                       56
<PAGE>

Agreement have been terminated with respect to the Additional Collateral
Mortgage Loans, in which case, the Master Servicer shall be bound to service and
administer the Additional Collateral and the Limited Purpose Surety Bond in
accordance with the provisions of this Agreement and the related Additional
Collateral Agreements from the date of such termination. The Trustee, as
assignee of the Additional Collateral Servicing Agreement, shall enforce the
obligations of MLCC to service and administer the Additional Collateral as
provided in the Additional Collateral Servicing Agreement, and shall take
appropriate action thereunder if MLCC fails to substantially comply with its
obligations to administer the Additional Collateral. In the event the Trustee
receives an indemnification payment from MLCC under Section 3 of the Additional
Collateral Servicing Agreement that is attributable to losses resulting from
MLCC's failure to administer the Additional Collateral in accordance with the
terms of the Additional Collateral Servicing Agreement in connection with
Additional Collateral Mortgage Loans, the Trustee shall deposit such amount in
the Collection Account.

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

         Section 3.02 SUB-SERVICING AGREEMENTS BETWEEN THE MASTER SERVICER AND
                      SUB-SERVICERS.

         (a) The Master Servicer may enter into Sub-Servicing Agreements
(provided that such agreements would not result in a withdrawal or a downgrading
by any Rating Agency of the rating on any Class of Certificates) with
Sub-Servicers, for the servicing and administration of the Mortgage Loans.
Notwithstanding any other provision of this Agreement, the Master Servicer shall
not be precluded from selling all or part of the Servicing Fee relating to any
Mortgage Loans to any Sub-Servicer, provided that with respect to any Mortgage
Loan as to which the Master Servicer sells all or a part of the related
Servicing Fee, the Master Servicer shall retain full responsibility under this
Agreement for the servicing activities relating to such Mortgage Loan.

         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 of which
are insured by the FDIC and (iii) a Freddie Mac or Fannie Mae approved mortgage
servicer. Each Sub-Servicing Agreement must impose on the Sub-Servicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Master Servicer will examine each Sub-Servicing Agreement and will be
familiar with the terms thereof. The terms of any Sub-Servicing Agreement will
not be inconsistent with any of the provisions of this Agreement. The Master
Servicer and the Sub-Servicers may enter into and make amendments to the
Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the
Certificateholders, without the consent of the Holders of Certificates entitled
to at least 66% of the Voting Rights. Any variation without the consent of the
Holders of Certificates entitled to at


                                       57
<PAGE>

least 66% of the Voting Rights from the provisions set forth in Section 3.08
relating to insurance or priority requirements of Sub-Servicing Accounts, or
credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Trustee copies of all Sub-Servicing Agreements,
and any amendments or modifications thereof, promptly upon the Master Servicer's
execution and 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 of each
Seller under the Mortgage Loan Purchase Agreement, including, without
limitation, any obligation to make advances in respect of delinquent payments as
required by a Sub-Servicing Agreement, or to purchase a Mortgage Loan on account
of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans, or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
Enforcement of the obligations under the Mortgage Loan Purchase Agreement
against the Sellers shall be effected by the Master Servicer, in accordance with
the foregoing provisions of this paragraph.

         Section 3.03 SUCCESSOR SUB-SERVICERS.

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

         Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Master
Servicer shall, for any reason, no longer be the Master Servicer (including
termination due to a Master Servicer Event of Termination).

         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


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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.

         Section 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICERS AND
                      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 and Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Master Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.

         Section 3.06 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY
                      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 Termination), the Trustee or its designee or the successor master
servicer as appointed pursuant to Section 7.02 herein, 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 and (ii) none of the Trustee, its designee or any
successor master servicer shall be deemed to have assumed any liability or
obligation of the Master Servicer that arose before it ceased to be the Master
Servicer.

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

         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 related Primary Insurance


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<PAGE>

Policy and any other 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, penalty interest, only upon determining that the coverage of such
Mortgage Loan by the related Primary Insurance Policy, if any, will not be
affected, or (ii) extend the due dates for Monthly Payments due on a Mortgage
Note for a period of not greater than 180 days; provided that any extension
pursuant to clause (ii) above shall not affect the amortization schedule of any
Mortgage Loan for purposes of any computation hereunder, except as provided
below. In the event of any such arrangement pursuant to clause (ii) above, the
Master Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.06 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements. 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 Loan Rate, forgive the
payment of principal or interest or extend the final maturity date of such
Mortgage Loan), accept payment from the related Mortgagor of an amount less than
the Stated Principal Balance in final satisfaction of such Mortgage Loan (such
payment, a "Short Pay-off") or consent to the postponement of strict compliance
with any such term or otherwise grant indulgence to any Mortgagor.

         Section 3.08 SUB-SERVICING ACCOUNTS.

         In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account (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
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 one or more accounts
(the "Servicing Accounts"), into which all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of ground rents, taxes,
assessments, fire and hazard insurance premiums, Primary Insurance Policy
premiums, water charges, sewer rents and comparable items for the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in the
clearing


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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 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 Escrow Payments; (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) make Permitted Investments as provided in Section 3.12; (v)
pay interest, to the Master Servicer or to the Mortgagor if required and as
described below, on balances in the Servicing Account; (vi) clear and terminate
the Servicing Account at the termination of the Master Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article IX; or (vii) 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
and shall effect payments of all such bills irrespective of the Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments. The Master
Servicer shall be entitled to retain any interest paid on funds deposited in the
Servicing Account to effect Escrow Payments other than interest on escrowed
funds required by law to be paid to the Mortgagor.

         Section 3.10 COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.

         (a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain one or more accounts (such account or accounts, the "Collection
Account"), held in trust for the benefit of the Trustee 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;



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

                  (iii) all Insurance Proceeds, Liquidation Proceeds and
         Subsequent Recoveries (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 or Section 9.01;

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

                  (viii) any amounts required to be transferred from any Buydown
         Account pursuant to Section 3.25; and

                  (ix) any (x) amounts realized by MLCC or (y) Required Surety
         Payments received by the Trustee or the Master Servicer in respect of
         any Additional Collateral.

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

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

         (b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the 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 5:00 p.m.
New York time on the Master Servicer Remittance Date, that portion of the
Available Distribution Amount for the related Distribution Date then on deposit
in the Collection Account.

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


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<PAGE>

give notice to the Master Servicer and the Depositor of the location of the
Distribution Account when established and prior to any change thereof.

         (d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw such amount from the Distribution Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Master Servicer shall deliver to the Trustee from time to time for deposit, and
upon written notification from the Master Servicer, the Trustee shall so
deposit, in the Distribution Account:

                  (i) any Advances, as required pursuant to Section 4.06;

                  (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, or federal bankruptcy court or other source,
the Trustee shall deposit such funds in the Distribution Account.

         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 4.06:

                  (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;

                  (iii) subject to Section 3.16(d), to pay the Master Servicer
         or any Sub-Servicer any unpaid Servicing Fees and reimburse any
         unreimbursed Servicing Advances with respect to each Mortgage Loan, but
         only to the extent of any Liquidation Proceeds, Insurance Proceeds or
         other amounts as may be collected by the Master Servicer;

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<PAGE>

                  (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, any Foreclosure Profits and any prepayment
         penalties or premiums relating to any Principal Prepayments; provided,
         however, that no such amounts shall be payable as servicing
         compensation to the extent they relate to a Mortgage Loan with respect
         to which a default, breach, violation or event of acceleration exists
         or would exist but for the lapse of time, the giving of notice, or
         both;

                  (v) to pay to the Master Servicer, the Depositor or a 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
         previously made which the Master Servicer has determined to be a
         Nonrecoverable Advance in accordance with the provisions of Section
         4.06; (vii) to reimburse the Master Servicer or the Depositor for
         expenses incurred by or reimbursable to the Master Servicer or the
         Depositor, as the case may be, pursuant to Section 6.03;

                  (viii) to reimburse the Master Servicer or the Trustee, as the
         case may be, for expenses reasonably incurred in respect of the breach
         or defect giving rise to the purchase obligation under Section 2.03 or
         Section 2.04 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 10.01;

                  (xi) to reimburse the Master Servicer for amounts deposited in
         error.

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

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



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

                  (iii) to pay 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 and 7.01(b);

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

                  (vi) to clear and terminate the Distribution Account pursuant
         to Section 10.01.

         Section 3.12 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT, SERVICING
                      ACCOUNTS AND THE DISTRIBUTION ACCOUNT.

         (a) The Master Servicer may direct any depository institution
maintaining the Collection Account or Servicing Accounts (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, 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 or Servicing
Accounts, as applicable, 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:

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

                  (y)      demand payment of all amounts due thereunder promptly
                           upon determination by a Responsible Officer of the
                           Trustee that such Permitted Investment would not
                           constitute a Permitted Investment in respect of funds
                           thereafter on deposit in the Investment Account.

         (b) All income and gain realized from the investment of funds deposited
in the Collection Account or Servicing Accounts, as applicable, 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



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accordance with Section 3.11. The Master Servicer shall deposit in the
Collection Account or Servicing Accounts, 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(a)(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 MAINTENANCE OF THE PRIMARY INSURANCE POLICIES; COLLECTIONS
                      THEREUNDER.

         The Master Servicer will maintain or cause the related Sub-Servicer, if
any, to maintain in full force and effect, if required under the Mortgage Loan
Purchase Agreement and to the extent available, a Primary Insurance Policy
conforming in all respects to the description set forth in Section 2(vii) of the
Mortgage Loan Purchase Agreement with respect to each Mortgage Loan so insured
as of the Closing Date (or, in the case of a Eligible Substitute Mortgage Loan,
on the date of substitution). Such coverage will be maintained with respect to
each such Mortgage Loan for so long as it is outstanding, subject to any
applicable laws or until the related Loan-to-Value Ratio is reduced to less than
or equal to 80% based on Mortgagor payments. The Master Servicer shall cause the
premium for each Primary Insurance Policy to be paid on a timely basis and shall
pay such premium out of its own funds if it is not otherwise paid. The Master
Servicer or the related Sub-Servicer, if any, will not cancel or refuse to renew
any such Primary Insurance Policy in effect on the Closing Date (or, in the case
of a Eligible Substitute Mortgage Loan, on the date of substitution) that is
required to be kept in force under this Agreement unless a replacement Primary
Insurance Policy for such canceled or non-renewed policy is obtained from and
maintained with an insurer.

         The Master Servicer shall not take, or permit any Sub-Servicer to take,
any action which would result in non-coverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Master Servicer
or Sub-Servicer, would have been covered thereunder. The Master Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Primary Insurance Policy. In connection
with any assumption and modification agreement or substitution of liability
agreement entered into or to be entered into pursuant to Section 3.15, the
Master Servicer shall promptly notify the insurer under the related Primary
Insurance Policy, if any, of such assumption in accordance with the terms of
such policies and shall take all actions which may be required by such insurer
as a condition to the continuation of coverage under the Primary Insurance
Policy. If any such Primary Insurance Policy is terminated as a result of such
assumption, the Master Servicer or the related Sub-Servicer shall obtain a
replacement Primary Insurance Policy as provided above.



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         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 the Certificateholders, claims to the insurer under any
Primary Insurance Policy in a timely fashion in accordance with the terms of
such policies and, in this regard, to take such action as shall be necessary to
permit recovery under any Primary Insurance Policy respecting a defaulted
Mortgage Loan. Any amounts collected by the Master Servicer under any Primary
Insurance Policy shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11; and any amounts collected by the Master
Servicer under any Primary Insurance Policy in respect of any REO Property shall
be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.23. In those cases in which a Mortgage Loan is serviced by a
Sub-Servicer, the Sub-Servicer, on behalf of itself, the Trustee, and the
Certificateholders, will present claims to the insurer under any Primary
Insurance Policy and all collections thereunder shall be deposited initially in
the Sub-Servicing Account.

         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 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 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 Loan 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, within two Business Days after
receipt thereof, 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, windstorm or other additional insurance is to be required of any
Mortgagor other than pursuant to such applicable laws and regulations as shall
at any time be in force and as shall require such additional insurance. If the
Mortgaged Property or REO Property is at any time in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, the 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


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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).

         If the Master Servicer shall obtain and maintain a blanket fire
insurance policy with extended coverage 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 the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
provide the Trustee (upon the Trustee'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 policy of insurance covering errors and omissions and a fidelity bond
which would meet such requirements.

         Section 3.15 ENFORCEMENT OF DUE-ON-SALE CLAUSES. ASSUMPTION AGREEMENTS.

         The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not exercise any such rights if prohibited by law
from doing so or if the exercise of such rights would impair or threaten to
impair any recovery under the related Primary Insurance Policy or Limited
Purpose Surety Bond, if any. 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


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apply, the Master Servicer will enter into an assumption and modification
agreement from or with the person to whom such property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. The Master Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Master Servicer and has a credit risk
rating at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Master Servicer shall apply 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 in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable Primary Insurance
Policy or hazard insurance policy, or a new policy meeting the requirements of
this Section is obtained. Any fee collected by the Master Servicer in respect of
an 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 Loan Rate and the amount of the Monthly Payment) may be
amended or modified, except as otherwise required pursuant to the terms thereof.
The Master Servicer shall notify the Trustee that any such substitution or
assumption agreement has been completed by forwarding to the Trustee the
executed original of such substitution or assumption agreement, which document
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof.

         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, consistent with the servicing standard
set forth in Section 3.01, foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07. The Master Servicer
shall be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Master Servicer as contemplated in Section 3.11 and
Section 3.23. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Master Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its


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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 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
a Person who regularly conducts environmental audits using customary industry
standards, that:

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

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

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

         If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. 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.

         (c) The Master Servicer may at its option purchase from the Trust Fund
any Mortgage Loan that is 90 days or more Delinquent, which the Master Servicer
determines in


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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 sum of the outstanding Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest thereon at the Loan Rate through
the end of the Due Period preceding the last Distribution Date, less
unreimbursed Servicing Advances, Advances and any unpaid Servicing Fees
allocable to such Mortgage Loan. The purchase price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account, and the
Trustee, upon receipt of written certification from the Master Servicer of such
deposit, shall release or cause to be released to the Master Servicer the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, as the Master Servicer shall
furnish and as shall be necessary to vest in the Master Servicer title to any
Mortgage Loan released pursuant hereto.

         (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and 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; third, as a recovery of principal of the Mortgage Loan;
and fourth, to Foreclosure Profits. If the amount of the recovery so allocated
to interest is less than the full amount of accrued and unpaid interest due on
such Mortgage Loan, the amount of such recovery will be allocated by the Master
Servicer as follows: first, to unpaid Servicing Fees; and second, to the balance
of the interest then due and owing. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Master Servicer or any
Sub-Servicer pursuant to Section 3.11(a)(iii).

         (e) In addition to the foregoing, the Trustee, as assignee of the
Additional Collateral Servicing Agreement, shall enforce the obligations of the
Additional Collateral Servicer to use its best reasonable efforts to realize
upon any Additional Collateral for such of the Additional Collateral 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 3.11; provided that pursuant to the Additional Collateral Servicing
Agreement, the Additional Collateral Servicer shall not, on behalf of the
Trustee, obtain title to any such Additional Collateral as a result of or in
lieu of the disposition thereof or otherwise; and provided further that (i) the
Additional Collateral Servicer, pursuant to the Additional Collateral Servicing
Agreement, shall not proceed with respect to such Additional Collateral in any
manner that would impair the ability to recover against the related Mortgaged
Property, and (ii) the Master Servicer shall proceed with any acquisition of REO
Property in a manner that preserves the ability to apply the proceeds of such
Additional Collateral against amounts owed under the defaulted Mortgage Loan.
Any proceeds realized from such Additional Collateral (other than amounts to be
released to the Mortgagor or the related guarantor in accordance with 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 and to the terms and conditions of any security agreement,
guarantee agreement, mortgage or other agreement governing the disposition of
the proceeds of such Additional Collateral) shall be deposited in the
Distribution Account, subject to withdrawal pursuant to Section 3.11; provided,
that such proceeds shall not


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<PAGE>

be so deposited if the Required Surety Payment in respect of such Additional
Collateral Mortgage Loan has been deposited in the Collection Account (except to
the extent of any such proceeds taken into account in calculating the amount of
the Required Surety Payment). Any other payment received by a Seller in respect
of such Additional Collateral shall be deposited in the Distribution Account
subject to withdrawal pursuant to Section 3.11.

         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 delivering a certification in duplicate (one of which will
be returned to the Master Servicer with the Mortgage File) in the form of
Exhibit E which shall be signed by a Servicing Officer or in a mutually
agreeable electronic format which will in lieu of a signature be deemed to
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee shall promptly
release the related Mortgage File to the Master Servicer. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to the Collection Account or the Distribution Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy or any other insurance policy relating to the
Mortgage Loans, the Trustee shall, upon request of the Master Servicer and
delivery to the Trustee in duplicate (one of which will be returned to the
Master Servicer with the Mortgage File) of a Request for Release in the form of
Exhibit E, which shall be signed by a Servicing Officer or in a mutually
agreeable electronic format which will in lieu of a signature be deemed to
originate from a Servicing Officer release the related Mortgage File to the
Master Servicer, and the Trustee shall, at the direction of the Master Servicer,
and in the form provided by the Master Servicer execute such documents as shall
be necessary to the prosecution of any such proceedings. Such Request for
Release shall obligate the Master Servicer to return each and every document
previously requested from the Mortgage File to the Trustee when the need
therefor by the Master Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Collection Account or the Mortgage File or such document
has been delivered to an attorney, or to a public trustee or other public
official as required by law, for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Master Servicer has delivered to the
Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Collection Account have been so deposited, or
that such Mortgage Loan has become an REO Property, the Master Servicer shall no
longer be obligated to return the documents released by the Trustee pursuant to
the related Request for Release and a copy of the Request for Release shall be
released by the Trustee to the Master Servicer.



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         (c) Upon written certification of a Servicing Officer, 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
inequity. Each such certification shall include a request that such pleadings or
documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale.

         Section 3.18 SERVICING COMPENSATION.

         As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest and Buydown Funds in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement.
In the event that Liquidation Proceeds, Insurance Proceeds and proceeds from any
REO Disposition (net of amounts reimbursable therefrom pursuant to Section
3.11(a)(iii)) in respect of a Cash Liquidation or REO Disposition exceed the
unpaid principal balance of such Mortgage Loan plus unpaid interest accrued
thereon (including REO Imputed Interest) at a per annum rate equal to the
related Net Mortgage Rate, the Master Servicer shall be entitled to retain
therefrom and to pay to itself any Foreclosure Profits and any Servicing Fee
considered to be accrued but unpaid.

         Additional servicing compensation in the form of assumption fees, late
payment charges and other similar fees and 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 and Section 3.24. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including premiums for the insurance required by Section
3.14, to the extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, servicing compensation of each Sub-Servicer, and to the extent
provided herein in Section 8.05, the 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.

         Upon request from the Trustee, the Master Servicer shall forward to the
Trustee 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


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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.

         Section 3.20 STATEMENT AS TO COMPLIANCE.

         Not later than the earlier of (a) March 15 of each calendar year (other
than the calendar year during which the Closing Date occurs) or (b) with respect
to any calendar year during which the Depositor's annual report on Form 10-K is
required to filed in accordance with the Exchange Act and the rules and
regulations of the Commission, 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to filed in accordance with
the Exchange Act and the rules and regulations of the Commission (or, in each
case, if such day is not a Business Day, the immediately preceding Business
Day), the Master Servicer will deliver to the Trustee and the Depositor 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 the earlier of (a) March 15 of each calendar year (other
than the calendar year during which the Closing Date occurs) or (b) with respect
to any calendar year during which the Depositor's annual report on Form 10-K is
required to filed in accordance with the Exchange Act and the rules and
regulations of the Commission, 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to filed in accordance with
the Exchange Act and the rules and regulations of the Commission (or, in each
case, if such day is not a Business Day, the immediately preceding Business
Day), 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


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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 Trustee and the Rating Agency.

         Section 3.22 ACCESS TO CERTAIN DOCUMENTATION.

         The Master Servicer shall provide to the Office of Thrift Supervision,
the FDIC, and any other federal or state banking or insurance regulatory
authority that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Trustee and to
any Person identified to the Master Servicer as a prospective transferee of a
Certificate, 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.

         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 the Trust Fund, shall
either sell any REO Property within three years after the end of the calendar
year in which the Trust Fund acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code or request from the Internal Revenue
Service, no later than 60 days before the day on which the three-year grace
period would otherwise expire, an extension of the three-year grace period,
unless the Master Servicer shall have delivered to the Trustee and the Depositor
an Opinion of Counsel, addressed to the Trustee and the Depositor, to the effect
that the holding by the Trust Fund of such REO Property subsequent to the
three-year grace period after its acquisition will not result in the imposition
on the Trust Fund of taxes on "prohibited transactions" thereof, as defined in
Section 860F of the Code, or cause the Trust Fund to fail to qualify as a REMIC
under Federal law at any time that any Certificates are outstanding. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust Fund 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
with respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Master Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Master


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<PAGE>

Servicer shall be entitled to retain or withdraw any interest income paid on
funds deposited in the REO Account.

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

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

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

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

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

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



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

         (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), far 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).



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<PAGE>

         (e) Subject to the time constraints set forth in Section 3.23(a), and
further subject to obtaining the approval of the insurer under any related
Primary Insurance Policy (if and to the extent that such approvals are necessary
to make claims under such policies in respect of the affected REO Property),
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.

         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 5:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount equal to the lesser of (i) the
aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from Principal Prepayments in Full or Curtailments during the
related Prepayment Period and (ii) the portion of its aggregate Servicing Fee
which accrued at a Servicing Fee Rate for the most recently ended calendar month
("Compensating Interest").

         Section 3.25 ADMINISTRATION OF BUYDOWN FUNDS.

         The Buydown Account established and maintained by the Master Servicer
with respect to each Buydown Mortgage Loan shall be an Eligible Account. Upon
receipt from the Mortgagor of the amount due on a Due Date for each Buydown
Mortgage Loan, the Master Servicer will withdraw from the related Buydown
Account the predetermined amount that, when added to the amount due on such date
from the Mortgagor, equals the Monthly Payment and will deposit that amount
together with the related payment made by the Mortgagor in the Collection
Account. The Buydown Account shall not be an asset of any REMIC and for federal
income tax purposes shall be owned by the Master Servicer.

         If any Mortgagor on a Buydown Mortgage Loan prepays such Mortgage Loan
in its entirety during the Buydown Period, when Buydown Funds are required to be
applied to such Buydown Mortgage Loan, the Master Servicer will withdraw from
the related Buydown Account and remit to such Mortgagor or any other Person in
accordance with the related Buydown Agreement any Buydown Funds remaining in the
Buydown Account. If a Principal Prepayment


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by a Mortgagor during the Buydown Period, together with any Buydown Funds in the
related Buydown Account, will result in a Principal Prepayment in Full, the
Master Servicer will withdraw from the related Buydown Account for deposit in
the Collection Account the Buydown Funds, which together with such Principal
Prepayment, will result in a Principal Prepayment in Full. If a Mortgagor
defaults during the Buydown Period with respect to a Buydown Mortgage Loan and
the Mortgaged Property is sold at foreclosure or title thereto is acquired on
behalf of the Certificateholders, the Master Servicer will withdraw from the
Buydown Account the Buydown Funds (which shall thereupon constitute "Liquidation
Proceeds" for purposes of this Agreement) for deposit in the Collection Account.

         Section 3.26 OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF LOAN
                      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 a calculation of
the principal balance of a Mortgage Loan that was made by the Master Servicer in
a manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Master Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee for deposit in the Distribution Account
from its own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Depositor and any successor master
servicer in respect of any such liability. Such indemnities shall survive the
termination or discharge of this Agreement.



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                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

         Section 4.01 DISTRIBUTION ACCOUNT; DISTRIBUTIONS.

         (a) The Master Servicer shall remit to the Trustee for deposit into the
Distribution Account on or before 5:00 P.M. New York time on each Master
Servicer Remittance Date by wire transfer of immediately available funds an
amount equal to the sum of (i) any Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be deposited in the Distribution
Account pursuant to Sections 3.10, 3.11, 3.14 or 3.24 and (iii) all other
amounts constituting the Available Distribution Amount for the immediately
succeeding Distribution Date.

         (b) [reserved]

         (c) On each Distribution Date the Trustee shall distribute to each
Certificateholder of record as of the next preceding Record Date (other than as
provided in Section 10.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least five
(5) Business Days prior to the related Record Date, or otherwise by check mailed
to such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority:

                  (i) to the Senior Certificates, on a pro rata basis based on
         the Monthly Interest Distributable Amount payable on such Certificates
         with respect to such Distribution Date, the Monthly Interest
         Distributable Amount on such Classes of Certificates for such
         Distribution Date, plus any Monthly Interest Distributable Amount
         thereon remaining unpaid from any previous Distribution Date except as
         provided in the last paragraph of this Section 4.01(c) (the "Senior
         Interest Distribution Amount"); provided that the Monthly Interest
         Distributable Amount on the Class A-3 Certificates, Class A-4
         Certificates, Class A-5 Certificates and Class A-6 Certificates shall
         be distributed as provided in Section 4.01(i) through (l);

                  (ii) to the Senior Certificates in the priorities and amounts
         set forth in Section 4.01(d)(i) through (vi), the Senior Principal
         Distribution Amount and the Accrual Distribution Amounts (applied to
         reduce the Certificate Principal Balances of such Senior Certificates,
         as applicable);

                  (iii) if the Certificate Principal Balances of the Subordinate
         Certificates have not been reduced to zero, to the Master Servicer, by
         remitting for deposit to the Collection Account, to the extent of and
         in reimbursement for any Advances previously made with respect to any
         Mortgage Loan or REO Property which remain unreimbursed in whole or in
         part following the Cash Liquidation or REO Disposition of such Mortgage
         Loan or REO Property, minus any such Advances that were made with



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         respect to delinquencies that ultimately constituted Excess Special
         Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
         Extraordinary Losses;

                  (iv) to the Holders of the Class B-1 Certificates, the Monthly
         Interest Distributable Amount thereon for such Distribution Date, plus
         any Monthly Interest Distributable Amount thereon remaining unpaid from
         any previous Distribution Date, except as provided below;

                  (v) to the Holders of the Class B-1 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-1 Certificates;

                  (vi) to the Holders of the Class B-2 Certificates, the Monthly
         Interest Distributable Amount thereon for such Distribution Date, plus
         any Monthly Interest Distributable Amount thereon remaining unpaid from
         any previous Distribution Date, except as provided below;

                  (vii) to the Holders of the Class B-2 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-2 Certificates;

                  (viii) to the Holders of the Class B-3 Certificates, the
         Monthly Interest Distributable Amount thereon for such Distribution
         Date, plus any Monthly Interest Distributable Amount thereon remaining
         unpaid from any previous Distribution Date, except as provided below;

                  (ix) to the Holders of the Class B-3 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-3 Certificates;

                  (x) to the Holders of the Class B-4 Certificates, the Monthly
         Interest Distributable Amount thereon for such Distribution Date, plus
         any Monthly Interest Distributable Amount thereon remaining unpaid from
         any previous Distribution Date, except as provided below;

                  (xi) to the Holders of the Class B-4 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-4 Certificates;

                  (xii) to the Holders of the Class B-5 Certificates, the
         Monthly Interest Distributable Amount thereon for such Distribution
         Date, plus any Monthly Interest Distributable Amount thereon remaining
         unpaid from any previous Distribution Date, except as provided below;


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<PAGE>

                  (xiii) to the Holders of the Class B-5 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-5 Certificates;

                  (xiv) to the Holders of the Class B-6 Certificates, an amount
         equal to the Monthly Interest Distributable Amount thereon for such
         Distribution Date, plus any Monthly Interest Distributable Amount
         thereon remaining unpaid from any previous Distribution Date, except as
         provided below;

                  (xv) to the Holders of the Class B-6 Certificates, an amount
         equal to the Subordinate Principal Distribution Amount for such Class
         of Certificates for such Distribution Date, applied in reduction of the
         Certificate Principal Balance of the Class B-6 Certificates;

                  (xvi) to the Senior Certificates, in the priority set forth in
         Section 4.01(d) of this Agreement, the portion, if any, of the
         Available Distribution Amount remaining after the foregoing
         distributions, applied to reduce the Certificate Principal Balances of
         such Senior Certificates, but in no event more than the aggregate of
         the outstanding Certificate Principal Balances of each such Class of
         Senior Certificates, and thereafter, to each Class of Subordinate
         Certificates then outstanding beginning with such Class with the
         Highest Priority, any portion of the Available Distribution Amount
         remaining after the Senior Certificates have been retired, applied to
         reduce the Certificate Principal Balance of each such Class of
         Subordinate Certificates, but in no event more than the outstanding
         Certificate Principal Balance of each such Class of Subordinate
         Certificates; and

                  (xvii) to the Class R-II Certificates, the balance, if any, of
         the Available Distribution Amount.

         Notwithstanding the foregoing, on any Distribution Date, with respect
to the Class of Subordinate Certificates outstanding on such Distribution Date
with the Lowest Priority, or in the event the Subordinate Certificates are no
longer outstanding, the Senior Certificates, the Monthly Interest Distributable
Amount thereon remaining unpaid from any previous Distribution Date will be
distributable only to the extent that such unpaid Monthly Interest Distributable
Amount was attributable to interest shortfalls relating to the failure of the
Master Servicer to make any required Advance, or the determination by the Master
Servicer that any proposed Advance would be a Nonrecoverable Advance with
respect to the related Mortgage Loan where such Mortgage Loan has not yet been
the subject of a Cash Liquidation or REO Disposition or the related Liquidation
Proceeds, Insurance Proceeds and REO Proceeds have not yet been distributed to
the Certificateholders.

         (d) The Senior Principal Distribution Amount and Accrual Distribution
Amounts shall be distributed to the Senior Certificates as follows:

                  (i) an amount equal to the Class A-3 Accrual Distribution
         Amount shall be distributed to the Class A-2 Certificates, until the
         Certificate Principal Balance thereof has been reduced to zero;

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<PAGE>

                  (ii) an amount equal to the Class A-4 Accrual Distribution
         Amount shall be distributed to the Class A-1, Class A-2 and Class A-3
         Certificates, in accordance with the priorities set forth below in
         clause (vi)(B) below, in each case until the Certificate Principal
         Balance thereof has been reduced to zero;

                  (iii) an amount equal to the Class A-5 Accrual Distribution
         Amount shall be distributed to the Class A-1, Class A-2, Class A-3 and
         Class A-4 Certificates, in accordance with the priorities set forth
         below in clauses (vi)(B) and (vi)(C) below, in that order, in each case
         until the Certificate Principal Balance thereof has been reduced to
         zero;

                  (iv) an amount equal to the Class A-6 Accrual Distribution
         Amount shall be distributed to the Class A-1, Class A-2, Class A-3,
         Class A-4 and Class A-5 Certificates, in accordance with the priorities
         set forth below in clauses (vi)(B) through (vi)(D) below, in that
         order, in each case until the Certificate Principal Balance thereof has
         been reduced to zero;

                  (v) the Senior Principal Distribution Amount shall be
         distributed to the Class R-I Certificates and Class R-II Certificates,
         concurrently on a pro rata basis, until the Certificate Principal
         Balances thereof have been reduced to zero;

                  (vi) the balance of the Senior Principal Distribution Amount
         remaining after the distributions, if any, described in clause (v)
         above shall be distributed in the following manner and priority:

                           (A) first, to the Class A-6 Certificates, in
                  reduction of the Certificate Principal Balance thereof, until
                  the Certificate Principal Balance thereof has been reduced to
                  zero, in an amount equal to the sum of (a) the Lockout
                  Scheduled Percentage of the aggregate of the collections
                  described in clauses (A), (B) and (E) (to the extent clause
                  (E) relates to clauses (A) and (B)) of the definition of
                  Senior Principal Distribution Amount and (b) the Lockout
                  Prepayment Percentage of the aggregate of the collections
                  described in clauses (C) and (E) (to the extent clause (E)
                  relates to clause (C))of the definition of Senior Principal
                  Distribution Amount;

                           (B) second, concurrently as follows:

                                    (1) 52.310172445875% of the Senior Principal
                           Distribution Amount distributable under clause
                           (vi)(B) shall be distributed to the Class A-1
                           Certificates, until the Certificate Principal Balance
                           thereof has been reduced to zero; and

                                    (2) 47.689827554125% of the Senior Principal
                           Distribution Amount distributable under clause
                           (vi)(B) shall be distributed sequentially, to the
                           Class A-2 Certificates and Class A-3 Certificates, in
                           that order, in each case until the Certificate
                           Principal Balance thereof has been reduced to zero;



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<PAGE>

                           (C) third, to the Class A-4 Certificates, until the
                  Certificate Principal Balance thereof has been reduced to
                  zero;

                           (D) fourth, to the Class A-5 Certificates, until the
                  Certificate Principal Balance thereof has been reduced to
                  zero; and

                           (E) fifth, to the Class A-6 Certificates, until the
                  Certificate Principal Balance thereof has been reduced to
                  zero.

         (e) On or after the Credit Support Depletion Date, all priorities
relating to distributions as described in Section 4.01(d) above in respect of
principal among the various classes of Senior Certificates will be disregarded,
and the Senior Principal Distribution Amount will be distributed to the
remaining Senior Certificates, pro rata in accordance with their respective
outstanding Certificate Principal Balances, and the Senior Interest Distribution
Amount will be distributed as set forth above in Section 4.01(c)(i).

         (f) After the reduction of the Certificate Principal Balances of the
Senior Certificates to zero but prior to the Credit Support Depletion Date, the
Senior Certificates will be entitled to no further distributions of principal
thereon and the Available Distribution Amount will be paid solely to the holders
of the Class B Certificates, as described herein.

         (g) In addition to the foregoing distributions, with respect to any
Subsequent Recoveries, the Master Servicer shall deposit such amounts into the
Collection Account pursuant to Section 3.10(a). If, after taking into account
such Subsequent Recoveries, the amount of a Realized Loss is reduced, the amount
of such Subsequent Recoveries will be applied to increase the Certificate
Principal Balance of the Class of Class B Certificates with the Highest Priority
to which Realized Losses have been allocated, but not by more than the amount of
Realized Losses previously allocated to that Class of Class B Certificates
pursuant to Section 4.04. The amount of any remaining Subsequent Recoveries will
be applied to increase the Certificate Principal Balance of the Class of Class B
Certificates with the next Highest Priority, up to the amount of such Realized
Losses previously allocated to that Class of Class B Certificates pursuant to
Section 4.04, and so on. Subsequent Recoveries will be applied to increase, from
zero, the Certificate Principal Balance of a Class of Class B Certificates
pursuant to the previous sentence if the Certificate Principal Balance of such
Class was reduced to zero due to the application of Realized Losses. Holders of
such Certificates will not be entitled to any payment in respect of Monthly
Interest Distributable Amount on the amount of such increases for any Interest
Accrual Period preceding the Distribution Date on which such increase occurs.
Any such increases shall be applied to the Certificate Principal Balance of each
Certificate of such Class in accordance with its respective Percentage Interest.

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



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<PAGE>

         (i) On each Distribution Date prior to the Class A-3 Accretion
Termination Date, an amount equal to the Monthly Interest Distributable Amount
that would otherwise be distributed on the Class A-3 Certificates shall be added
to Certificate Principal Balance of the Class A-3 Certificates. On or after the
related Accretion Termination Date, the entire amount of Monthly Interest
Distributable Amount on the Class A-3 Certificates for such Distribution Date
shall be payable to the Class A-3 Certificateholders pursuant to Section
4.01(c)(i) of this Agreement to the extent not required to reduce the
Certificate Principal Balance of the Class A-2 Certificates to zero on such
Class A-3 Accretion Termination Date; provided that if the Class A-3 Accretion
Termination Date is the Credit Support Depletion Date, the entire amount of
Monthly Interest Distributable Amount on the Class A-3 Certificates for such
Distribution Date will be paid to the Class A-3 Certificateholders. Any such
Monthly Interest Distributable Amount on the Class A-3 Certificates which is
required to be paid to the holders of the Class A-2 Certificates on such Class
A-3 Accretion Termination Date will be added to the Certificate Principal
Balance of the Class A-3 Certificates in the manner described in the first
sentence of this Section 4.01(i)

         (j) On each Distribution Date prior to the Class A-4 Accretion
Termination Date, an amount equal to the Monthly Interest Distributable Amount
that would otherwise be distributed on the Class A-4 Certificates shall be added
to Certificate Principal Balance of the Class A-4 Certificates. On or after the
related Accretion Termination Date, the entire amount of Monthly Interest
Distributable Amount on the Class A-4 Certificates for such Distribution Date
shall be payable to the Class A-4 Certificateholders pursuant to Section
4.01(c)(i) of this Agreement to the extent not required to reduce the aggregate
Certificate Principal Balance of the Class A-1, Class A-2 and Class A-3
Certificates to zero on such Class A-4 Accretion Termination Date; provided that
if the Class A-4 Accretion Termination Date is the Credit Support Depletion
Date, the entire amount of Monthly Interest Distributable Amount on the Class
A-4 Certificates for such Distribution Date will be paid to the Class A-4
Certificateholders. Any such Monthly Interest Distributable Amount on the Class
A-4 Certificates which is required to be paid to the holders of the Class A-1,
Class A-2 and Class A-3 Certificates on such Class A-4 Accretion Termination
Date will be added to the Certificate Principal Balance of the Class A-4
Certificates in the manner described in the first sentence of this Section
4.01(j).

         (k) On each Distribution Date prior to the Class A-5 Accretion
Termination Date, an amount equal to the Monthly Interest Distributable Amount
that would otherwise be distributed on the Class A-5 Certificates shall be added
to Certificate Principal Balance of the Class A-5 Certificates. On or after the
related Accretion Termination Date, the entire amount of Monthly Interest
Distributable Amount on the Class A-5 Certificates for such Distribution Date
shall be payable to the Class A-5 Certificateholders pursuant to Section
4.01(c)(i) of this Agreement to the extent not required to reduce the aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates to zero on such Class A-5 Accretion Termination Date; provided
that if the Class A-5 Accretion Termination Date is the Credit Support Depletion
Date, the entire amount of Monthly Interest Distributable Amount on the Class
A-5 Certificates for such Distribution Date will be paid to the Class A-5
Certificateholders. Any such Monthly Interest Distributable Amount on the Class
A-5 Certificates which is required to be paid to the holders of the Class A-1,
Class A-2, Class A-3 and Class A-4 Certificates on such Class A-5 Accretion
Termination Date will be added to the Certificate Principal Balance of the Class
A-5 Certificates in the manner described in the first sentence of this Section
4.01(k).



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<PAGE>

         (l) On each Distribution Date prior to the Class A-6 Accretion
Termination Date, an amount equal to the Monthly Interest Distributable Amount
that would otherwise be distributed on the Class A-6 Certificates shall be added
to Certificate Principal Balance of the Class A-6 Certificates. On or after the
related Accretion Termination Date, the entire amount of Monthly Interest
Distributable Amount on the Class A-6 Certificates for such Distribution Date
shall be payable to the Class A-6 Certificateholders pursuant to Section
4.01(c)(i) of this Agreement to the extent not required to reduce the aggregate
Certificate Principal Balance of the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates to zero on such Class A-6 Accretion Termination Date;
provided that if the Class A-6 Accretion Termination Date is the Credit Support
Depletion Date or the Distribution Date occurring in April 2010, the entire
amount of Monthly Interest Distributable Amount on the Class A-6 Certificates
for such Distribution Date will be paid to the Class A-6 Certificateholders. Any
such Monthly Interest Distributable Amount on the Class A-6 Certificates which
is required to be paid to the holders of the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates on such Class A-6 Accretion Termination
Date will be added to the Certificate Principal Balance of the Class A-6
Certificates in the manner described in the first sentence of this Section
4.01(l).

         (m) Except as otherwise provided in Section 10.01, if the Master
Servicer anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates 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 or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month.

         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 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(m) 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 six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee shall
take reasonable steps as directed by the Depositor, or appoint an agent to take
reasonable steps, to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the fiends in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the Trust Fund. If within nine months
after the second notice any such Certificates shall not have been surrendered
for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(m).



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<PAGE>

         (n) Distributions of interest shall be deemed to be made to each REMIC
I Regular Interest in an amount equal to the related Uncertificated Monthly
Interest Distributable Amount. Distributions of principal shall be deemed to be
made to each of the REMIC I Regular Interests in the same manner and priority as
principal payments are made to Corresponding Certificated Interests.

         (o) Distributions of interest in respect of the Class A-6 Certificates
shall be deemed to be made to the Class A-6A Component, Class A-6B Component and
the Class A-6C Component, with deemed interest in respect of the Class A-6A
Component equal to the amount which would be determined under the definition of
Monthly Interest Distributable Amount using the Pass-Through Rate for the Class
A-6A Component and a Certificate Principal Balance equal to the Class A-6A
Component Principal Balance, with deemed interest in respect of the Class A-6B
Component equal to the amount which would be determined under the definition of
Monthly Interest Distributable Amount using the Pass-Through Rate for the Class
A-6B Component and a Certificate Principal Balance equal to the Class A-6B
Component Notional Amount and with deemed interest in respect of the Class A-6C
Component equal to the amount which would be determined under the definition of
Monthly Interest Distributable Amount using the Pass-Through Rate for the Class
A-6C Component and a Certificate Principal Balance equal to the Class A-6C
Component Notional Amount. Distributions of principal in respect of the Class
A-6 Certificates shall be deemed to be made to the Class A-6A Component.

         Section 4.02 STATEMENTS TO CERTIFICATEHOLDERS.

         On each Distribution Date the Trustee shall make available to each
Holder of a Certificate and to the Depositor, the Master Servicer and the Rating
Agency, a statement based on information contained in the Remittance Report:

                  (i) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Certificates, separately
         identified, allocable to principal;

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

                  (iii) the aggregate amount of servicing compensation received
         by the Master Servicer during the related Due Period and such other
         customary information as the Trustee deems necessary or desirable, or
         which a Certificateholder reasonably requests, to enable
         Certificateholders to prepare their tax returns;

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

                  (v) the aggregate Stated Principal Balance of the Mortgage
         Loans at the close of business at the end of the related Due Period;

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

                  (vii) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) one month, two months or three months Delinquent on
         a contractual basis, (b) as to which foreclosure proceedings have been
         commenced and (c) in bankruptcy as of the close of business on the last
         day of the calendar month preceding such Distribution Date;



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

                  (ix) the book value of any REO Property as of the close of
         business on the last Business Day of the calendar month preceding the
         Distribution Date, and, cumulatively, the total number and cumulative
         principal balance of all REO Properties as of the close of business of
         the last day of the preceding due period;

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

                  (xi) the aggregate amount of Realized Losses incurred during
         the related Due Period and the cumulative amount of Realized Losses;

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

                  (xiii) the Certificate Principal Balance of each Class of
         Certificates, after giving effect to the distributions made on such
         Distribution Date;

                  (xiv) the aggregate amount of interest accrued at the related
         Pass-Through Rate with respect to each Class during the related
         Interest Accrual Period and the respective portions thereof, if any,
         remaining unpaid following the distributions made in respect of such
         Certificates on such Distribution Date;

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

                  (xvi) the Available Distribution Amount; and

                  (xvii) the aggregate Stated Principal Balance of Mortgage
         Loans purchased by the Master Servicer during the related Due Period
         and indicating the Section of this Agreement requiring or allowing the
         purchase of each such Mortgage Loan.

         The Trustee will make the monthly statements described above (and, at
its option, any additional files containing the same information in an
alternative format) available on each Distribution Date to Certificateholders,
and other parties to the Pooling and Servicing Agreement via the Trustee's
internet website and its fax-on-demand service. The Trustee's internet website
shall initially be located at "www.sf.citidirect.com". Assistance in using the
website can be obtained by calling the Trustee's customer service desk at (212)
657-2186. 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 monthly statements are distributed in order to make such
distribution


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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.

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

         In addition, the Trustee will make available, as a convenience for
interested parties (and not in furtherance of the distribution of any related
prospectus or prospectus supplement under the securities laws), this Agreement,
the related prospectus and prospectus supplement via the Trustee's internet
website.

         The Trustee will make no representations or warranties as to the
accuracy of completeness of such documents and will assume no responsibility
therefor.

         In connection with providing access to the Trustee's website, the
Trustee may require registration and the acceptance of a disclaimer. The Trustee
shall not be liable for the dissemination of information in accordance with this
Agreement which is not due to an error on the part of the Trustee with respect
to such information.

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

         The Trustee shall provide to each Certificateholder any written reports
or other information required by the Code and regulations thereunder as from
time to time are in force. In addition, upon written request, within a
reasonable period of time after the end of each calendar year, the Trustee shall
prepare and forward, to each Person who at any time during the calendar year was
a Certificateholder, a statement containing the information set forth in
subclauses (i) - (iii) above, aggregated for such calendar year or applicable
portion thereof during which such person was a Certificateholder.

         Section 4.03 REMITTANCE REPORTS; ADVANCES BY THE MASTER SERVICER.

         (a) On the second Business Day following each Determination Date but in
no event less than five Business Days prior to the related Distribution Date,
the Master Servicer shall deliver to the Trustee by telecopy (or by such other
means as the Master Servicer and the Trustee may agree from time to time) a
Remittance Report, and other data mutually agreed upon, with respect to the
related Distribution Date. On the same date, the Master Servicer shall forward
to the Trustee by overnight mail a computer readable magnetic tape or diskette
or in such other medium as may be agreed between the Master Servicer and the
Trustee containing the information set forth in such Remittance Report with
respect to the related Distribution Date. 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 4.06 and to prepare the statements to Certificateholders contemplated
by Section 4.02. The Master Servicer shall make a good faith effort to deliver
any such additional information to the Trustee within two Business Days of any
such request, provided that in no event shall the Master Servicer be required to
provide any such additional information to the Trustee to the extent the Trustee


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makes such request prior to five Business Days prior to the Master Servicer
Remittance Date. 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 the sum of (i) the aggregate amount of Monthly
Payments (net of the related Servicing Fee), due during the related Due Period
in respect of the Mortgage Loans, which Monthly Payments were delinquent on a
contractual basis as of the close of business on the related Determination Date
and (ii) with respect to each REO Property, which REO Property was acquired
during or prior to the related Due Period and as to which REO Property an REO
Disposition did not occur during the related Due Period, an amount equal to the
excess, if any, of the REO Imputed Interest on such REO Property for the most
recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 4.01 for
distribution on such Distribution Date, less amounts held for future
distributions.

         Before the close of business 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 4.03, 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 and replaced by the Master Servicer
by deposit in the Collection Account on or before any future Master Servicer
Remittance Date to the extent that the Available Distribution Amount for the
related Distribution Date (determined without regard to 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 Master
Servicer by telecopy on any Master Servicer Remittance Date or within one
Business Day 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, less amounts held for future
distributions, as set forth in the related Remittance Report.

         (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; provided, however, that such obligation will cease if title to the
Mortgaged Property is acquired by the Trust Fund in foreclosure or by deed in
lieu of foreclosure.

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


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Nonrecoverable Advance, shall be evidenced by an Officers' Certificate of the
Master Servicer delivered to the Depositor and the Trustee.

         Section 4.04 ALLOCATION OF REALIZED LOSSES.

         Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition that
occurred during the related Prepayment Period. The amount of each Realized Loss
shall be evidenced by an Officers' Certificate. All Realized Losses, other than
Excess Special Hazard Losses, Extraordinary Losses, Excess Bankruptcy Losses or
Excess Fraud Losses, shall be allocated as follows: first, to the Class B-6
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; second, to the Class B-5 Certificates until the Certificate Principal
Balance thereof has been reduced to zero; third, to the Class B-4 Certificates
until the Certificate Principal Balance thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Certificate Principal Balance
thereof has been reduced to zero; fifth, to the Class B-2 Certificates until the
Certificate Principal Balance thereof has been reduced to zero; sixth, to the
Class B-1 Certificates until the Certificate Principal Balance thereof has been
reduced to zero; and thereafter such Realized Losses will be allocated among all
the Senior Certificates on a pro rata basis, as described below. Any Excess
Special Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses,
Extraordinary Losses on the Mortgage Loans will be allocated among the Senior
Certificates and Subordinate Certificates, on a pro rata basis, as described
below.

         As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or based on the
Monthly Interest Distributable Amount thereon payable on such Distribution Date
(without regard to any Compensating Interest for such Distribution Date) in the
case of an interest portion of a Realized Loss. Any allocation of the principal
portion of Realized Losses (other than Debt Service Reductions) to the Class B
Certificates then outstanding with the highest numerical designation shall be
made by operation of the definition of "Certificate Principal Balance" and by
operation of the provisions of Section 4.01. Allocations of the interest
portions of Realized Losses shall be made by operation of the definition of
"Monthly Interest Distributable Amount" and by operation of the provisions of
Section 4.01. Allocations of the principal portion of Debt Service Reductions
shall be made by operation of the provisions of Section 4.01. All Realized
Losses and all other losses allocated to a Class of Certificates hereunder will
be allocated among the Certificates of such Class in proportion to the
Percentage Interests evidenced thereby. Realized Losses allocated to the Regular
Certificates shall be deemed allocated to the REMIC I Regular Interests in the
amount and priority allocated to Corresponding Certificated Interests. For
federal income tax purposes, Realized Losses allocated to the Class A-6
Certificates in respect of principal shall be deemed allocated to the Class A-6A
Component, and Realized Losses allocated to the Class A-6 Certificates in
respect of interest on any Distribution Date shall be allocated among the Class
A-6A Component, the Class A-6B Component and the Class A-6C Component in
proportion to each such component's entitlement to interest on such Distribution
Date.



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         Section 4.05 INFORMATION REPORTS TO BE FILED BY THE MASTER SERVICER.

         The Master Servicer or the Sub-Servicers shall file information reports
with respect to the receipt of mortgage interest received in a trade or
business, foreclosures and abandonments of any Mortgaged Property and the
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of the
Code, respectively, and deliver to the Trustee an Officers' Certificate stating
that such reports have been filed. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.

         Section 4.06 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 on the Mortgage Loans,
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 withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall, together with its monthly report to
such Certificateholders pursuant to Section 4.03 hereof, indicate such amount
withheld.

         Section 4.07 [RESERVED].

         Section 4.08 LIMITED PURPOSE SURETY BOND.

         If a Required Surety Payment is payable pursuant to the Limited Purpose
Surety Bond with respect to any Additional Collateral Mortgage Loans, as
determined by the Master Servicer and the Additional Collateral Servicer, the
Master Servicer shall so notify the Trustee as soon as reasonably practicable
and the Trustee shall promptly complete the notice in the form of Attachment 1
to the Limited Purpose Surety Bond and shall promptly submit such notice to the
surety as a claim for a Required Surety Payment. The Master Servicer shall upon
request assist the Trustee in completing such notice and shall provide any
information requested by the Trustee in connection therewith.

         Upon receipt of a Required Surety Payment from the surety on behalf of
the Certificateholders, the Trustee shall deposit such Required Surety Payment
in the Distribution Account and shall distribute such Required Surety Payment,
or the proceeds thereof, in accordance with the provisions of Section 4.01.

         The Trustee shall (i) receive as attorney-in-fact of each Holder of a
Certificate any Required Surety Payment from the surety and (ii) disburse the
same to the Holders of such Certificates as set forth in Section 4.01.



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                                   ARTICLE V

                                THE CERTIFICATES

         Section 5.01 THE CERTIFICATES.

         Each of the Class A, Class B and Class R Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
receipt of a Written Order to Authenticate from the Depositor concurrently with
the sale and assignment to the Trustee of the Trust Fund. Each Class of the
Certificates (other than the Class R Certificates) shall be initially evidenced
by one or more Certificates representing a Percentage Interest with a minimum
dollar denomination of $25,000 and integral dollar multiples of $1 in excess
thereof. Each Class of Residual Certificates will be issued in registered,
certificated form in minimum denominations of a 20% Percentage Interest except
in the case of one of each of the Class R-I Certificates and Class R-II
Certificates. Provided however, that one Certificate of each such Class of
Certificates may be in a different denomination so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Certificate Principal Balance of such Class on the Closing Date.

         The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate 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. Subject to Section 5.02(c), the Certificates, other
than the Class R, Class B-4, Class B-5 and Class B-6 Certificates, shall be
Book-Entry Certificates.

         Section 5.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.

         (a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.

         Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.



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<PAGE>

         At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing.

         (b) Except as provided in paragraphs (c) and (d) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall for all
purposes deal with the Depository as representative of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.

         All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute Letters of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.

         (c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Depository Participants and the Trustee, elects to
terminate the book-entry system through the Depository (with respect to some or
all of the Book-Entry Certificates) or (iii) after the occurrence of a Master
Servicer Event of Termination, the Certificate Owners of each Class of
Book-Entry Certificates representing Percentage Interests of such Classes
aggregating not less than 51% advises the Trustee and the Depository


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<PAGE>

Participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall, at the
Depositor's expense, in the case of (ii) above, or the related Seller's expense,
in the case of (i) and (iii) above, execute on behalf of the Trust and
authenticate the Definitive Certificates.

         In addition, if a Master Servicer Event of Termination has occurred and
is continuing, each Certificate Owner materially adversely affected thereby may
at its option request a Definitive Certificate evidencing such Certificate
Owner's Percentage Interest in the related Class of Certificates. In order to
make such request, such Certificate Owner shall, subject to the rules and
procedures of the Depository, provide the Depository or the related Depository
Participant with directions for the Trustee to exchange or cause the exchange of
the Certificate Owner's interest in such Class of Certificates for an equivalent
Percentage Interest in fully registered definitive form. Upon receipt by the
Trustee of instruction from the Depository directing the Trustee to effect such
exchange (such instructions to contain information regarding the Class of
Certificates and the Certificate Principal Balance being exchanged, the
Depository Participant account to be debited with the decrease, the registered
holder of and delivery instructions for the Definitive Certificates and any
other information reasonable required by the Trustee), (i) the Trustee shall
instruct the Depository to reduce the related Depository Participant's account
by the aggregate Certificate Principal Balance of the Definitive Certificates,
(ii) the Trustee shall execute, authenticate and deliver, in accordance with the
registration and delivery instructions provided by the Depository, a Definitive
Certificate evidencing such Certificate Owner's Percentage Interest in such
Class of Certificates and (iii) the Trustee shall execute and authenticate a new
Book-Entry Certificate reflecting the reduction in the aggregate Certificate
Principal Balance of such Class of Certificates by the amount of the Definitive
Certificates.

         Neither the Depositor nor the Trustee shall be liable for any delay in
delivery of any instruction required under this section and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates, the Trustee, the Certificate Registrar, the
Master Servicer, any Paying Agent and the Depositor shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder.

         (d) No transfer, sale, pledge or other disposition of any Private
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.

                  (i) In the event of any such transfer, (A) if such transfer is
         made in reliance upon Rule 144A under the 1933 Act, the Trustee shall
         require the transferor to execute a transferor certificate in
         substantially the form attached hereto as Exhibit F-2 and the
         transferee to execute an investment letter in substantially the form
         attached hereto as Exhibit F-1, or (B) (1) (x) if such transfer is made
         to an institutional "accredited investor" within the meaning of within
         the meaning of Rule 501(a) promulgated pursuant to the 1933 Act (in the
         case of a Class B-1, Class B-2, Class B-3, Class B-4 or Class B-5
         Certificate) or (y) if such transfer is made to an "accredited
         investor" within the meaning of Rule 501(a) promulgated pursuant to the
         1933 Act (in the case of a Class


                                       95
<PAGE>

         B-6 Certificate), the Trustee shall require the transferor to execute a
         transferor certificate (in substantially the form attached hereto as
         Exhibit F-2) and the transferee to execute an investment letter (in
         substantially the form attached hereto as Exhibit F-3) 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 and (2) 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. The Holder of a Private Certificate 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.

                  (ii) If any such transfer of a Private Certificate held by the
         related transferor and also to be held by the related transferee in the
         form of a Book-Entry Certificate is to be made without registration
         under the Securities Act, the transferor will be deemed to have made as
         of the transfer date each of the representations and warranties set
         forth on Exhibit F-2 hereto in respect of such Private Certificate and
         the transferee will be deemed to have made as of the transfer date each
         of the representations and warranties set forth on Exhibit F-1 hereto
         in respect of such Private Certificate.

                  (iii) No transfer of any Private Certificate that is a
         Book-Entry Certificate or interest therein shall be made by any related
         Certificate Owner except (A) in the manner set forth in clause (ii)
         above and in reliance on Rule 144A under the 1933 Act to a "qualified
         institutional buyer" that is acquiring such Book-Entry Certificate for
         its own account or for the account of another "qualified institutional
         buyer" or (B) in the manner set forth in clause (i) above and in the
         form of a Definitive Certificate.

         If any Certificate Owner that is required under this Section 5.02(d) to
transfer its Book-Entry Certificates in the form of Definitive Certificates, (i)
notifies the Trustee of such transfer or exchange and (ii) transfers such
Book-Entry Certificates to the Trustee, in its capacity as such, through the
book-entry facilities of the Depository, then the Trustee shall decrease the
balance of such Book-Entry Certificates or, the Trustee shall use reasonable
efforts to cause the surrender to the Certificate Registrar of such Book-Entry
Certificates by the Depository, and thereupon, the Trustee shall execute,
authenticate and deliver to such Certificate Owner or its designee one or more
Definitive Certificates in authorized denominations and with a like aggregate
principal amount.

         Subject to the provisions of this Section 5.02(d) governing
registration of transfer and exchange, Private Certificates (i) held as
Definitive Certificates may be transferred in the form of Book-Entry
Certificates in reliance on Rule 144A under the 1933 Act to one or more
"qualified institutional buyers" that are acquiring such Definitive Certificates
for their own accounts or for the accounts of other "qualified institutional
buyers" and (ii) held as Definitive Certificates by a "qualified institutional
buyer" for its own account or for the account of another "qualified
institutional buyer" may be exchanged for Book-Entry Certificates, in each case
upon surrender of such Private Certificates for registration of transfer or
exchange at the offices of the Trustee


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maintained for such purpose. Whenever any such Private Certificates are so
surrendered for transfer or exchange, either the Trustee shall increase the
balance of the related Book-Entry Certificates or the Trustee shall execute,
authenticate and deliver the Book-Entry Certificates for which such Private
Certificates were transferred or exchanged, as necessary and appropriate. No
Holder of Definitive Certificates other than a "qualified institutional buyer"
holding such Certificates for its own account or for the account of another
"qualified institutional buyer" may exchange such Private Certificates for
Book-Entry Certificates. Further, any Certificate Owner of a Book-Entry
Certificate other than any such "qualified institutional buyers" shall notify
the Trustee of its status as such and shall transfer such Book-Entry Certificate
to the Trustee, through the book-entry facilities of the Depository, whereupon,
and also upon surrender to the Trustee of such Book-Entry Certificate by the
Depository, (which surrender the Trustee shall use reasonable efforts to cause
to occur), the Trustee shall execute, authenticate and deliver to such
Certificate Owner or such Certificate Owner's nominee one or more Definitive
Certificates in authorized denominations and with a like aggregate principal
amount.

         (e) No purchase or transfer of an ERISA-Restricted Certificate shall be
made unless the Trustee shall have received (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee (in
the case of a Class B-4, Class B-5 or Class B-6 Certificate) substantially in
the form of Exhibit G-1 hereto or receipt of a representation from the
transferee (in the case of a Class R Certificate) substantially in the form of
paragraph (xvii) of Exhibit F-4, as appropriate), to the effect that either (a)
such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer (each, a "Plan Investor") or
(b) in the case of a Class B-4, Class B-5 or Class B-6 Certificate, the purchase
of such Certificate by or on behalf of such Plan is permissible under applicable
law, will not subject the Depositor, the Trustee or the Master Servicer to any
obligation in addition to those undertaken in the Agreement and the following
conditions are satisfied: (I) the transferee is an insurance company, (II) the
source of funds used to purchase such Certificates is an "insurance company
general account" (as such term is defined in Prohibited Transaction Class
Exemption ("PTCE") 95-60) and (III) the conditions set forth in Section III of
PTCE 95-60 and all other applicable conditions of PTCE 95-60 have been satisfied
and as a result the acquisition and holding of such Certificates will not
constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code or (ii) in the case of any such ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel addressed to
the Depositor, the Trustee and the Master Servicer, satisfactory to such
entities, which Opinion of Counsel shall not be an expense of such entities, to
the effect that the purchase or holding of such ERISA-Restricted Certificate is
permissible under applicable law, will not result in a non-exempt prohibited
transaction provisions of ERISA or Section 4975 of the Code and will not subject
the Trustee, the Master Servicer or the Depositor to any obligation or liability
in addition to those expressly undertaken in this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the delivery to the Trustee of either a
representation in the form of Exhibit G-1


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(in the case of a Class B-4, Class B-5 or Class B-6 Certificate) or paragraph
(xvii) of Exhibit F-4 (in the case of a Class R Certificate) hereto or an
Opinion of Counsel as described above shall be void and of no effect.

         Any Holder of a Class B-1, Class B-2 or Class B-3 Certificate or any
interest therein that is a Definitive Certificate shall represent in the form of
Exhibit G-2 with respect to such Certificates, that either (i) such Holder is
not a Plan Investor or (ii) such Holder is an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the 1933 Act. Any Holder of a
Class B-1, Class B-2 or Class B-3 Certificate or any interest therein that is a
Book-Entry Certificate shall be deemed to have made the representations
described in the preceding sentence.

         If any Book-Entry Certificate (or any interest therein) is acquired or
held in violation of the provisions of Section 5.02(e) above, then the last
preceding Transferee that either (i) is not a Plan Investor or (ii) is in
compliance with Section 5.02(e)(i)(b) shall be restored, to the extent permitted
by law, to all rights and obligations as Certificate Owner thereof retroactive
to the date of such Transfer of such Certificate. The Trustee shall be under no
liability to any Person for making any payments due on such Certificate to such
preceding Transferee.

         Any purported Certificate Owner whose acquisition or holding of any
Book-Entry Certificate (or interest therein) was effected in violation of the
restrictions in this Section 5.02(e) shall indemnify and hold harmless the
Depositor, the Trustee, the Master Servicer and the Trust Fund from and against
any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.

         (f) 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 F-4 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



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                           B. 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 malting any distributions due on such
         Class R Certificate to the Holder thereof or tatting any other action
         with respect to 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 upon receipt of
         reasonable compensation 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)(5) 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 the Rating Agency that the removal of the restrictions


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on Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC hereunder to fail to qualify
as a REMIC.

         (g) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar 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 cancelled by the Certificate Registrar 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 Certificate
Registrar or the Certificate Registrar 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 the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, 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 or the Certificate Registrar 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 and the Certificate Registrar) 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 Certificate
Registrar, any Paying Agent and any agent of the Master Servicer, the Depositor,
the Certificate Registrar, any Paying Agent or the Trustee may treat the 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 Trust, the Trustee nor any agent of any of them shall be affected
by notice to the contrary.

         To the extent the Trustee, Certificate Registrar or any Paying Agent is
required pursuant to this Agreement to determine the identity of the beneficial
owner of a Book-Entry Certificate, any costs assessed by the Depository in
making such determination shall be an expense of the party making such request,
but in no event shall such cost be an expense of the Trust Fund.

         Section 5.05 APPOINTMENT OF PAYING AGENT.

         (a) The Paying Agent shall make distributions to Certificateholders
from the Distribution Account pursuant to Section 4.01 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Distribution Account
pursuant to Sections 3.10 and 3.11 and for the purpose of making


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the distributions referred to above and (ii) to distribute statements and
provide information to Certificateholders as required hereunder. The Paying
Agent hereunder shall at all times be an entity duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying Agent
shall initially be the Trustee. The Trustee may appoint a successor to act as
Paying Agent, which appointment shall be reasonably satisfactory to the
Depositor and the Rating Agency.

         (b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.



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                                   ARTICLE VI

                      THE MASTER SERVICER AND THE DEPOSITOR

         Section 6.01 LIABILITY OF THE MASTER SERVICER AND THE DEPOSITOR.

         The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the Master
Servicer, as the case may be, herein. The Depositor shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor.

         Section 6.02 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE
                      OBLIGATIONS OF THE MASTER SERVICER OR THE DEPOSITOR.

         Any entity into which the Master Servicer or Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Master Servicer or the Depositor shall be a party, or
any corporation succeeding to the business of the Master Servicer or the
Depositor, shall be the successor of the Master Servicer or the Depositor, 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 master servicer
shall satisfy all the requirements of Section 7.02 with respect to the
qualifications of a successor master servicer. In addition, the Master Servicer
may assign the servicing rights with respect to any Mortgage Loans to a third
party, provided that any such third party shall be an entity that satisfies all
the requirements of Section 7.02 that would be applicable to a successor master
servicer.

         Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.

         Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer or by reason
of its reckless disregard of its obligations and duties of the Master Servicer
hereunder; provided, further, that this provision shall not be construed to
entitle the Master Servicer to indemnity in the event that amounts advanced by
the Master Servicer to retire any senior lien exceed Liquidation Proceeds (in
excess of related liquidation expenses) realized with respect to the related
Mortgage Loan. The Master Servicer and any director or officer or employee or
agent of the Master Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Master Servicer and any director or officer or employee
or agent of the Master Servicer shall be indemnified by the Trust and held
harmless 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 related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of duties hereunder


                                      102
<PAGE>

or by reason of its reckless disregard of obligations and duties hereunder. The
Master Servicer may undertake any such action which it may deem necessary or
desirable in respect of this Agreement, and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust and the Master
Servicer shall be entitled to be reimbursed therefor only pursuant to Section
3.11. The Master Servicer's right to indemnity or reimbursement pursuant to this
Section shall survive any resignation or termination of the Master Servicer
pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination). This paragraph
shall apply to the Master Servicer solely in its capacity as Master Servicer
hereunder and in no other capacities.

         Section 6.04 MASTER SERVICER NOT TO RESIGN.

         Subject to the provisions of Section 7.01 and Section 6.02, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer or its subsidiaries or Affiliates at the date of this Agreement or (ii)
upon satisfaction of the following condition: the Rating Agency shall have
delivered a letter to the Trustee prior to the appointment of the successor
master servicer stating that the proposed appointment of such successor master
servicer as Master Servicer hereunder will not result in the reduction or
withdrawal of the then current rating of the Regular Certificates or the ratings
that are in effect; provided, however, that no such resignation by the Master
Servicer shall become effective until such successor master servicer or, in the
case of (i) above, the Trustee shall have assumed the Master Servicer's
responsibilities and obligations hereunder or the Trustee shall have designated
a successor master servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Master Servicer of responsibility for any of
the obligations specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Master Servicer. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee.

         Section 6.05 DELEGATION OF DUTIES.

         In the ordinary course of business, the Master Servicer at any time may
delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01, including entering into
Sub-Servicing Agreements with Sub-Servicers, for the servicing and
administration of the Mortgage Loans, in accordance with the provisions of
Section 3.02. Such delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04. The Master Servicer
shall provide the Trustee and the Rating Agency with 60 days prior written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.



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                                  ARTICLE VII

                                     DEFAULT

         Section 7.01 MASTER SERVICER EVENTS OF TERMINATION.

         (a) If any one of the following events ("Master Servicer Events of
Termination' ) shall occur and be continuing:

                  (i) (A) The failure by the Master Servicer to make any Advance
         (other than a Nonrecoverable Advance); or (B) any other failure by the
         Master Servicer to deposit in the Collection Account or Distribution
         Account any deposit required to be made under the terms of this
         Agreement which continues unremedied for a period of (i) one Business
         Day in the case of any such Advance that was required to be remitted to
         the Trustee or (ii) five Business Days in the case of any such deposit
         that was required to be remitted to the Trustee, provided, that, if the
         Master Servicer cures such failure within the applicable grace period,
         the amounts remitted shall include interest calculated at the
         applicable federal funds rate; or

                  (ii) The failure by the Master Servicer duly to observe or
         perform, in any material respect, any other covenants, obligations or
         agreements of the Master Servicer as set forth in this Agreement, which
         failure continues unremedied for a period of 30 days, after the date
         (A) on which written notice of such failure, requiring the same to be
         remedied, shall have been given to the Master Servicer by the Trustee
         or by any Holder of a Regular Certificate evidencing at least 25% of
         the Voting Rights or (B) actual knowledge of such failure by a
         Servicing Officer of the Master Servicer; or

                  (iii) The entry against the Master Servicer of a decree or
         order by a court or agency or supervisory authority having jurisdiction
         in the premises for the appointment of a trustee, conservator, receiver
         or liquidator in any insolvency, conservatorship, receivership,
         readjustment of debt, marshalling of assets and liabilities or similar
         proceedings, or for the winding up or liquidation of its affairs, and
         the continuance of any such decree or order unstayed and in effect for
         a period of 60 days; or

                  (iv) The Master Servicer shall voluntarily go into
         liquidation, consent to the appointment of a conservator or receiver or
         liquidator or similar person in any insolvency, readjustment of debt,
         marshalling of assets and liabilities or similar proceedings of or
         relating to the Master Servicer or of or relating to all or
         substantially all of its property; or a decree or order of a court or
         agency or supervisory authority having jurisdiction in the premises for
         the appointment of a conservator, receiver, liquidator or similar
         person in any insolvency, readjustment of debt, marshalling of assets
         and liabilities or similar proceedings, or for the winding-up or
         liquidation of its affairs, shall have been entered against the Master
         Servicer and such decree or order shall have remained in force
         undischarged, unbonded or unstayed for a period of 60 days; or 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



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         reorganization statute, make an assignment for the benefit of its
         creditors or voluntarily suspend payment of its obligations;

         (b) then, and in each and every such case, so long as a Master Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance is not
made by 11:00 A.M., New York time, on the Business Day immediately following the
Master Servicer Remittance Date (provided the Trustee shall give the Master
Servicer, and the Master Servicer shall have received, notice of such failure to
above by 5:00 P.M. New York time on the Master Servicer Remittance Date), the
Trustee shall terminate all of the rights and obligations of the Master Servicer
under this Agreement and the Trustee, or a successor master servicer appointed
in accordance with Section 7.02, shall immediately make such Advance and assume,
pursuant to the terms of Section 7.02, the duties of a successor master servicer
and (y) in the case of (i)(B), (ii), (iii) and (iv) above, the Trustee shall, at
the direction of the Holders of each Class of Regular Certificates evidencing
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Master Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement, to the extent permitted by law, and
in and to the Mortgage Loans and the proceeds thereof. Any such notice to the
Master Servicer shall also be given to the Rating Agency and the Depositor. On
or after the receipt by the Master Servicer (and by the Trustee if such notice
is given by the Holders) of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Certificates
or the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee
or duly appointed successor master servicer pursuant to and under this Section;
and, without limitation, the Trustee or duly appointed successor master servicer
is hereby authorized and empowered to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and Related
Documents or otherwise. The Master Servicer agrees to cooperate with the Trustee
(or the applicable successor master servicer) in effecting the termination of
the responsibilities and rights of the Master Servicer hereunder, including,
without limitation, the delivery to the Trustee of all documents and records
requested by it to enable it to assume the Master Servicer's functions under
this Agreement within ten Business Days subsequent to such notice, the transfer
within one Business Day subsequent to such notice to the Trustee (or the
applicable successor master servicer) for the administration by it of all cash
amounts that shall at the time be held by the Master Servicer and to be
deposited by it in the Collection Account, the Distribution Account, any REO
Account or any Servicing Account or that have been deposited by the Master
Servicer in such accounts or thereafter received by the Master Servicer with
respect to the Mortgage Loans or any REO Property received by the Master
Servicer. All Transition Costs incurred in connection with transferring the
Mortgage Files to the successor master servicer and amending this Agreement to
reflect such succession as Master Servicer pursuant to this Section shall be
paid by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Trustee, the initial Master Servicer) or by the Trust pursuant to Section
3.11(b)(iv) herein if the Master Servicer does not fulfill its obligations
hereunder within 45 days of presentation of reasonable documentation of such
costs and expenses. For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Termination 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


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         Master Servicer Event of Termination is received by the Trustee and
         such notice references the Certificates, the Trust Fund or this
         Agreement.

         Section 7.02 TRUSTEE TO ACT: APPOINTMENT OF SUCCESSOR.

         (a) Within 90 days of the time the Master Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, the Trustee (or such other successor master servicer as is
approved in accordance with this Agreement) shall be the successor in all
respects to the Master Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Master Servicer by the terms and provisions hereof arising on and after its
succession; 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 4.06; and provided further, it is understood and acknowledged that by
the parties hereto that there will be a period of transition (not to exceed 90
days) before the transfer of servicing obligations is fully effected and that
the Trustee (i) shall be under no obligation to purchase any Mortgage Loan, and
(ii) shall have no obligation whatsoever with respect to any liability (other
than advances deemed recoverable and not previously made) incurred by the Master
Servicer at or prior to the time of termination As compensation therefor, the
Trustee (or such other successor master servicer) shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if the
Trustee is unwilling to act as successor master servicer or (ii) if the Trustee
is legally unable so to act, or if the Holders of Certificates entitled to at
least 51% of the Voting Rights so request in writing to the Trustee, the Trustee
shall appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $50,000,000 as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder,
provided, that the appointment of any such successor master servicer will not
result in the qualification, reduction or withdrawal of the ratings assigned to
the Certificates or the ratings that are in effect by the Rating Agency as
evidenced by a letter to such effect from the Rating Agency. Pending appointment
of a successor to the Master Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
herein above provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on Mortgage
Loans in an amount equal to the compensation which the Master Servicer would
otherwise have received pursuant to Section 3.18 (or such other compensation as
the Trustee and such successor shall agree, not to exceed the Servicing Fee).
The appointment of a successor master servicer shall not affect any liability of
the predecessor Master Servicer which may have arisen under this Agreement prior
to its termination as Master Servicer to pay any deductible under an insurance
policy pursuant to Section 3.13 or to indemnify the Trustee pursuant to Section
8.05, nor shall any successor master servicer be liable for any acts or
omissions of the predecessor Master Servicer or for any breach by such Master
Servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.



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         (b) Any successor, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as master servicer continue to
master service and administer the Mortgage Loans for the benefit of
Certificateholders, and maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a Fidelity Bond in respect of its officers, employees and
agents to the same extent as the Master Servicer is so required pursuant to
Section 3.14.

         (c) In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Trustee if the Trustee is acting as successor Master Servicer, shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS, in which case the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to revise its records to reflect the
transfer of servicing to the successor Master Servicer as necessary under MERS'
rules and regulations, or (ii) the predecessor Master Servicer shall cooperate
with the successor Master Servicer in causing MERS to execute and deliver an
assignment of Mortgage in recordable form to transfer the Mortgage from MERS to
the Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
predecessor Master Servicer shall bear any and all fees of MERS, costs of
preparing any assignments of Mortgage, and fees and costs of filing any
assignments of Mortgage that may be required under this subsection (c). The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee promptly upon receipt of the original with evidence of recording thereon
or a copy certified by the public recording office in which such assignment was
recorded.

         Section 7.03 WAIVER OF MASTER SERVICER EVENTS OF TERMINATION.

         The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permuting removal of the Master Servicer as
servicer pursuant to this Article VII, provided, however, that the Majority
Certificateholders may not waive such events or a Master Servicer Event of
Termination in making a required distribution on a Certificate without the
consent of the Holder of such Certificate. Upon any waiver of a past default,
such default shall cease to exist and any Master Servicer Event of Termination
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Trustee to the Rating Agency.

         Section 7.04 NOTIFICATION TO CERTIFICATEHOLDERS.

         (a) Upon any termination or appointment of a successor the Master
Servicer pursuant to this Article VII or Section 6.04, the Trustee shall give
prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register and the Rating Agency.

         (b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Master Servicer Event of


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Termination the Trustee shall be deemed to have actual knowledge of such Master
Servicer Event of Termination five Business Days after a Responsible Officer of
the Trustee becomes aware of the occurrence of such an event and the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Master Servicer Event of Termination shall have been
waived or cured. Such notice shall be given to the Rating Agency promptly after
any such occurrence.

         Section 7.05 SURVIVABILITY OF MASTER SERVICER LIABILITIES.

         Notwithstanding anything herein to the contrary, upon termination of
the Master Servicer hereunder, any liabilities of the Master Servicer which
accrued prior to such termination shall survive such termination.



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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
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Master Servicer Events of Termination
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If a Master Servicer Event of
Termination has occurred (which has not been cured) of which a Responsible
Officer has actual knowledge, 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.

         As provided in Section 4.02 hereof, on each Distribution Date, the
Trustee shall provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP
level information for each Class of Certificates as of such Distribution Date,
using a format and media mutually acceptable to the Trustee and Bloomberg.

         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; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Master Servicer, the Additional Collateral Servicer or the
Depositor hereunder. If any such instrument is found not to conform in any
material respect to the requirements of this Agreement, the Trustee shall notify
the Certificateholders of such instrument in the event that the Trustee, after
so requesting, does not receive a satisfactorily corrected instrument.

         The Trustee shall prepare and file or cause to be filed on behalf of
the Trust Fund any tax return that is required with respect to the Trust Fund
pursuant to applicable federal, state or local tax laws.

         The Trustee covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of the Trust Fund as two
REMICs under the REMIC Provisions and to prevent the imposition of any federal,
state or local income, prohibited transaction, contribution or other tax on the
Trust Fund to the extent that maintaining such status and avoiding such taxes
are within the control of the Trustee and are within the commercially reasonable
scope of specific responsibilities under this Agreement.

         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:



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                  (i) prior to the occurrence of a Master Servicer Event of
         Termination, and after the curing of all such Master Servicer Events of
         Termination 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 and
         conforming 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 of the Trustee,
         unless it shall be proved by a court of competent jurisdiction that the
         Trustee was negligent in ascertaining or investigating the facts
         related thereto;

                  (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 Majority
         Certificateholders relating to the time, method and place of conducting
         any proceeding for any remedy available to the Trustee, or exercising
         or omitting to exercise any trust or power conferred upon the Trustee,
         under this Agreement; and

                  (iv) the Trustee shall not be charged with knowledge of any
         failure by the Master Servicer to comply with the obligations of the
         Master Servicer referred to in clauses (i) and (ii) of Section 7.01 or
         any Master Servicer Event of Termination unless a Responsible Officer
         of the Trustee at the Corporate Trust Office obtains actual knowledge
         of such failure or the Trustee receives written notice of such failure
         from the Master Servicer or the Majority Certificateholders. In the
         absence of such receipt of such notice, the Trustee may conclusively
         assume that there is no Master Servicer Event of Termination.

         The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer or Additional Collateral Servicer
under this Agreement, except during such time, if any, as the Trustee shall be
the successor to, and be vested with the rights, duties, powers and privileges
of, the Master Servicer in accordance with the terms of this Agreement.

         The Trustee shall not complete foreclosure proceedings, or accept a
deed in lieu of foreclosure, with respect to any Mortgage Loan, unless the
Trustee has been supplied with an Opinion of Counsel to the effect that if the
related Mortgaged Property is acquired by the Trust, such Mortgaged Property
from such Mortgage will qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code. In the event that the Trustee acquires
possession of any Mortgaged Property in spite of the foregoing, the Trustee
shall dispose of the acquired Mortgaged Property as expeditiously as possible.


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         The Trustee shall have no duty (A) to see any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Fund other than
from funds available in the Distribution Account to confirm or verify the
contents of any reports or certificates of the Master Servicer or the Additional
Collateral Servicer delivered to the Trustee pursuant to this Agreement believed
by the Trustee to be genuine and to have been signed or presented by the proper
party or parties.

         Section 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.

         (a) Except as otherwise provided in Section 8.01:

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

                  (ii) the Trustee may consult with counsel and any advice or
         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 advice or Opinion
         of Counsel;

                  (iii) the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Agreement, or to
         institute, conduct or defend any litigation hereunder or in relation
         hereto, at the request, order or direction of the Certificateholders
         pursuant to the provisions of this Agreement, unless such
         Certificateholders shall have offered to the Trustee reasonable
         security or indemnity against the costs, expenses and liabilities which
         may be incurred therein or thereby; the right of the Trustee to perform
         any discretionary act enumerated in this Agreement shall not be
         construed as a duty, and the Trustee shall not be answerable for other
         than its negligence or willful misconduct in the performance of any
         such act;

                  (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
         Termination and after the curing of all Master Servicer Events of
         Termination 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
         documents, unless requested in writing to do so by the Majority
         Certificateholder; provided, however, that if the payment within a
         reasonable time to the Trustee of the costs, expenses or liabilities
         likely to be incurred by it in the making of such investigation is, in
         the opinion of the Trustee, not


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         reasonably assured to the Trustee by the security afforded to it by the
         terms of this Agreement, the Trustee may require reasonable indemnity
         against such cost, expense or liability as a condition to such
         proceeding. The reasonable expense of every such examination shall be
         paid by the Master Servicer or, if paid by the Trustee, shall be
         reimbursed by the Master Servicer upon demand. Nothing in this clause
         (v) shall derogate from the obligation of the Master Servicer to
         observe any applicable law prohibiting disclosure of information
         regarding the Mortgagors;

                  (vi) the Trustee shall not be accountable, shall have no
         liability and makes no representation as to any acts or omissions
         hereunder of the Master Servicer until such time as the Trustee may be
         required to act as Master Servicer pursuant to Section 7.02;

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

                  (viii) the right of the Trustee to perform any discretionary
         act enumerated in this Agreement shall not be construed as a duty, and
         the Trustee shall not be answerable for other than its negligence or
         willful misconduct in the performance of such act.

         Section 8.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.

         The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Master Servicer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document, or of MERS or the MERS(R) System. The Trustee
shall not be accountable for the use or application by the Master Servicer, or
for the use or application of any funds paid to the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer. The Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Mortgage Loan, or the perfection and priority of any
Mortgage or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust or its ability to generate the payments
to be distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Master Servicer pursuant to Section
7.02); the validity of the assignment of any Mortgage Loan to the Trustee or of
any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.02); the
compliance by the Depositor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any noncompliance therewith or any breach
thereof, any investment of monies by or at the direction of the Master Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to


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Section 7.02), any Sub-Servicer or any Mortgagor, any action of the Master
Servicer (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 7.02), or any Sub-Servicer taken in the name of the
Trustee; the failure of the Master Servicer or any Sub-Servicer to act or
perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 7.02); provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement. The
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder (unless
the Trustee shall have become the successor master servicer).

         Section 8.04 TRUSTEE MAY OWN CERTIFICATES.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the Master
Servicer, the Depositor or their Affiliates.

         Section 8.05 MASTER SERVICER TO PAY TRUSTEE EXPENSES; TRUSTEE FEES.

         On each Distribution Date, the Trustee shall be entitled to withdraw
from the Distribution Account as compensation hereunder the Trustee Fees. The
Master Servicer will pay or reimburse the Trustee (or, if the Master Servicer
does not fulfill its obligations hereunder, the Trust Fund will reimburse
pursuant to Section 3.11(b)(ii) herein) within 30 days upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of the Trustee hereunder. In addition, the Master Servicer
covenants and agrees to indemnify the Trustee (or, if the Master Servicer does
not fulfill its obligations hereunder within 30 days upon the Trustee's request,
the Trust Fund will indemnify pursuant to Section 3.11(b)(ii) herein) and its
officers, directors, employees and agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of obligations
and duties hereunder. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special, indirect
or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified, by the
Trust Fund and held harmless against any loss, liability or expense (not
including expenses, disbursements and advances incurred or made by the Trustee,
including the compensation and the expenses and disbursements of its agents and
its counsel, in the ordinary course of the Trustee's performance of its regular
duties in accordance with the provisions of this Agreement) incurred by the
Trustee or such party arising out of or in connection with the acceptance or
administration of its duties under this Agreement, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance by the Trustee of its duties under this Agreement
or by reason of the reckless disregard of the Trustee's obligations and duties
under


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this Agreement. This section shall survive termination of this Agreement or the
resignation or removal of any Trustee hereunder.

         Section 8.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.

         The Trustee hereunder shall be a corporation or a national banking
association, and duly organized and validly existing under the laws of the
United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and a minimum long-term debt rating of Baa3 by Moody's
Investors Service, Inc. and a short-term rating of at least A-1 by S&P and A by
Fitch, and subject to supervision or examination by federal or state authority.
If such entity publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 8.06, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.06, 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 trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer and the Rating Agency. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and having accepted appointment within 60 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.

         If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee. If the Depositor or the Master Servicer
removes the Trustee under the authority of the immediately preceding sentence,
the Depositor shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.

         The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Master Servicer, the
Depositor and the Trustee; the Depositor shall thereupon use its best efforts to
appoint a successor Trustee in accordance with this Section.



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

         No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of 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 Regular Certificates
by either Rating Agency, as evidenced by a letter from the Rating Agency.

         Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment of
a successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to the Rating Agency.

         Section 8.09 MERGER OR CONSOLIDATION OF TRUSTEE.

         Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, 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 of this Agreement, at anytime, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Master Servicer and the Trustee may consider necessary
or desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Master Servicer. If the Master Servicer shall not have
joined in such appointment within 15 days after the receipt


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<PAGE>

by it of a request so to do, or in the case a Master Servicer Event of
Termination shall have occurred and be continuing, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor Trustee under
Section 8.06, and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required under Section 8.08. The Master
Servicer shall be responsible for the fees of any co-trustee or separate trustee
appointed hereunder.

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

                  (i) 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 (it being understood that such separate trustee or
         co-trustee is not authorized to act separately without the Trustee
         joining in such act), except to the extent that under any law of any
         jurisdiction in which any particular act or acts are to be performed
         (whether as Trustee hereunder or as successor to the 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 the Trust or any portion
         thereof in any such jurisdiction) shall be exercised and performed
         singly by such separate trustee or co-trustee, but solely at the
         direction of the Trustee;

                  (ii) no trustee hereunder shall be held personally liable by
         reason of any act or omission of any other trustee hereunder; and

                  (iii) the Master Servicer and the Trustee, acting jointly may
         at any time accept the resignation of or remove any separate trustee or
         co-trustee except that following the occurrence of a Master Servicer
         Event of Termination, the Trustee acting alone may accept the
         resignation or remove any separate trustee or co-trustee.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the 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 trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Rating Agency and the Master Servicer.

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



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         Section 8.11 LIMITATION OF LIABILITY.

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

         Section 8.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.

         (a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.

         (b) The Trustee shall afford the Depositor, the Master Servicer and
each Certificateholder upon reasonable notice during normal business hours,
access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. The Trustee shall cooperate fully with the Master Servicer, the
Depositor and such Certificateholder and shall make available to the Master
Servicer, the Depositor and such Certificateholder for review and copying at the
expense of the party requesting such copies, such books, documents or records as
may be requested with respect to the Trustee's duties hereunder. The Depositor,
the Master Servicer and the Certificateholders shall not have any responsibility
or liability for any action or failure to act by the Trustee and are not
obligated to supervise the performance of the Trustee under this Agreement or
otherwise.

         Section 8.13 SUITS FOR ENFORCEMENT.

         In case a Master Servicer Event of Termination or other default by the
Master Servicer or the Depositor hereunder shall occur and be continuing, the
Trustee may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, and subject
to the foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.

         Section 8.14 WAIVER OF BOND REQUIREMENT.

         The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.


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         Section 8.15 WAIVER OF INVENTORY. ACCOUNTING AND APPRAISAL REQUIREMENT.

         The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.

         Section 8.16 RIGHT OF TRUSTEE IN CAPACITY OF CERTIFICATE REGISTRAR OR
                      PAYING AGENT.

         In the event that the Trustee is also acting in the capacity of Paying
Agent or Certificate Registrar hereunder, the rights, protections, indemnities
and immunities afforded to the Trustee pursuant to this Article VIII shall also
be afforded to the Trustee in its capacity as Paying Agent or Certificate
Registrar.

         Section 8.17 PERIODIC FILINGS.

         The Trustee shall, on behalf of the Trust Fund, prepare, sign (as
trustee for the Trust Fund) and cause to be filed with the Commission on a
timely basis any periodic reports required to be filed under the provisions of
the Exchange Act, and the rules and regulations of the Commission thereunder;
provided, however, that any annual report of the Depositor on Form 10-K shall be
signed by the Chief Executive Officer of the Master Servicer on behalf of the
Depositor and in respect of the Trust Fund. The Trustee shall provide copies of
all such reports to the Depositor for approval prior to filing. In connection
with the preparation and filing of such periodic reports, the Depositor and the
Master Servicer shall timely provide to the Trustee all material information
available to them which is required to be included in such reports. Prior to
January 30 of the first year in which the Trustee is able to do so under
applicable law, the Trustee shall file a Form 15 Suspension Notification with
respect to the Trust Fund. Any Form 10-K filed with the Commission in connection
with this Section 8.17 shall include a certification, signed by the Chief
Executive Officer of the Master Servicer, in the form attached as Exhibit M
hereto or such other form as may be required or permitted by the Commission (the
"Form 10-K Certification"), in compliance with Rule 13a-14 and 15d-14 under the
Exchange Act and any additional directives of the Commission. In connection with
the Form 10-K Certification, the Trustee shall provide the Master Servicer with
a back-up certification substantially in the form attached hereto as Exhibit N.



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                                   ARTICLE IX

                              REMIC ADMINISTRATION

         Section 9.01 REMIC ADMINISTRATION.

         (a) The Trustee shall make elections to treat the Trust Fund as two
REMICs 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 or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
the purposes of the REMIC elections in respect of the Trust Fund, the REMIC I
Regular Interests shall be designated as the "regular interests" in REMIC I, the
Class R-I Certificates shall be designated as the sole class of "residual
interest" in REMIC I, the Regular Certificates (other than the Class A-6
Certificates), the Class A-6A Component, the Class A-6B Component and the Class
A-6C Component shall be designated as the "regular interests" in REMIC II, and
the Class R-II Certificates shall be designated as the sole class of "residual
interest" in REMIC II. The Class A-6 Certificates shall represent ownership of
the Class A-6A Component, the Class A-6B Component and the Class A-6C Component.
The Master Servicer and the Trustee shall not permit the creation of any
"interests" (within the meaning of Section 860G of the Code) in any REMIC other
than the Regular Certificates (other than the Class A-6 Certificates), the Class
A-6A Component, the Class A-6B Component, the Class A-6C Component and the Class
R Certificates. Within 30 days after the Closing Date, the Trustee shall prepare
and file with the Internal Revenue Service Form 8811, "Information Return for
Real Estate Mortgage Investment Conduits (REMIC) and Issuers of Collateralized
Debt Obligations" for each REMIC.

         The Trustee will apply for an Employee Identification Number from the
IRS via form SS-4 or any other acceptable method for all tax entities.

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

         (c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of the Trust Fund
other than the expense of obtaining any tax related Opinion of Counsel except as
specified herein and except that the Trustee shall be entitled to be reimbursed
from the Collection Account for any professional fees and expenses related to
any non-routine audits or any administrative or judicial proceedings that do not
result from any breach of its tax duties under this Section 9.01. The Trustee,
as agent for the Trust Fund's Tax Matters Person, shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving the Trust Fund
and (ii) represent the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. By their acceptance thereof, the holder of the largest
Percentage Interest of the Residual Certificates of each REMIC shall be
designated as the Tax Matters Person (as defined in the REMIC Provisions) 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 each REMIC.

         (d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by


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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 IX.

         (e) The Trustee shall perform on behalf of the Trust Fund all reporting
and other tax compliance duties that are the responsibility of the Trust Fund
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, at such Transferor's expense, 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 and (iii) to the Internal Revenue Service the name, title,
address and telephone number of the person who will serve as the representative
of the Trust Fund. 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.

         (f) To the extent that the affairs of the Trust Fund are within its
control and the scope of its specific responsibilities under this Agreement, the
Trustee shall take such action and shall cause the Trust Fund created hereunder
to take such action as shall be necessary to create or maintain the status
thereof as two REMICs under the REMIC Provisions (and the Master Servicer shall
assist it, to the extent reasonably requested by it). The Trustee shall not
knowingly 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 the
Trust Fund as two REMICs or (ii) result in the imposition of a tax upon the
Trust Fund (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code) (either such event, an "Adverse
REMIC Event") unless the Trustee has received an Opinion of Counsel, addressed
to the Trustee (at the expense of the party seeking to take such action but in
no event at the expense of the Trustee) to the effect that the contemplated
action will not, with respect to the Trust Fund created hereunder, 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. In addition, prior to taking any action with respect to the Trust
Fund or the assets of the Trust Fund, or causing the Trust Fund to take any
action, which is not contemplated under the terms of this Agreement, the Master
Servicer will consult with counsel with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to the Trust Fund, and the
Master Servicer shall not take any such action or cause the Trust Fund to take
any such action as to which counsel has advised it in writing that an Adverse
REMIC


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Event could occur. 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.

         (g) In the event that any tax is imposed on "prohibited transactions"
of the Trust Fund created hereunder as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of either REMIC as defined
in Section 860G(c) of the Code, on any contributions to the Trust Fund 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 9.03 hereof, if
such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article IX, (ii) to the Master Servicer pursuant to
Section 9.03 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 IX,
or otherwise, (iii) to the Master Servicer as provided in Section 3.05 and (iv)
against amounts on deposit in the Distribution Account and shall be paid by
withdrawal therefrom to the extent not required to be paid by the Master
Servicer or the Trustee pursuant to another provision of this Agreement.

         (h) On or before April 15 of each calendar year, commencing April 15,
2006, the Trustee shall deliver to the Master Servicer and the Rating Agency a
Certificate from a Responsible Officer of the Trustee stating (without regard to
any action taken by any party other than the Trustee) the Trustee's compliance
with this Article IX.

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

         (j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the Trust Fund other than in connection with any
Eligible Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel (which shall be at the
expense of the party requesting to make such contribution and not at the expense
of the Trustee) to the effect that the inclusion of such assets in the Trust
Fund will not cause the Trust Fund to fail to qualify as two REMICs at any time
that any Certificates are outstanding or subject the Trust Fund 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 the Trust Fund will receive a fee or other compensation for
services nor knowingly permit the Trust Fund 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 9.02 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 the Trust Fund, (iii) the termination of the
Trust Fund pursuant to Article X 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


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

         Section 9.03 MASTER SERVICER AND TRUSTEE INDEMNIFICATION.

         (a) The Trustee agrees to indemnify the Trust Fund, the Depositor, and
the Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article IX, subject, however, to the provision of
Sections 8.01 and 8.02 of this Agreement.

         (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 IX.


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                                   ARTICLE X

                                   TERMINATION

         Section 10.01 TERMINATION.

         (a) The respective obligations and responsibilities of the Master
Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Master Servicer to send
certain notices as hereinafter set forth) shall terminate upon notice to the
Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balance of each Class of Certificates has been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
and (iii) the optional purchase by the Master Servicer of the Mortgage Loans as
described below. Notwithstanding the foregoing, 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's, living on the date hereof.

         The Master Servicer may, at its option, terminate this Agreement on any
date on which the Loan Balance is less than 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date or by purchasing,
on the next succeeding Distribution Date, all of the outstanding Mortgage Loans
and REO Properties at a price equal to the sum of the outstanding Stated
Principal Balance of the Mortgage Loans (or the fair market value of the related
underlying Mortgaged Property with respect to any REO Properties, if such fair
market value is less than such outstanding Stated Principal Balance) and accrued
and unpaid interest thereon at the weighted average of the Loan Rates through
the end of the Due Period preceding the final Distribution Date plus
unreimbursed Servicing Advances, Advances and any unpaid Servicing Fees
allocable to such Mortgage Loans and REO Properties (the "Termination Price").
The Termination Price paid by the Master Servicer shall also include any amounts
owed by PHH Mortgage pursuant to the last paragraph of Section 3.2(a) of the
Mortgage Loan Purchase Agreement in respect of any liability, penalty or expense
that resulted from a breach of the representation and warranty set forth in
clause (xlvi) of such Section, that remain unpaid on the date of such purchase.

         In connection with any such purchase pursuant to the preceding
paragraph, the Master Servicer shall deposit in the Distribution Account all
amounts then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Master Servicer pursuant to Section 3.10), which deposit shall
be deemed to have occurred immediately preceding such purchase.

         Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price and the delivery of an opinion of counsel that such
termination is a "qualified liquidation" under Section 860F of the Code.

         (b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be


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given promptly by the Trustee upon the Trustee receiving notice of such date
from the Master Servicer, by letter to the Certificateholders mailed not earlier
than the 15th day and not later than the 25th day of the month next preceding
the month of such final distribution specifying (1) the Distribution Date upon
which final distribution of the Certificates will be made upon presentation and
surrender of such Certificates at the office or agency of the Trustee therein
designated, (2) the amount of any such final distribution and (3) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.

         (c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holder of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Section 4.01 for such
Distribution Date.

         (d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate servicing account for
the benefit of such Certificateholders, and the Master Servicer (if the Master
Servicer has exercised its right to purchase the Mortgage Loans) or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders, to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within nine months after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto, and the Trustee upon
transfer of such funds shall be discharged of any responsibility for such funds,
and the Certificateholders shall look to the Class R Certificateholders for
payment.

         Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS.

         (a) In the event that the Master Servicer exercises its purchase option
as provided in Section 10.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or (ii) cause the Trust Fund constituting part of the
Trust Fund to fail to qualify as two REMICs at any time that any Certificates
are outstanding:

                  (i) Within 90 days prior to the final Distribution Date, the
         Trustee shall adopt and sign a plan of complete liquidation of the
         Trust Fund meeting the requirements of a "qualified liquidation" under
         Section 860F of the Code and any regulations thereunder;

                  (ii) At or after the time of adoption of such a plan of
         complete liquidation and at or prior to the final Distribution Date,
         the Trustee shall sell all of the assets of the Trust to the Master
         Servicer for cash pursuant to the terms of the plan of complete
         liquidation; and



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                  (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 (A) to the Holders of each of the Class A
         Certificates and Class B Certificates, an amount equal to the sum of
         the related Certificate Principal Balance and one month's interest
         thereon at the applicable Pass-Through Rate, and (B) to the Class R
         Certificateholders, all cash on hand after such payment to the Class A
         Certificateholders and Class B Certificateholders (other than cash
         retained to meet claims) and the Trust shall terminate at such time.

         (b) By their acceptance of Certificates, the Holder thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate and (ii) to take
such other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.



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                                   ARTICLE XI

                                   [RESERVED]




                                      126
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                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         Section 12.01 AMENDMENT.

         This Agreement may be amended from time to time by the Depositor, the
Master Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein or (iii) to make any other provisions with respect to matters
or questions arising under this Agreement, which shall not be inconsistent with
the provisions of this Agreement; provided, however, that any such action listed
in clause (i) through (iii) above shall not adversely affect in any respect the
interests of any Certificateholder, as evidenced by (i) notice in writing to the
Depositor, the Master Servicer and the Trustee from the Rating Agency that such
action will not result in the reduction or withdrawal of the rating of any
outstanding Class of Certificates with respect to which it is a Rating Agency,
or (ii) an Opinion of Counsel delivered to the Master Servicer and the Trustee.

         In addition, this Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding. Upon approval
of an amendment, a copy of such amendment shall be sent to the Rating Agency.
Prior to the execution of any amendment to this Agreement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel (at the expense of the
Person seeking such amendment) stating that the execution of such amendment is
authorized or permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.

         Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a federal tax on the Trust Fund pursuant to the
REMIC Provisions or cause the Trust Fund constituting part of the Trust to fail
to qualify as two REMICs at any time that any Certificates are outstanding and
that the amendment is being made in accordance with the terms hereof.

         Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Master Servicer (but in no event at the expense of the Trustee),
otherwise at the expense of the Trust, a copy of such


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amendment and the Opinion of Counsel referred to in the immediately preceding
paragraph to the Master Servicer and the Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment;
instead 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 Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this 11.01 Section that affects its rights, duties and
immunities under this Agreement or otherwise.

         Section 12.02 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 12.03 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 hens to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the 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


                                      128
<PAGE>

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 12.04 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. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the light to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.

         Section 12.05 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, or by express delivery service, to (a) in the
case of the Sellers: (i) PHH Mortgage Corporation, 3000 Leadenhall Road, Mt.
Laurel, New Jersey 08054 or (ii) Bishop's Gate Residential Mortgage Trust, c/o
PHH Mortgage Corporation, 3000 Leadenhall Road, Mt. Laurel, New Jersey 08054, or
such other address or telecopy number as may be furnished to the Master Servicer
and the Trustee in writing by either Seller; (b) in the case of the Trustee:
Citibank, N.A., 388 Greenwich Street, 14th Floor, New York, New York 10013,
Attention: PHHMC Series 2005-2, or such other address as may hereafter be
furnished to the Depositor, the Sellers and the Master Servicer in writing by
the Trustee; (c) in the case of the Depositor: PHH Mortgage Capital LLC, 3000
Leadenhall Road, Mail Stop LGL, Mt. Laurel, New Jersey 08054, Attention: General
Counsel, or such other address or telecopy number as may be furnished to the
Sellers, the Master Servicer and the Trustee in writing by the Depositor; (d) in
the case of the Master Servicer: PHH Mortgage Corporation, 3000 Leadenhall Road,
Mail Stop LGL, Mt. Laurel, New Jersey 08054, or such other address as maybe
furnished to the Sellers, the Depositor and the Trustee in writing by the Master
Servicer; and (e) in the case of Fitch, Fitch Ratings, One State Street Plaza,
New York, New York 10004. 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


                                      129
<PAGE>

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 12.06 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 12.07 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 12.08 NOTICE TO THE RATING AGENCY.

         (a) Each of the Trustee and the Master Servicer shall be obligated to
use its best reasonable efforts promptly to provide notice to the Rating Agency
with respect to each of the following of which a Responsible Officer of the
Trustee or Master Servicer, as the case may be, has actual knowledge:

                  (i) any material change or amendment to this Agreement;

                  (ii) the occurrence of any Master Servicer Event of
         Termination that has not been cured or waived;

                  (iii) the resignation or termination of the Master Servicer or
         the Trustee;

                  (iv) the final payment to Holders of the Certificates of any
         Class;

                  (v) any change in the location of any Account; and

                  (vi) if the Trustee is acting as successor master servicer
         pursuant to Section 7.02 hereof, any event that would result in the
         inability of the Trustee to make Advances.

         (b) In addition, (i) the Trustee shall promptly furnish to the Rating
Agency copies of each Statement to Certificateholders described in Section 4.06
hereof; and

                  (i) the Master Servicer shall promptly furnish to the Rating
         Agency copies of the following:

                           (A) each annual statement as to compliance described
                  in Section 3.19 hereof;



                                      130
<PAGE>

                           (B) each annual independent public accountants'
                  servicing report described in Section 3.20 hereof; and

                           (C) each notice delivered pursuant to Section 7.01
                  (a) hereof which relates to the fact that the Master Servicer
                  has not made an Advance.

         Any such notice pursuant to this Section 11.08 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 Fitch
Ratings, One State Street Plaza, New York, New York 10004.

         Section 12.09 FURTHER ASSURANCES.

         Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.

         Section 12.10 BENEFITS OF AGREEMENT.

         Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.

         Section 12.11 ACTS OF CERTIFICATEHOLDERS.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Master
Servicer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust, if made in the manner provided in this Section 12.11.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.

         (c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in


                                      131

<PAGE>

lieu thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Trust in reliance thereon, whether or not notation of such action
is made upon such Certificate.


                                      132
<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.

                                      PHH MORTGAGE CAPITAL LLC, as Depositor


                                      By: /s/ Richard Bradfield
                                          --------------------------------------
                                      Name:   Richard Bradfield
                                      Title:  Senior Vice President


                                      PHH MORTGAGE CORPORATION,
                                      as Master Servicer


                                      By: /s/ Richard Bradfield
                                          --------------------------------------
                                      Name:   Richard Bradfield
                                      Title:  Senior Vice President


                                      CITIBANK, N.A., as Trustee


                                      By: /s/ Kristen Driscoll
                                          --------------------------------------
                                      Name:   Kristen Driscoll
                                      Title:  Vice President



                                      133
<PAGE>



STATE OF NEW JERSEY     )
                        ) ss.:
COUNTY OF BURLINGTON    )

         On the 29th day of March, 2005 before me, a notary public in and for
said State, personally appeared Richard Bradfield known to me to be a Senior
Vice President of PHH Mortgage Capital LLC, a Delaware limited liability company
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said limited liability company, and acknowledged to me
that such limited liability company 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


                                              ___________________________


                                      134
<PAGE>



STATE OF NEW JERSEY     )
                        )ss.:
COUNTY OF BURLINGTON    )

         On the 29th day of March, 2005 before me, a notary public in and for
said State, personally appeared Richard Bradfield known to me to be a Senior
Vice President of PHH Mortgage Corporation, a New Jersey corporation, that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said limited liability company, and acknowledged to me
that such limited liability company 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


                                              ___________________________



                                      135
<PAGE>



STATE OF NEW YORK       )
                        )ss.:
COUNTY OF NEW YORK      )

         On the 29th day of March, 2005 before me, a notary public in and for
said State, personally appeared Kristen Driscoll known to me to be a Vice
President of Citibank, N.A., a corporation that executed the within instrument,
and also known to me to be the person who executed it on behalf of said limited
liability company, and acknowledged to me that such limited liability company
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


                                              ___________________________


                                      136

<PAGE>

                                    EXHIBIT A

                           FORM OF CLASS A CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.



<PAGE>




PHHMC Mortgage Pass-Through                Aggregate Certificate Principal
Certificates, Series 2005-2, Class A-__    Balance of Class  A-__  Certificates
                                           as of the Issue Date: $______________

Pass-Through Rate:
Variable
                                           Denomination:
Date of Agreement and Cut-off Date:        $______________
March 1, 2005
                                           Master Servicer:
                                           PHH Mortgage Corporation

First Distribution Date: April 18, 2005    Trustee: Citibank, N.A.

                                           Issue Date: March 29, 2005

No. _                                      CUSIP: ___________

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

         evidencing a beneficial ownership interest in a Trust Fund (the "Trust
         Fund") consisting primarily of a pool of conventional, one- to
         four-family, fixed-rate, first lien mortgage loans (the "Mortgage
         Loans") formed and sold by

                            PHH MORTGAGE CAPITAL LLC

             PHHMC MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-2

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN PHH
         MORTGAGE CAPITAL LLC, THE MASTER SERVICER, THE TRUSTEE OR ANY OF THEIR
         RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
         MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
         UNITED STATES.

                  This certifies that __________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-_ Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-_ Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among PHH


                                      A-2
<PAGE>

Mortgage Capital LLC (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement), the Master Servicer and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, distributions will be made on
the 18th day of each month or, if such 18th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-_ Certificates on such Distribution
Date pursuant to the Agreement.

         All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-_ Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-_ Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon the presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

         This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the related Mortgage Loans, all as more specifically
set forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Holders of the Certificates,
such purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.

         The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66%, in some cases 100%, of the Voting
Rights.


                                      A-3
<PAGE>

Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

         As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee 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 evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

         The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

         The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the Distribution Date on which the Certificate Principal Balance of each
Class of Certificates has been reduced to zero, (ii) the final payment (or any
advance with respect thereto) on or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and (iii) the optional purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all the Mortgage Loans and all property acquired in
respect of such Mortgage Loans remaining therein. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from the
Trust Fund all the related Mortgage Loans and all property acquired in respect
of any related Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the


                                      A-4
<PAGE>

aggregate Loan Balance of the related Mortgage Loans at the time of purchase
being less than 10% of the aggregate principal balance of the related Mortgage
Loans as of the Cut-off Date.

         The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

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



                                      A-5
<PAGE>


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

Dated: March 29, 2005

                                 CITIBANK, N.A.
                                 as Trustee


                                 By:   _____________________________
                                       Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

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

                                 CITIBANK, N.A.
                                 as Certificate Registrar

                                 By:   _____________________________
                                       Authorized Officer


<PAGE>



                                  ABBREVIATIONS
                                  -------------

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT-      CUSTODIAN
TEN ENT - as tenants by the entireties                         (Cust)   (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                           to Minors Act
          of survivorship and not as                         ___________________
          tenants in common                                        (State)

                  Additional abbreviations may also be used though not in the
above list.



                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

         I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed



<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.



<PAGE>

                                    EXHIBIT B

                                   (RESERVED)





                                       B-1

<PAGE>

                                   EXHIBIT C-1

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
         ("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
         AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
         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"), OR THE
         CODE WILL BE REGISTERED EXCEPT IN ACCORDANCE WITH SECTION 5.02(E) OF
         THE AGREEMENT.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
         MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
         TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
         POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
         FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
         INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
         THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
         FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
         IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
         ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
         PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
         HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN
         AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH
         TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II)
         SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
         FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
         REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
         DISPOSITION OF THIS CERTIFICATE TO A


                                     C-1-1
<PAGE>

         DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION,
         SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT
         WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
         CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
         TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
         THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE CONSENTED
         TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION
         5.02(F) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
         DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.



                                     C-1-2
<PAGE>


Certificate No. ___

PHHMC Mortgage Pass-Through                 Percentage Interest: [___]%
Certificates, Series 2005-2,Class R-_

Pass-Through Rate: Variable                 Master Servicer:
                                            PHH Mortgage Corporation

Date of Agreement and Cut-off Date:
March 1, 2005                               Trustee: Citibank, N.A.

First Distribution Date: April 18, 2005     Issue Date: March 29, 2005

No. _                                       CUSIP: ______________

                        MORTGAGE PASS-THROUGH CERTIFICATE

         evidencing a beneficial ownership interest in a Trust Fund (the "Trust
         Fund") consisting primarily of a pool of conventional, one- to
         four-family, fixed-rate, first lien mortgage loans (the "Mortgage
         Loans") formed and sold by

                            PHH MORTGAGE CAPITAL LLC

             PHHMC MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-2

                  THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
                  INTEREST IN PHH MORTGAGE CAPITAL LLC, THE MASTER SERVICER, THE
                  TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
                  CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED
                  BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ___________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-_
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-_ Certificates in The Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among PHH Mortgage Capital LLC (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.



                                     C-1-3
<PAGE>

                  Pursuant to the terms of the Agreement, distributions will be
made on the 18th day of each month or, if such 18th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-_ Certificates on such Distribution
Date pursuant to the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66%, in some cases 100%, of the Voting
Rights. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee 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 evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are


                                     C-1-4
<PAGE>

exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

                  No 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(e) of the Agreement.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-_ Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a pro rata share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-_ Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.

                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the Distribution Date on which the Certificate Principal Balance of each
Class of Certificates has been reduced to zero, (ii) the final payment (or any
advance with respect thereto) on or other liquidation of the last Mortgage Loan
remaining in The


                                     C-1-5
<PAGE>

Trust Fund and (iii) the optional purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from The Trust Fund
of all the Mortgage Loans and all property acquired in respect of such Mortgage
Loans remaining therein. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the related
Mortgage Loans and all property acquired in respect of any related Mortgage Loan
remaining therein at a price determined as provided in the Agreement. The
exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Loan Balance of the
related Mortgage Loans at the time of purchase being less than 10% of the
aggregate principal balance of the related Mortgage Loans as of the Cut-off
Date.

         The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

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



                                     C-1-6
<PAGE>


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

Dated: March 29, 2005

                                 CITIBANK, N.A.
                                 as Trustee


                                 By:   _____________________________
                                       Authorized Officer

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

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

                                 CITIBANK, N.A.
                                 as Certificate Registrar

                                 By:   _____________________________
                                       Authorized Officer


<PAGE>






                                  ABBREVIATIONS
                                  -------------

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT-      CUSTODIAN
TEN ENT - as tenants by the entireties                         (Cust)   (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                           to Minors Act
          of survivorship and not as                         ___________________
          tenants in common                                        (State)

                  Additional abbreviations may also be used though not in the
above list.



                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

         I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed



<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.


<PAGE>


                                   EXHIBIT C-2

                           FORM OF CLASS B CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

         [[FOR CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES ONLY:] UNLESS
         THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR
         ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
         CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
         OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
         ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
         PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
         IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN.]

         THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR CERTIFICATES, THE
         RESIDUAL CERTIFICATES, [THE CLASS B-1 CERTIFICATES], [THE CLASS B-2
         CERTIFICATES], [THE CLASS B-3 CERTIFICATES], [THE CLASS B-4
         CERTIFICATES] [AND THE CLASS B-5 CERTIFICATES] TO THE EXTENT DESCRIBED
         IN 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"), OR THE
         CODE WILL BE REGISTERED EXCEPT IN ACCORDANCE WITH SECTION 5.02(E) OF
         THE AGREEMENT.

         [[FOR CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES ONLY:]
         NOTWITHSTANDING THE PREVIOUS PARAGRAPH, A CERTIFICATION WILL NOT BE
         REQUIRED WITH RESPECT TO THE TRANSFER OF THIS CERTIFICATE TO A
         DEPOSITORY, OR FOR ANY SUBSEQUENT TRANSFER OF THIS CERTIFICATE FOR SO
         LONG AS THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE. ANY TRANSFEREE OF
         THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
         PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST HEREIN) THAT SUCH
         TRANSFEREE IS EITHER (I) NOT A PLAN INVESTOR OR (II) AN "ACCREDITED
         INVESTOR" WITHIN THE


                                     C-2-1
<PAGE>

         MEANING OF RULE 501(A) PROMULGATED PURSUANT TO THE 1933 ACT.]

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
         AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
         TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
         EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
         AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02(D)
         OF THE AGREEMENT.

         [[FOR CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES ONLY:]
         NOTWITHSTANDING THE PREVIOUS PARAGRAPH, A CERTIFICATION WILL NOT BE
         REQUIRED WITH RESPECT TO THE TRANSFER OF THIS CERTIFICATE TO A
         DEPOSITORY, OR FOR ANY SUBSEQUENT TRANSFER OF THIS CERTIFICATE FOR SO
         LONG AS THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE. ANY TRANSFEREE OF
         THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
         PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST HEREIN) THAT SUCH
         TRANSFEREE IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF
         RULE 144A UNDER THE 1933 ACT.]




                                     C-2-2
<PAGE>


PHHMC Mortgage Pass-Through                  Aggregate Certificate Principal
Certificates, Series 2005-2,Class B-__       Balance of Class B-__
                                             Certificates as of the Issue Date:
                                             $__________

Pass-Through Rate: Variable                  Denomination: $__________

Date of Agreement and Cut-off Date:          Master Servicer:
March 1, 2005                                PHH Mortgage Corporation

First Distribution Date: April 18, 2005
                                             Trustee: Citibank, N.A.

No. 1                                        Issue Date: March 29, 2005

                                             CUSIP: ____________

         DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
         CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
         OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
         LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
         CERTIFICATE.

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                            PHH MORTGAGE CAPITAL LLC

             PHHMC MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-2

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN PHH
         MORTGAGE CAPITAL LLC, THE MASTER SERVICER, THE TRUSTEE OR ANY OF THEIR
         RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
         MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
         UNITED STATES.

                  This certifies that _______________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-__ Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-__ Certificates in the Trust Fund created


                                     C-2-3
<PAGE>

pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among PHH Mortgage Capital LLC (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 18th day of each month or, if such 18th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-__ Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-__ Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class B-__ Certificates, or otherwise by check mailed
by first class mail to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon the presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the


                                     C-2-4
<PAGE>

Agreement at any time by the Depositor, the Master Servicer and the Trustee,
with the consent of the Holders of Certificates entitled to at least 66%, in
some cases 100%, of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee 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 evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, (i) if such transfer is made in reliance upon
Rule 144A under the 1933 Act, the Trustee shall require the transferor to
execute a transferor certificate in substantially the same form attached to the
Agreement as Exhibit F-2 and the transferee to execute an investment letter in
substantially the form attached to the Agreement as Exhibit F-1 or (ii) (A) the
Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached to the Agreement as Exhibit F-2) and the
transferee to execute an investment letter (in substantially the form attached
to the Agreement as Exhibit F-3) 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 and (B) 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. None
of the Depositor, the Certificate Registrar or the Trustee is obligated to
register or qualify the Class of Certificates specified on the face hereof under
the 1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates


                                     C-2-5
<PAGE>

without registration or qualification. Any Holder desiring to effect a transfer
of this Certificate shall be required to indemnify the Trustee, the Depositor,
the Certificate Registrar and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(e) of the Agreement.

                  [[For Class B-1, Class B-2 and Class B-3 Certificates Only:]
Notwithstanding the foregoing, the certifications described in the previous two
paragraphs will not be required with respect to the transfer of this Certificate
to a Depository, or for any subsequent transfer of this Certificate for so long
as this Certificate is a Book-Entry Certificate. Any Transferee of this
Certificate will be deemed to have represented by virtue of its purchase or
holding of this Certificate (or interest herein) that (i) either (a) such
Transferee is not a Plan Investor or (b) such Transferee is an "accredited
investor" within the meaning of Rule 501(a) promulgated pursuant to the 1933 Act
and (ii) such Transferee is a "qualified institutional buyer" within the meaning
of Rule 144A under the 1933 Act.]

                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the Distribution Date on which the Certificate Principal Balance of each
Class of Certificates has been reduced to zero, (ii) the final payment (or any
advance with respect thereto) on or other liquidation of the last Mortgage Loan
remaining in The Trust Fund and (iii) the optional purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from The Trust Fund of all the Mortgage Loans and all property acquired in
respect of such Mortgage Loans remaining therein. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from the
Trust Fund all the related Mortgage Loans and all property acquired in respect
of any related Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Loan
Balance of the related Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the related Mortgage Loans as of the
Cut-off Date.



                                     C-2-6
<PAGE>

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

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



                                     C-2-7
<PAGE>


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

Dated: March 29, 2005

                                 CITIBANK, N.A.
                                 as Trustee


                                 By:   _____________________________
                                       Authorized Officer

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

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

                                 CITIBANK, N.A.
                                 as Certificate Registrar

                                 By:   _____________________________
                                       Authorized Officer


<PAGE>


                                  ABBREVIATIONS
                                  -------------

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT-      CUSTODIAN
TEN ENT - as tenants by the entireties                         (Cust)   (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                           to Minors Act
          of survivorship and not as                         ___________________
          tenants in common                                        (State)

                  Additional abbreviations may also be used though not in the
above list.



                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

         I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed



<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.



<PAGE>



                                    EXHIBIT D

                             MORTGAGE LOAN SCHEDULE

                                (Filed Manually)




                                       D-1


<PAGE>


                                    EXHIBIT E

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      Citibank, N.A.
Attn:    Inventory Control

         Re:  Pooling and Servicing Agreement dated as of March 1, 2005, among
         PHH Mortgage Capital LLC, as Depositor, PHH Mortgage Corporation,
         as Master Servicer and Citibank, N.A., as Trustee

         In connection with the administration of the Mortgage Loans held by you
as Trustee for the Owner pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Trustee's Mortgage File for the Mortgage Loan described below, for the reason
indicated.

MORTGAGE LOAN NUMBER:

MORTGAGOR NAME, ADDRESS & ZIP CODE:

REASON FOR REQUESTING DOCUMENTS (check one):

______    1.    Mortgage Paid in Full

______    2.    Foreclosure

______    3.    Substitution

______    4.    Other Liquidation (Repurchases, etc.)

______    5.    Nonliquidation    Reason: ________________________

Address to which Trustee should
Deliver the Trustee's Mortgage File:                 ________________________

                                                     ________________________
                                                     ________________________

                                            By:      ________________________
                                                     (authorized signer)
                                            Issuer:  _________________________
                                            Address:   ________________________
                                                     ________________________
                                            Date:    ________________________



                                       E-1



<PAGE>



                                   EXHIBIT F-1

                     FORM OF RULE 144A REPRESENTATION LETTER

                                                                 ______ __, 2005

Citibank, N.A.
111 Wall Street, 14th Floor / Zone 3
New York, New York 10005

[Certificate Registrar]
________________________
________________________

       Re:      PHH  Mortgage Capital LLC
                PHHMC Mortgage Pass-Through Certificates, Series 2005-2,
                Class ___, Representing a ___% Class ___ Percentage Interest
                ------------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
         term is defined in Rule 144A ("Rule 144A") under the Securities Act of
         1933 (the "1933 Act") and has completed either of the forms of
         certification to that effect attached hereto as Annex 1 or Annex 2. The
         Transferee is aware that the sale to it is being made in reliance on
         Rule 144A. The Transferee is acquiring the Certificates for its own
         account or for the account of a qualified institutional buyer, and
         understands that such Certificate may be resold, pledged or transferred
         only (i) to a person reasonably believed to be a qualified
         institutional buyer that purchases for its own account or for the
         account of a qualified institutional buyer to whom notice is given that
         the resale, pledge or transfer is being made in reliance on Rule 144A,
         or (ii) pursuant to another exemption from registration under the 1933
         Act.

                  2. The Transferee has been furnished with all information
         regarding (a) the Certificates and distributions thereon, (b) the
         nature, performance and servicing of the Mortgage Loans, (c) the
         Pooling and Servicing Agreement referred to below, and (d) any credit
         enhancement mechanism associated with the Certificates, that it has
         requested.


                                      F-1-1


<PAGE>



                  All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of March 1, 2005, among PHH Mortgage Capital LLC as
Depositor, PHH Mortgage Corporation as Master Servicer and Citibank, N.A. as
Trustee, pursuant to which the Certificates were issued.

                                  [TRANSFEREE]

                                  By:      ________________________
                                  Name:    ______________________
                                  Title:   ________________________



                                     F-1-2
<PAGE>


                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Citibank, N.A., as Trustee and Certificate
Registrar, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.

         ___      CORPORATION, ETC. The Transferee is a corporation (other than
                  a bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or any
                  organization described in Section 501(c)(3) of the Internal
                  Revenue Code of 1986.

         ___      BANK. The Transferee (a) is a national bank or banking
                  institution organized under the laws of any State, territory
                  or the District of Columbia, the business of which is
                  substantially confined to banking and is supervised by the
                  State or territorial banking commission or similar official or
                  is a foreign bank or equivalent institution, and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, A COPY OF WHICH IS
                  ATTACHED HERETO.

         ___      SAVINGS AND LOAN. The Transferee (a) is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar

---------------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.


                                     F-1-3
<PAGE>


                  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 Transferee is a dealer registered pursuant
                  to Section 15 of the Securities Exchange Act of 1934.

         ___      INSURANCE COMPANY. The Transferee is an insurance company
                  whose primary and predominant business activity is the writing
                  of insurance or the reinsuring of risks underwritten by
                  insurance companies and which is subject to supervision by the
                  insurance commissioner or a similar official or agency of a
                  State, territory or the District of Columbia.

         ___      STATE OR LOCAL PLAN. The Transferee is a plan established and
                  maintained by a State, its political subdivisions, or any
                  agency or instrumentality of the State or its political
                  subdivisions, for the benefit of its employees.

         ___      ERISA PLAN. The Transferee is an employee benefit plan within
                  the meaning of Title I of the Employee Retirement Income
                  Security Act of 1974.

         ___      INVESTMENT ADVISOR. The Transferee is an investment advisor
                  registered under the Investment Advisers Act of 1940.

                  3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

                  4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.



                                     F-1-4
<PAGE>

                  5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.

         ___      ___      Will the Transferee be purchasing the Certificates
         Yes      No       only for the Transferee's own account?

                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

                  7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

Dated:

                                      _______________________________
                                      Print Name of Transferee

                                      By:    ________________________
                                      Name:  ________________________
                                      Title: ________________________



                                     F-1-5
<PAGE>


                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
           ----------------------------------------------------------

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Citibank, N.A., as Trustee and Certificate
Registrar, with respect to the mortgage pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

____         The Transferee owned $___________________ in securities (other than
             the excluded securities referred to below) as of the end of the
             Transferee's most recent fiscal year (such amount being calculated
             in accordance with Rule 144A).

____         The Transferee is part of a Family of Investment Companies which
             owned in the aggregate $______________ in securities (other than
             the excluded securities referred to below) as of the end of the
             Transferee's most recent fiscal year (such amount being calculated
             in accordance with Rule 144A).

                  3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).



                                     F-1-6
<PAGE>


                  4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

                  5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

                  6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                      ____________________________________
                                      Print Name of Transferee or Advisor

                                      By:    _____________________________
                                      Name:  _____________________________
                                      Title: _____________________________


                                      IF AN ADVISER:


                                      ____________________________________
                                      Print Name of Transferee


                                     F-1-7
<PAGE>



                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                  1. I am an executive officer of the Purchaser.

                  2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933, as
amended.

                  3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.

Name of Purchaser  ___________________________________________________________

By:      (Signature)__________________________________________________________

Name of Signatory ____________________________________________________________

Title ________________________________________________________________________

Date of this certificate _____________________________________________________

Date of information provided in paragraph 3 __________________________________



                                     F-1-8
<PAGE>


                                   EXHIBIT F-2

                         FORM OF TRANSFEROR CERTIFICATE

                                                                  _____ __, 2005


Citibank, N.A.
111 Wall Street, 14th Floor / Zone 3
New York, New York 10005

[Certificate Registrar]
________________________
________________________

            Re:     PHH Mortgage Capital LLC,
                    PHHMC Mortgage Pass-Through Certificates, Series 2005-2,
                    Class ___, Representing a ___% Class ___ Percentage Interest
                    ------------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 2005, among PHH Mortgage Capital LLC as Depositor, PHH Mortgage
Corporation as Master Servicer and Citibank, N.A. as Trustee (the "Pooling and
Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.

         Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.



                                     F-2-1
<PAGE>

                                      Very truly yours,

                                      [Transferor]

                                      By:    ________________________
                                      Name:  ________________________
                                      Title: ________________________




                                     F-2-2
<PAGE>


                                   EXHIBIT F-3

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                                 ______ __, 2005


Citibank, N.A.
111 Wall Street, 14th Floor / Zone 3
New York, New York 10005

[Certificate Registrar]
________________________
________________________

       Re:      PHH Mortgage Capital LLC,
                PHHMC Mortgage Pass-Through Certificates, Series 2005-2,
                Class ___, Representing a ___% Class ___ Percentage Interest
                ------------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferee hereby certifies
as follows:

                  1. The Transferee understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities Act of
1933 (the "1933 Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the Certificates may be
resold only if registered and qualified pursuant to the provisions of the Act or
any state securities law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates and (e) the Certificates
will bear a legend to the foregoing effect.

                  2. The Transferee is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in connection
with any distribution thereof in any manner that would violate the 1933 Act or
any applicable state securities laws.

                  3. The Transferee is (a) a substantial, sophisticated [[For
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates Only:]
institutional] investor having such knowledge and experience in financial and
business matters, and, in particular, in such matters related to securities
similar to the Certificates, such that it is capable of evaluating the merits
and risks of investment in the Certificates, (b) able to bear the economic risks
of such an investment and (c) an "accredited investor" within the meaning of
Rule 501(a) promulgated pursuant to the 1933 Act.

                  4. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage


                                     F-3-1
<PAGE>

Loans, (c) the Pooling and Servicing Agreement referred to below, and (d) any
credit enhancement mechanism associated with the Certificates, that it has
requested.

         5. The Transferee has not and will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicit any offer to buy or to accept
a pledge, disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, (e) take any other action, that (in the case of each of subclauses (a)
through (e) above) would constitute a distribution of the Certificates under the
1933 Act, or would render the disposition of any Certificate a violation of
Section 5 of the 1933 Act or any state securities law or would require
registration or qualification pursuant thereto. The Transferee will not sell or
otherwise transfer any of the Certificates, except in compliance with the
provisions of that certain Pooling and Servicing Agreement, dated as of March 1,
2005, among PHH Mortgage Capital LLC as Depositor, PHH Mortgage Corporation as
Master Servicer and Citibank, N.A. as Trustee (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.

         Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                      Very truly yours,

                                      [Transferee]

                                      By:    ________________________
                                      Name:  ________________________
                                      Title: ________________________


                                     F-3-2
<PAGE>

                                   EXHIBIT F-4

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF ________          )
                           : ss.:
COUNTY OF ________         )

         ________________________ , being duly sworn, deposes, represents and
warrants as follows:

         (i) I am a ______________________ of ____________________________ (the
"Owner") a corporation duly organized and existing under the laws of
______________, the record owner of or ______% Percentage Interest in the PHH
Mortgage Capital LLC, PHHMC Mortgage Pass-Through Certificates, Series 2005-2,
Class R-I Certificates and Class R-II Certificates (together, the "Class R
Certificates"), on behalf of whom I make this affidavit and agreement.
Capitalized terms used but not defined herein have the respective meanings
assigned thereto in the Pooling and Servicing Agreement pursuant to which the
Class R Certificates were issued.

         (ii) The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 200___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.

         (iii) The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after May 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that thetransferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection of tax.



                                     F-4-1
<PAGE>

         (iv) The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity"includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

         (v) The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit in substantially the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

         (vi) The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.

         (vii) The Owner's taxpayer identification number is _________________.

         (viii) The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(f) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(f) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(f)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.

         (ix) The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.

         (x) The Owner anticipates that it will, so long as it holds the Class R
Certificates, have sufficient assets to pay any taxes owed by the holder of such
Class R Certificates, and hereby represents to and for the benefit of the person
from whom it acquired the Class R Certificates that the Owner intends to pay
taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.

         (xi) The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.

         (xii) The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.

         (xiii) The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.



                                     F-4-2
<PAGE>

         (xiv) The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(f) of the Pooling and Servicing Agreement under which
the Class R Certificates were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.

         (xv) The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which represents
and warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee".

         (xvi) The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

         (xvii) (a) The Owner is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or an investment
manager, named fiduciary or a trustee of any such plan, or any other Person
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any such plan; or

                  (b) The Owner will provide the Trustee, the Company and the
Master Servicer with an opinion of counsel acceptable to and in form and
substance satisfactory to such entities to the effect that the purchase of
Certificates is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under ERISA or Section 4975 of the Code
and will not subject the Trustee, the Depositor or the Master Servicer to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the Pooling and
Servicing Agreement.

         In addition, the Owner hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Master Servicer that the
Owner will not transfer such Certificates to any Plan or person unless either
such Plan or person meets the requirements set forth in either (a) or (b) above.



                                     F-4-3
<PAGE>


                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 200___.

                                          [OWNER]


                                          By:    _______________________________
                                          Name:  _______________________________
                                          Title: [Vice] President
ATTEST:

By:      __________________________
Name:    ________________________
Title:   [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
200___.

                                          ________________________________
                                                   Notary Public

                                          County of ______________________
                                          State of _______________________

                                          My Commission expires:


                                     F-4-4
<PAGE>



                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF ________          )
                                    : ss. :
COUNTY OF ________          )

         ________________________, being duly sworn, deposes, represents and
warrants as follows:


         1. I am a ____________________ of _____________________________ (the
"Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.

         2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

         3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

         4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-4. The Owner does not know or believe that
any representation contained therein is false.

         5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

         6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement



                                     F-4-5
<PAGE>


         IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, pursuant to the authority of its Board of Directors, by its
[Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 200___.

                                     [OWNER]


                                     By:    ____________________________________
                                     Name:  ____________________________________
                                     Title: [Vice] President
ATTEST:

By:__________________________
Name:________________________
Title: [Assistant] Secretary

                  Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

                  Subscribed and sworn before me this ____ day of __________,
200___.

                                     __________________________________
                                                Notary Public

                                     County of__________________________________
                                     State of___________________________________


                                     My Commission expires:


                                     F-4-6
<PAGE>

                                   EXHIBIT G-1

                       FORM OF ERISA REPRESENTATION LETTER
                      (CLASS B-4, CLASS B-5 AND CLASS B-6)

                                                                 ______ __, 2005

PHH Mortgage Capital LLC
3000 Leadenhall Road
Mount Laurel, New Jersey 08054

Citibank, N.A.
111 Wall Street, 14th Floor / Zone 3
New York, New York 10005

PHH Mortgage Corporation
3000 Leadenhall Road
Mount Laurel, New Jersey 08054

       Re:      PHH Mortgage Capital LLC
                PHHMC Mortgage Pass-Through Certificates, Series 2005-2, Class
                [B-4][B-5][B-6]
                --------------------------------------------------------------

Ladies and Gentlemen:

         __________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of PHH Mortgage Capital LLC, PHHMC Mortgage
Pass-Through Certificates, Series 2005-2, Class ___ (the "Certificates"), issued
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 2005 among PHH Mortgage Capital LLC as
depositor (the "Depositor"), PHH Mortgage Corporation as master servicer (the
"Master Servicer") and Citibank, 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 and the Master Servicer that the
following statements in either (1), (2) or (3) below are accurate (please mark
the applicable statement with a check (|X|)):

_____ (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




                                      G-1-1
<PAGE>


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 purchase of Certificates is permissible under applicable law, will
not subject the Depositor, the Trustee or the Master Servicer to any obligation
in addition to those undertaken in the Pooling and Servicing Agreement and (i)
the Transferee is an insurance company, (ii) the source of funds used to
purchase such Certificates is an "insurance company general account" (as such
term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60) and
(iii) the conditions set forth in Section III of PTCE 95-60 and all other
applicable conditions of PTCE 95-60 have been satisfied and as a result, the
acquisition and holding of the Certificates will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code; or

_____ (3) The Transferee has provided the Trustee and the Master Servicer with
an Opinion of Counsel, subject to the satisfaction of the Depositor in form and
substance, that purchase of the Certificates (i) is permissible under applicable
law, (ii) will not constitute or result in a non-exempt prohibited transaction
under ERISA or Section 4975 of the Code, and (iii) will not subject the
Depositor, the Trustee or the Master Servicer to any obligation or liability
(including obligations or liabilities arising under ERISA or Section 4975 of the
Code) in addition to those undertaken in the Pooling and Servicing Agreement.

                                       Very truly yours,


                                       ___________________________________

                                       By:      _______________________________
                                       Name:
                                       Title:

                                      G-1-2

<PAGE>


                                   EXHIBIT G-2

                       FORM OF ERISA REPRESENTATION LETTER
                      (CLASS B-1, CLASS B-2 AND CLASS B-3)

                                                                  _____ __, 2005

PHH Mortgage Capital LLC
3000 Leadenhall Road
 Mount Laurel, New Jersey 08054

Citibank, N.A.
111 Wall Street, 14th Floor / Zone 3
New York, New York 10005

PHH Mortgage Corporation
3000 Leadenhall Road
 Mount Laurel, New Jersey 08054

         Re:      PHH Mortgage Capital LLC
                  PHHMC Mortgage Pass-Through Certificates, Series 2005-2, Class
                  [B-1][B-2][B-3]
                  --------------------------------------------------------------

Ladies and Gentlemen:

         __________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of PHH Mortgage Capital LLC, PHHMC Mortgage
Pass-Through Certificates, Series 2005-2, Class ____ (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 2005 among PHH Mortgage Capital LLC as
depositor (the "Depositor"), PHH Mortgage Corporation as master servicer (the
"Master Servicer") and Citibank, 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 and the Master Servicer that the
following statements in either (1) or (2) below are accurate (please mark the
applicable statement with a check (T)):

_____ (1) The Certificates (1) are not being acquired by, and will not be
transferred to, any employee benefit plan with 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")


                                      H-1
<PAGE>

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 is an "accredited investor" as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange Commission under the
Securities Act of 1933 (the "Securities Act") and, so long as the Transferee (or
any transferee of the Transferee's Certificates) is required to obtain from its
transferee a representation regarding compliance with the Securities Act, the
Transferee will require its transferee to make such representation in writing.

                                      Very truly yours,

                                      ___________________________________

                                      By: _______________________________
                                      Name:
                                      Title:




                                      H-2
<PAGE>


                                   EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

                  [Name of Seller], a ______________ corporation (the "Mortgage
Loan Seller"), by its undersigned authorized representative, hereby certifies:

                  Pursuant to the Mortgage Loan Purchase Agreement, dated
_______________, between the Seller [PHH Mortgage Corporation] [Bishop's Gate
Residential Mortgage Trust] and PHH Mortgage Capital LLC (the "Depositor"), the
Seller is granting all of its right, title and interest in and to the Mortgage
Loan identified below to the Depositor. Terms used but not defined herein have
the respective meanings assigned to them in the Mortgage Loan Purchase
Agreement.

Mortgage Loan Number:
Maker:
Original Principal Amount:
Original Mortgage Note Date:
Maturity Date:

                  The Seller is the current owner and holder of the indebtedness
evidenced by the original Mortgage Note.

                  After diligent search, the Seller has been unable to locate
the original Mortgage Note and believes it to be lost or misplaced.

                  A true, complete and correct photocopy of the original
Mortgage Note is attached hereto.

                  If at any time the Seller locates the original Mortgage Note,
the Mortgage Loan Seller shall endorse such original Mortgage Note in the
following form: "Pay to the order of [Name of Trustee], as Trustee for the
registered holders of PHH Mortgage Capital LLC, Mortgage Pass-Through
Certificates, PHHMC Series 2005-2, without recourse," and shall promptly deliver
to the Trustee the original Mortgage Note so endorsed, with all prior and
intervening endorsements showing a complete chain of endorsement from the
originator to the Seller.

                  The Seller hereby indemnifies the Depositor, the Trustee and
the Certificateholders from and against any and all losses, liabilities,
damages, claims or expenses of whatever kind (including without limitation
attorneys' fees and disbursements) arising from or in connection with the
Seller's failure to have delivered the original Mortgage Note (as required under
the Mortgage Loan Purchase Agreement) to the Trustee as designee of the
Depositor, including without limitation any such losses, liabilities, damages,
claims or expenses arising from or in connection with any claim by any third
party who is the holder of such indebtedness by virtue of its possession of such
original Mortgage Note.


                                      H-3
<PAGE>


                  This Lost Note Affidavit shall inure to the benefit of the
Depositor, the Trustee and the Certificateholders and their respective
successors and permitted assigns.

Dated:

                                    [Seller]



                                    By:     ___________________________________
                                    Name:   ___________________________________
                                    Title:  ___________________________________




                                      H-4
<PAGE>

                                   EXHIBIT I-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                              _________ __, 2005

PHH Mortgage Capital LLC
3000 Leadenhall Road
Mount Laurel, New Jersey 08054

PHH Mortgage Corporation
3000 Leadenhall Road
Mount Laurel, New Jersey 08054

         Re:      Pooling and Servicing Agreement, dated as of March 1, 2005,
                  among PHH Mortgage Capital LLC, as depositor, PHH Mortgage
                  Corporation as master servicer and Citibank, N.A., as Trustee,
                  PHHMC Mortgage Pass-Through Certificates, Series 2005-2
                  --------------------------------------------------------------

Ladies and Gentlemen:

                  Attached is the Trustee's preliminary exception report
delivered in accordance with Section 2.02 of the referenced Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"). Capitalized terms
used but not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in the Mortgage File pertaining to
the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or (iii) whether any Mortgage File included any of the documents specified
in Section 2.01 of the Pooling and Servicing Agreement.

                                     CITIBANK, N.A.


                                     By:  _________________________________
                                     Name:
                                     Title:


                                      I-1-1
<PAGE>


                                   EXHIBIT I-2

                       FORM OF TRUSTEE FINAL CERTIFICATION

                                                         _________________, 2005

PHH Mortgage Capital LLC
3000 Leadenhall Road
Mount. Laurel, New Jersey 08054

PHH Mortgage Corporation
3000 Leadenhall Road
Mount Laurel, New Jersey 08054

         Re:      Pooling and Servicing Agreement, dated as of March 1, 2005,
                  among PHH Mortgage Capital LLC, as depositor, PHH Mortgage
                  Corporation as master servicer and Citibank, N.A., as Trustee,
                  PHHMC Mortgage Pass-Through Certificates, Series 2005-2
                  --------------------------------------------------------------


Ladies and Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as noted on
the Schedule of Exceptions attached hereto, for each Mortgage Loan listed on the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto), it has received a complete Mortgage File which includes
the documents required to be included in the Mortgage File as set forth in the
Pooling and Servicing Agreement.

         The undersigned 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 undersigned makes no
representation as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any documents contained in any Mortgage File for any of the
Mortgage Loans listed on the Mortgage Loan Schedule to the Pooling and Servicing
Agreement, (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan or (iii) whether any Mortgage File should include any
flood insurance policy, any rider, addenda, surety or guaranty agreement, power
of attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.



                                     I-2-1
<PAGE>


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

                                      CITIBANK, N.A., as Trustee

                                      By:__________________________________
                                      Name:
                                      Title:




                                     I-2-2
<PAGE>


                                    EXHIBIT J

                        MORTGAGE LOAN PURCHASE AGREEMENT

                  This MORTGAGE LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of March 29, 2005, is made between PHH Mortgage Capital LLC (the
"Purchaser"), PHH Mortgage Corporation ("PHH Mortgage") and Bishop's Gate
Residential Mortgage Trust ("BGRMT," together with PHH Mortgage, the "Sellers"
and individually, each a "Seller").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, the Sellers own the Mortgage Loans indicated on the
Mortgage Loan Schedule attached as Exhibit 1 hereto (the "Mortgage Loans"),
including rights to (a) any property acquired by foreclosure or deed in lieu of
foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the Mortgage Loans;

                  WHEREAS, the parties hereto desire that the Sellers sell the
Mortgage Loans to the Purchaser (other than the servicing rights with respect
thereto), effective as of the Closing Date, and that the Sellers make certain
representations and warranties and undertake certain obligations with respect to
the Mortgage Loans;

                  WHEREAS, pursuant to the terms of a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of March 1, 2005 (the
"Cut-off Date"), among the Purchaser, as depositor, PHH Mortgage Corporation, as
master servicer (the "Master Servicer"), and Citibank, N.A., as trustee (the
"Trustee"), the Purchaser will issue the PHHMC Mortgage Pass-Through
Certificates, Series 2005-2 (the "Certificates");

                  NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:

                                       I.

                                   DEFINITIONS

                  A. DEFINITIONS. For all purposes of this Mortgage Loan
Purchase Agreement, except as otherwise expressly provided herein or unless the
context otherwise requires, capitalized terms not otherwise defined herein shall
have the meanings assigned to such terms in the Pooling and Servicing Agreement.
All other capitalized terms used herein shall have the meanings specified
herein.

                                      II.

                  SALE OF MORTGAGE LOANS AND RELATED PROVISIONS

                  A. SALE OF MORTGAGE LOANS.

                  1. The Sellers, by the execution and delivery of this
Agreement, do hereby sell, and in connection therewith hereby assign, to the
Purchaser, effective as of the Closing



<PAGE>

Date, without recourse but subject to the terms of this Agreement, all of its
right, title and interest in, to and under the Mortgage Loans identified on
Exhibit 1 as of the Closing Date, whether now existing or hereafter acquired and
wherever located, on the Closing Date and as of the Cut-off Date. In addition,
PHH Mortgage hereby assigns to the Purchaser all of its right, title and
interest in and to the Additional Collateral Servicing Agreement with respect to
the Additional Collateral Mortgage Loans, which right, title and interest shall
be assigned by the Purchaser to the Trustee, for the benefit of the
Certificateholders, pursuant to the Pooling and Servicing Agreement.

                  2. In connection with such conveyances by each Seller, the
applicable Seller shall on behalf of the Purchaser deliver to, and deposit with
the Trustee (or the Master Servicer, in which case the Master Servicer shall
hold such documents in trust for the use and benefit of all present and future
Certificateholders until such time as set forth in Section 2.01 of the Pooling
and Servicing Agreement), on or before the Closing Date, the following documents
or instruments with respect to each Mortgage Loan:

                  (i) with respect to each Mortgage Loan, other than a
                  Cooperative Loan:

                           (a) the original Mortgage Note, endorsed "Pay to the
                  order of Citibank, N.A., as Trustee for the registered holders
                  of the PHHMC Mortgage Pass-Through Certificates, Series
                  2005-2, without recourse", or endorsed "Pay to the order of
                  _______ without recourse", and signed in the name of the last
                  named endorsee by an authorized officer together with all
                  prior and intervening endorsements showing a complete chain of
                  endorsement from the originator to the last endorsee;

                           (b) the original Mortgage, noting the presence of the
                  MIN of the Mortgage Loan and language indicating that the
                  Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM
                  Loan, with evidence of recording thereon which have been
                  recorded, with evidence of recording thereon or a copy of the
                  Mortgage certified by the public recording office in which
                  such Mortgage has been recorded;

                           (c) Unless the Mortgage Loan is registered on the
                  MERS(R) System, an original Assignment of the Mortgage (A)
                  executed in the following form "Citibank, N.A., as Trustee for
                  the registered holders of the PHHMC Mortgage Pass-Through
                  Certificates, Series 2005-2, or (B) in the blank, which
                  assignment appears to be in form and substance acceptable for
                  recording;

                           (d) the original recorded Assignment or Assignments
                  of the Mortgage showing a complete chain of assignment from
                  the originator to the Person assigning the Mortgage to the
                  Trustee (or to MERS, if the Mortgage Loan is registered on the
                  MERS(R) System and noting the presence of a MIN) as
                  contemplated by the immediately preceding clause (C), if
                  applicable and only to the extent available to the Depositor
                  with evidence of recording thereon;



                                       2
<PAGE>

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

                           (f) a copy of any guarantee (other than Additional
                  Collateral) executed in connection with the Mortgage Note;

                           (g) the original of any security agreement, chattel
                  mortgage or equivalent document executed in connection with
                  the Mortgage;

                           (h) the original power of attorney, if applicable;
                  and

                           (i) if such Mortgage Loan is a Buydown Mortgage Loan
                  (as shown in the Mortgage Loan Schedule), the original Buydown
                  Agreement or a copy thereof;

                  (ii) in addition, with respect to each Mortgage Loan that is
         an Additional Collateral Mortgage Loan:

                           (a) a copy of the related Mortgage 100(sm) Pledge
                  Agreement or Parent Power Agreement, as applicable; and

                           (b) a copy of the related UCC-1, to the extent that
                  MLCC was required to deliver such UCC-1 to the Master
                  Servicer, and an original form UCC-3, if applicable, to the
                  extent that MLCC was required to deliver such UCC-3 to the
                  Master Servicer; or

                  (iii) with respect to each Mortgage Loan that is a Cooperative
         Loan:

                           (a) the original Mortgage Note, endorsed "Pay to the
                  order of Citibank, N.A., as Trustee for the registered holders
                  of the PHHMC Mortgage Pass-Through Certificates, Series
                  2005-2, without recourse", or endorsed "Pay to the order of
                  _______ without recourse", and signed in the name of the last
                  named endorsee by an authorized officer together with all
                  prior and intervening endorsements showing a complete chain of
                  endorsement from the originator to the last endorsee;

                           (b) the original duly executed assignment of Security
                  Agreement to the Trustee;

                           (c) the acknowledgment copy of the original executed
                  Form UCC-1 (or certified copy thereof) with respect to the
                  Security Agreement, and any required continuation statements;

                           (d) the acknowledgment copy of the original executed
                  Form UCC-3 with respect to the Security Agreement, indicating
                  the Trustee as the assignee of the secured party;



                                       3
<PAGE>

                           (e) the stock certificate representing the
                  Cooperative Assets allocated to the cooperative unit, with a
                  stock power in blank attached;

                           (f) the original collateral assignment of the
                  proprietary lease by Mortgagor to the originator;

                           (g) a copy of the recognition agreement;

                           (h) if applicable and to the extent available, the
                  original intervening assignments, including warehousing
                  assignments, if any, showing, to the extent available, an
                  unbroken chain of the related Mortgage Loan to the Trustee,
                  together with a copy of the related Form UCC-3 with evidence
                  of filing thereon; and

                           (i) the originals of each assumption, modification or
                  substitution agreement, if any, relating to the Mortgage Loan;

provided, however, that in lieu of the foregoing, the applicable Seller may
deliver the following documents, under the circumstances set forth below: (x) in
lieu of the original Mortgage, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will, upon
receipt of recording information relating to the Mortgage required to be
included thereon, be delivered to recording offices for recording and have not
been returned to applicable Seller within 270 days of the Closing Date,
applicable Seller may deliver a true copy thereof with an Officer's Certificate
certifying that such Mortgage, assignment to the Trustee or intervening
assignment has been delivered to the appropriate recording office for recording;
and (y) in lieu of the Mortgage, assignment to the Trustee or intervening
assignments thereof, if the applicable jurisdiction retains the originals of
such documents (as evidenced by a certification from applicable Seller, to such
effect) the applicable Seller may deliver photocopies of such documents
containing an original certification by the judicial or other governmental
authority of the jurisdiction where such documents were recorded; and provided,
further, however, that in the case of Mortgage Loans which have been prepaid in
full after the Cut-off Date and prior to the Closing Date, the applicable
Seller, in lieu of delivering the above documents, may deliver to the Trustee a
certification to such effect and shall pay all amounts paid in respect of such
Mortgage Loans to the Trustee on the Closing Date. The applicable Seller shall
deliver such original documents (including any original documents as to which
certified copies had previously been delivered) to the Trustee promptly after
they are received.

         The applicable Seller may, in lieu of delivering the original of the
documents set forth in Section 2.1(b)(i), (ii) and (iii) (other than Section
2.1(b)(i)(A) and Section 2.1(b)(iii)(A)) (or copies thereof as permitted by
Section 2.1) to the Trustee, deliver such documents to the Master Servicer, and
the Master Servicer shall hold such documents in trust for the use and benefit
of all present and future Certificateholders until such time as is set forth in
the next sentence. Within 60 days following the earlier of (i) the receipt of
the original of all of the documents or instruments set forth in Section
2.1(b)(i), (ii) and (iii) (other than Section 2.1(b)(i)(A) and Section
2.1(b)(iii)(A)) (or copies thereof as permitted by such Section) for any
Mortgage Loan and (ii) a written request by the Trustee to deliver those
documents with respect to any or all of


                                       4
<PAGE>

the Mortgage Loans then being held by the Master Servicer, the Master Servicer
shall deliver a complete set of such documents to the Trustee.

                  The applicable Seller shall, at its expense, cause the
Assignment of the Mortgage to the Trustee to be recorded not later than 270 days
after the Closing Date, unless (a) such recordation is not required by the
Rating Agencies or an Opinion of Counsel has been provided as set forth below in
this Section 2.1 or (b) MERS is identified on the Mortgage or on a properly
recorded assignment of the Mortgage as the mortgagee of record. The applicable
Seller need not cause to be recorded any assignment in any jurisdiction under
the laws of which, as evidenced by an Opinion of Counsel delivered by the
applicable Seller to the Trustee and the Rating Agencies, the recordation of
such assignment is not necessary to protect the Trustee's interest in the
related Mortgage Loan; provided, 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 the Holders
of Certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of the Trust Fund, (ii) the occurrence of a Master Servicer Event of
Termination, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the applicable Seller, (iv) the occurrence of a servicing transfer
as described in Section 7.02 of the Pooling and Servicing Agreement and (v) with
respect to any one assignment, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage.

                  If any original Mortgage Note referred to in Section
2.1(b)(i)(A) or 2.1(b)(iii)(A) above cannot be located, the obligations of the
applicable Seller to deliver such documents shall be deemed to be satisfied upon
delivery to the Trustee of a photocopy of such Mortgage Note, if available, with
a Lost Note Affidavit. If any of the original Mortgage Notes for which a Lost
Note Affidavit was delivered to the Trustee is subsequently located, such
original Mortgage Note shall be delivered to the Trustee within three Business
Days.

                  The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to this Section 2.1.

                  B. PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS.

                  In consideration of the sale of the Mortgage Loans from the
Sellers to the Purchaser on the Closing Date, (i) PHH Mortgage shall receive (a)
the Class R-I Certificates and Class R-II Certificates (other than a de minimis
portion of each such class) and (b) $[__________] by wire transfer of
immediately available funds to a bank account designated by PHH Mortgage and
(ii) BGRMT shall receive $[__________] by wire transfer of immediately available
funds to a bank account designated by BGRMT.




                                       5
<PAGE>

                                      III.

                         REPRESENTATIONS AND WARRANTIES;
                               REMEDIES FOR BREACH

                  A. SELLERS REPRESENTATIONS AND WARRANTIES.

                  1. Each Seller, as to itself, represents, warrants and
covenants to the Purchaser that as of the Closing Date (or as of such date
specifically provided herein) that:

                  (i) DUE ORGANIZATION. The Seller is an entity duly organized,
         validly existing and in good standing under the laws of its
         jurisdiction of organization, and has all licenses necessary to carry
         on its business now being conducted and is licensed, qualified and in
         good standing under the laws of each state where a Mortgaged Property
         is located or is otherwise exempt under applicable law from such
         qualification or is otherwise not required under applicable law to
         effect such qualification; no demand for such qualification has been
         made upon the Seller by any state having jurisdiction and in any event
         the Seller is or will be in compliance with the laws of any such state
         to the extent necessary to enforce each Mortgage Loan;

                  (ii) DUE AUTHORITY. The Seller had the full power and
         authority and legal right to originate the Mortgage Loans that it
         originated, if any, and to acquire the Mortgage Loans that it acquired.
         The Seller has the full power and authority to hold each Mortgage Loan,
         to sell each Mortgage Loan and to execute, deliver and perform, and to
         enter into and consummate, all transactions contemplated by this
         Agreement. The Seller has duly authorized the execution, delivery and
         performance of this Agreement, has duly executed and delivered this
         Agreement, and this Agreement, assuming due authorization, execution
         and delivery by the Purchaser, constitutes a legal, valid and binding
         obligation of the Seller, enforceable against it in accordance with its
         terms, subject to applicable bankruptcy, reorganization, receivership,
         conservatorship, insolvency, moratorium and other laws relating to or
         affecting creditors' rights generally or the rights of creditors of
         banks and to the general principles of equity (whether such
         enforceability is considered in a proceeding in equity or at law);

                  (iii) NO CONFLICT. The execution and delivery of this
         Agreement, the acquisition or origination, as applicable, of the
         Mortgage Loans by the Seller, the sale of the Mortgage Loans, the
         consummation of the transactions contemplated hereby, or the
         fulfillment of or compliance with the terms and conditions of this
         Agreement, will not conflict with or result in a breach of any of the
         terms, conditions or provisions of the Seller's organizational
         documents and bylaws or any legal restriction or any agreement or
         instrument to which the Seller is now a party or by which it is bound,
         or constitute a default or result in an acceleration under any of the
         foregoing, or result in the violation of any law, rule, regulation,
         order, judgment or decree to which the Seller or its property is
         subject, or impair the ability of the Purchaser to realize on the
         Mortgage Loans;

                  (iv) ABILITY TO PERFORM. The Seller does not believe, nor does
         it have any reason or cause to believe, that it cannot perform each and
         every covenant contained in this Agreement;



                                       6
<PAGE>

                  (v) NO MATERIAL DEFAULT. Neither the Seller nor any of its
         Affiliates is in material default under any agreement, contract,
         instrument or indenture of any nature whatsoever to which the Seller or
         any of its Affiliates is a party or by which it (or any of its assets)
         is bound, which default would have a material adverse effect on the
         ability of the Seller to perform under this Agreement, nor, to the best
         of the Seller's knowledge, has any event occurred which, with notice,
         lapse of time or both, would constitute a default under any such
         agreement, contract, instrument or indenture and have a material
         adverse effect on the ability of the Seller to perform its obligations
         under this Agreement;

                  (vi) NO LITIGATION PENDING. There is no action, suit,
         proceeding or investigation pending or, to the best of the Seller's
         knowledge, threatened, against the Seller, which, either in any one
         instance or in the aggregate, if determined adversely to the Seller
         would adversely affect the sale of the Mortgage Loans to the Purchaser
         or the execution, delivery or enforceability of this Agreement or
         result in any material liability of the Seller, or draw into question
         the validity of this Agreement, or have a material adverse effect on
         the financial condition of the Seller or the ability of the Seller to
         perform its obligations under this Agreement;

                  (vii) NO CONSENT REQUIRED. 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, the delivery of the Mortgage Files
         to the Purchaser, the sale of the Mortgage Loans to the Purchaser or
         the consummation of the transactions contemplated by this Agreement or,
         if required, such approval has been obtained prior to the Closing Date;

                  (viii) ORDINARY COURSE OF BUSINESS. The consummation of the
         transactions contemplated by this Agreement is in the ordinary course
         of business of the Seller, and the transfer, assignment and conveyance
         of the Mortgage Notes and the Mortgages by the Seller pursuant to this
         Agreement are not subject to the bulk transfer or any similar statutory
         provisions in effect in any applicable jurisdiction;

                  (ix) NO BROKER. The Seller has not dealt with any broker or
         agent or anyone else who might be entitled to a fee or commission in
         connection with this transaction; and

                  (x) NO UNTRUE INFORMATION. Neither this Agreement nor any
         statement, report or other agreement, document or instrument furnished
         or to be furnished pursuant to this Agreement contains or will contain
         any materially untrue statement of fact or omits or will omit to state
         a fact necessary to make the statements contained therein, in light of
         the circumstances under which they were made, not misleading.

                  2. With respect to each Mortgage Loan, the applicable Seller
hereby makes the following representations and warranties to the Purchaser on
which the Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Closing Date (unless otherwise
indicated), but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:



                                       7
<PAGE>

                  (i) Such Mortgage Loan complies with the terms and conditions
         set forth herein, and all of the information set forth with respect
         thereto on the Mortgage Loan Schedule is true and correct in all
         material respects;

                  (ii) The instruments and documents specified in Section 2.1
         with respect to such Mortgage Loan have been delivered to the Purchaser
         in accordance with the requirements of Section 2.1(b). The applicable
         Seller is in possession of a Mortgage File respecting such Mortgage
         Loan, except for such documents as have been previously delivered to
         the Purchaser;

                  (iii) The Mortgage relating to such Mortgage Loan has been
         duly recorded in the appropriate recording office, and the applicable
         Seller is the owner of record of such Mortgage Loan and the
         indebtedness evidenced by the related Mortgage Note;

                  (iv) All payments required to be made up to and including the
         Closing Date for such Mortgage Loan under the terms of the Mortgage
         Note have been made, such that such Mortgage Loan is not delinquent 30
         days or more on the Cut-off Date. Unless otherwise disclosed in the
         prospectus supplement, dated March [__], 2005, relating to the public
         offering of the Certificates (the "Prospectus Supplement") or the
         Mortgage Loan Schedule, there has been no delinquency, exclusive of any
         period of grace, in any payment by the Mortgagor thereunder during the
         twelve months preceding the Closing Date; and, if the Mortgage Loan is
         a Cooperative Loan, no foreclosure action or private or public sale
         under the Uniform Commercial Code has ever been overtly threatened or
         commenced with respect to the Cooperative Loan;

                  (v) There are no delinquent taxes, insurance premiums,
         assessments, including assessments payable in future installments, or
         other outstanding charges affecting the Mortgaged Property related to
         such Mortgage Loan;

                  (vi) The terms of the Mortgage Note and the Mortgage related
         to such Mortgage Loan (and the proprietary lease, the stock power, the
         Assignment of the proprietary lease, the Assignment of the Mortgage
         Note and the acceptance of assignment and assumption of lease agreement
         with respect to each Cooperative Loan), have not been impaired, waived,
         altered or modified in any material respect, except as specifically set
         forth in the Mortgage Loan Schedule;

                  (vii) The Mortgage Note and the Mortgage related to such
         Mortgage Loan (and the acceptance of assignment and assumption of lease
         agreement related to each Cooperative Loan) are not subject to any
         right of rescission, set-off or defense, including the defense of
         usury, nor will the operation of any of the terms of such Mortgage Note
         and such Mortgage, or the exercise of any right thereunder, render such
         Mortgage unenforceable, in whole or in part, or subject to any right of
         rescission, set-off or defense, including the defense of usury and no
         such right of rescission, set-off or defense has been asserted with
         respect thereto;



                                       8
<PAGE>

                  (viii) (a) All buildings upon the Mortgaged Property related
         to such Mortgage Loan are insured by a Qualified Insurer against loss
         by fire, hazards of extended coverage and such other hazards as are
         customary in the area where such Mortgaged Property is located. All
         such insurance policies (collectively, the "hazard insurance policy")
         are in full force and effect and contain a standard mortgagee clause
         naming the originator of such Mortgage Loan, its successors and
         assigns, as mortgagee. If the Mortgaged Property is in an area
         identified in the Federal Register by the Federal Emergency Management
         Agency ("FEMA") as having special flood hazards, a flood insurance
         policy is in effect which met the requirements of FEMA at the time such
         policy was issued. Such policies are the valid and binding obligations
         of the insurer, and all premiums thereon due to date have been paid.
         The related Mortgage obligates the Mortgagor thereunder to maintain all
         such insurance at such Mortgagor's cost and expense, and on such
         Mortgagor's failure to do so, authorizes the holder of such Mortgage to
         maintain such insurance at such Mortgagor's cost and expense and to
         seek reimbursement therefor from such Mortgagor; or (b) in the case of
         a condominium or unit in a planned unit development ("PUD") project
         that is not covered by an individual policy, the condominium or PUD
         project is covered by a "master" or "blanket" policy and there exists
         and is in the Mortgage File a certificate of insurance showing that the
         individual unit that secures the first mortgage is covered under such
         policy. The insurance policy contains a standard mortgagee clause
         naming the originator of such Mortgage Loan (and its successors and
         assigns), as insured mortgagee. Such policies are the valid and binding
         obligations of the insurer, and all premiums thereon have been paid.
         The insurance policy provides for advance notice to the applicable
         Seller or Master Servicer if the policy is canceled or not renewed, or
         if any other change that adversely affects the applicable Seller's
         interests is made; the certificate includes the types and amounts of
         coverage provided, describes any endorsements that are part of the
         "master" policy and would be acceptable pursuant to the Fannie Mae
         Guide;

                  (ix) All requirements of any federal, state or local law
         (including usury, truth in lending, real estate settlement procedures,
         consumer credit protection, equal credit opportunity or disclosure
         laws) applicable to the origination and servicing of such Mortgage Loan
         have been complied with in all material respects;

                  (x) The Mortgage related to such Mortgage Loan has not been
         satisfied, canceled or subordinated, in whole or in part, or rescinded,
         and the related Mortgaged Property has not been released from the lien
         of such Mortgage, in whole or in part, nor has any instrument been
         executed that would effect any such release, cancellation,
         subordination or rescission;

                  (xi) The Mortgage related to such Mortgage Loan is a valid,
         subsisting and enforceable perfected first lien on the related
         Mortgaged Property, including all improvements on the related Mortgaged
         Property, which Mortgaged Property is free and clear of any
         encumbrances and liens having priority over the first lien of the
         Mortgage subject only to (a) the lien of current real estate taxes and
         special assessments not yet due and payable, (b) covenants, conditions
         and restrictions, rights of way, easements and other matters of the
         public record as of the date of recording of such Mortgage which are


                                       9
<PAGE>

         acceptable to mortgage lending institutions generally, are referred to
         in the lender's title insurance policy and do not adversely affect the
         market value or intended use of the related Mortgaged Property, and (c)
         other matters to which like properties are commonly subject which do
         not individually or in the aggregate materially interfere with the
         benefits of the security intended to be provided by such Mortgage or
         the use, enjoyment, or market value of the related Mortgaged Property;
         with respect to each Cooperative Loan, each acceptance of assignment
         and assumption of lease agreement creates a valid, enforceable and
         subsisting first security interest in the collateral securing the
         related Mortgage Note subject only to (x) the lien of the related
         Cooperative for unpaid assessments representing the obligor's pro rata
         share of the Cooperative's payments for its blanket mortgage, current
         and future real property taxes, insurance premiums, maintenance fees
         and other assessments to which like collateral is commonly subject and
         (y) other matters to which like collateral is commonly subject which do
         not materially interfere with the benefits of the security intended to
         be provided by the acceptance of assignment and assumption of lease
         agreement; provided, however, that the appurtenant proprietary lease
         may be subordinated or otherwise subject to the lien of any mortgage on
         the cooperative project;

                  (xii) The Mortgage Note and the Mortgage related to such
         Mortgage Loan (and the acceptance of assignment and assumption of lease
         agreement with respect to each Cooperative Loan) are genuine and each
         is the legal, valid and binding obligation of the maker thereof,
         enforceable in accordance with its terms, except as such enforcement
         may be limited by bankruptcy, insolvency, reorganization or other
         similar laws affecting the enforcement of creditors' rights generally
         and general equitable principles (regardless whether such enforcement
         is considered in a proceeding in equity or at law);

                  (xiii) All parties to the Mortgage Note and the Mortgage
         related to such Mortgage Loan had legal capacity to enter into such
         Mortgage Loan and to execute and deliver the related Mortgage Note and
         the related Mortgage and the related Mortgage Note and the related
         Mortgage have been duly and properly executed by such parties; with
         respect to each Cooperative Loan, all parties to the Mortgage Note and
         the Mortgage Loan had legal capacity to execute and deliver the
         Mortgage Note, the acceptance of assignment and assumption of lease
         agreement, the proprietary lease, the stock power, the recognition
         agreement, the financing statement and the Assignment of proprietary
         lease and such documents have been duly and properly executed by such
         parties; each stock power (i) has all signatures guaranteed or (ii) if
         all signatures are not guaranteed, then such Cooperative Assets will be
         transferred by the stock transfer agent of the Cooperative if the
         applicable Seller undertakes to convert the ownership of the collateral
         securing the related Cooperative Loan;

                  (xiv) Such Mortgage Loan has closed and the proceeds of such
         Mortgage Loan have been fully disbursed prior to the Closing Date;
         provided that, with respect to any Mortgage Loan originated within the
         previous 150 days, alterations and repairs with respect to the related
         Mortgaged Property or any part thereof may have required an escrow of
         funds in an amount sufficient to pay for all outstanding work within
         150 days


                                       10
<PAGE>

         of the origination of such Mortgage Loan, and, if so, such funds are
         held in escrow by the applicable Seller, a title company or other
         escrow agent;

                  (xv) The Mortgage Note and the Mortgage related to such
         Mortgage Loan have not been assigned, pledged or otherwise transferred
         by the applicable Seller, in whole or in part, and the applicable
         Seller has good and marketable title thereto, and the applicable Seller
         is the sole owner thereof (and with respect to any Cooperative Loan,
         the sole owner of the related acceptance of assignment and assumption
         of lease agreement) and has full right and authority to transfer and
         sell such Mortgage Loan, and is transferring such Mortgage Loan to the
         Purchaser free and clear of any encumbrance, equity, lien, pledge,
         charge, claim or security interest;

                  (xvi) All parties that have had any interest in such Mortgage
         Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
         during the period in which they held and disposed of such interest,
         were) in compliance with any and all applicable licensing requirements
         of the laws of the state wherein the related Mortgaged Property is
         located;

                  (xvii) (a) Such Mortgage Loan is covered by an American Land
         Title Association ("ALTA") lender's title insurance policy or short
         form title policy acceptable to Fannie Mae and Freddie Mac (or, in
         jurisdictions where ALTA policies are not generally approved for use, a
         lender's title insurance policy acceptable to Fannie Mae and Freddie
         Mac), issued by a title insurer acceptable to Fannie Mae and Freddie
         Mac and qualified to do business in the jurisdiction where the related
         Mortgaged Property is located, insuring (subject to the exceptions
         contained in clauses (xi)(a), (b) and (x) above) the applicable Seller
         or Master Servicer, its successors and assigns as to the first priority
         lien of the related Mortgage in the original principal amount of such
         Mortgage Loan. Additionally, either such lender's title insurance
         policy affirmatively insures that there is ingress and egress to and
         from the Mortgaged Property or the applicable Seller warrants that
         there is ingress and egress to and from the Mortgaged Property and the
         lender' s title insurance policy affirmatively insures against
         encroachments by or upon the related Mortgaged Property or any interest
         therein or any other adverse circumstance that either is disclosed or
         would have been disclosed by an accurate survey. The applicable Seller
         or Master Servicer is the sole insured of such lender's title insurance
         policy, and such lender's title insurance policy is in full force and
         effect and will be in full force and effect upon the consummation of
         the transactions contemplated by this Agreement and will inure to the
         benefit of the Purchaser without any further act. No claims have been
         made under such lender's title insurance policy, neither the applicable
         Seller, nor to the best of the applicable Seller's knowledge, any prior
         holder of the related Mortgage has done, by act or omission, anything
         that would impair the coverage of such lender's insurance policy, and
         there is no act, omission, condition, or information that would impair
         the coverage of such lender's insurance policy; (b) The mortgage title
         insurance policy covering each unit mortgage in a condominium or PUD
         project related to such Mortgage Loan meets all requirements of Fannie
         Mae and Freddie Mac;

                  (xviii) (a) There is no default, breach, violation or event of
         acceleration existing under the Mortgage, the Mortgage Note, or any
         other agreements, documents, or


                                       11
<PAGE>

         instruments related to such Mortgage Loan; (b) to the best of the
         applicable Seller's knowledge, there is no event that, with the lapse
         of time, the giving of notice, or both, would constitute such a
         default, breach, violation or event of acceleration; (c) the
         Mortgagor(s) with respect to such Mortgage Loan is (1) not in default
         under any other Mortgage Loan or (2) the subject of an insolvency
         proceeding; (d) no event of acceleration has previously occurred, and
         no notice of default has been sent, with respect to such Mortgage Loan;
         and (e) in no event has the applicable Seller waived any of its rights
         or remedies in respect of any default, breach, violation or event of
         acceleration under the Mortgage, the Mortgage Note, or any other
         agreements, documents, or instruments related to such Mortgage Loan;
         and (f) with respect to each Cooperative Loan, there is no default in
         complying with the terms of the Mortgage Note, the acceptance of
         assignment and assumption of lease agreement and the proprietary lease
         and all maintenance charges and assessments (including assessments
         payable in the future installments, which previously became due and
         owing) have been paid, and the applicable Seller has the right under
         the terms of the Mortgage Note, acceptance of assignment and assumption
         of lease agreement and recognition agreement to pay any maintenance
         charges or assessments owed by the Mortgagor;

                  (xix) As of the date of origination of such Mortgage Loan,
         there were no mechanics' or similar liens, except such liens as are
         expressly insured against by a title insurance policy, or claims that
         have been filed for work, labor or material (and no rights are
         outstanding that under law could give rise to such lien) affecting the
         related Mortgaged Property that are or may be liens prior to, or equal
         or coordinate with, the lien of the related Mortgage;

                  (xx) As of the date of origination of such Mortgage Loan, to
         the best of the applicable Seller's knowledge, all improvements that
         were considered in determining the Value of the related Mortgaged
         Property lay wholly within the boundaries and building restriction
         lines of such Mortgaged Property (and wholly within the project in the
         case of a condominium unit), and no improvements on adjoining
         properties encroach upon such Mortgaged Property except as permitted
         under the terms of the Fannie Mae Guide and the Freddie Mac Selling
         Guide or those which are insured against by the title insurance policy
         referred to in clause (xvii) above; to the best of the applicable
         Seller's knowledge, no improvement located on or part of any Mortgaged
         Property is in violation of any applicable zoning law or regulation,
         and all inspections, licenses and certificates required to be made or
         issued with respect to all occupied portions of such Mortgaged
         Property, and with respect to the use and occupancy of the same,
         including certificates of occupancy, have been made or obtained from
         the appropriate authorities;

                  (xxi) Except with respect to approximately 4.22% of the
         Mortgage Loans for which the related Mortgage Note provides for an
         initial interest-only period of 15 years, principal payments on such
         Mortgage Loan commenced or will commence no more than 60 days after
         funds were disbursed in connection with such Mortgage Loan. The related
         Mortgage Note is payable on the first day of each month in arrears, in
         accordance with the payment terms described on the related Mortgage
         Loan Schedule;



                                       12
<PAGE>

                  (xxii) Except as noted otherwise on the Mortgage Loan
         Schedule, the related Mortgage contains the usual and customary
         "due-on-sale" clause or other similar provision for the acceleration of
         the payment of the unpaid principal balance of such Mortgage Loan if
         the related Mortgaged Property or any interest therein is sold or
         transferred without the prior consent of the mortgagee thereunder;

                  (xxiii) Except as noted otherwise on the Mortgage Loan
         Schedule, such Mortgage Loan is not subject to any prepayment penalty;

                  (xxiv) To the best of the applicable Seller's knowledge, as of
         the Closing Date, the related Mortgaged Property (and with respect to a
         Cooperative Loan, the related cooperative project and Cooperative Unit)
         is free of material damage and waste and there is no proceeding pending
         for the total or partial condemnation thereof;

                  (xxv) The related Mortgage contains customary and enforceable
         provisions that render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security provided thereby, including, (a) in the
         case of a Mortgage designated as a deed of trust, by trustee's sale,
         and (b) in the case of a Mortgage, otherwise by judicial foreclosure;

                  (xxvi) Such Mortgage Loan was underwritten in accordance with
         the Underwriting Guide;

                  (xxvii) The Mortgage File contains an appraisal (or other
         collateral assessment, permitted by the Underwriting Guide) of the
         related Mortgaged Property on forms and with riders approved by Fannie
         Mae and Freddie Mac, signed prior to the approval of such Mortgage Loan
         application by an appraiser, duly appointed by the originator of such
         Mortgage Loan, whose compensation is not affected by the approval or
         disapproval of such Mortgage Loan and who met the minimum
         qualifications of Fannie Mae and Freddie Mac for appraisers. Each
         appraisal of the Mortgage Loan was made in accordance with the relevant
         provisions of the Financial Institutions Reform, Recovery, and
         Enforcement Act of 1989;

                  (xxviii) If the related Mortgage constitutes a deed of trust,
         then 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 such deed of trust, except in
         connection with a trustee's sale after default by the related
         Mortgagor;

                  (xxix) Except with respect to Additional Collateral Mortgage
         Loans, if such Mortgage Loan had a Loan-to-Value Ratio of more than 80%
         at origination, such Mortgage Loan is and will be subject to a Primary
         Insurance Policy issued by a Qualified Insurer, which insures the
         applicable Seller or Master Servicer, its successors and assigns and
         insureds in the amount set forth on the Mortgage Loan Schedule provided
         that, a Primary Insurance Policy will not be required for any
         Cooperative Loan if (i) the proceeds of such Cooperative Loan were used
         to purchase a Cooperative Unit at the


                                       13
<PAGE>

         "insider's price" when the building was converted to a Cooperative,
         (ii) the value of the Cooperative Unit for purposes of establishing the
         Loan-to-Value Ratio at origination was such "insider's price", (iii)
         the principal amount of the Cooperative Loan at origination was not
         more than 100% of such "insider's price" and (iv) the Loan-to-Value
         Ratio at origination, as calculated using the Value at origination, was
         less than or equal to 80%. All provisions of such Primary Insurance
         Policy have been and are being complied with, such policy is in full
         force and effect, and all premiums due thereunder have been paid. Any
         related Mortgage subject to any such Primary Insurance Policy (other
         than a "lender-paid" Primary Insurance Policy) obligates the Mortgagor
         thereunder to maintain such insurance for the time period required by
         law and to pay all premiums and charges in connection therewith. As of
         the date of origination, the Loan-to-Value Ratio of such Mortgage Loan
         is as specified in the applicable Mortgage Loan Schedule;

                  (xxx) As of the date of origination of such Mortgage Loan, to
         the best of the applicable Seller's knowledge, the related Mortgaged
         Property (or with respect to a Cooperative Loan, the related
         Cooperative Unit) is lawfully occupied under applicable law and all
         inspections, licenses and certificates required to be made or issued
         with respect to all occupied portions of the Mortgaged Property (or
         with respect to a Cooperative Loan, the related Cooperative Unit) and,
         with respect to the use and occupancy of the same, including but not
         limited to certificates of occupancy, have been made or obtained from
         the appropriate authorities;

                  (xxxi) Each Mortgage Loan either was (a) closed in the name of
         PHH Mortgage or in the name of another entity that is either a savings
         and loan association, a savings bank, a commercial bank, credit union,
         insurance company or an institution which is supervised and examined by
         a federal or state authority, or a mortgagee approved by the Secretary
         of Housing and Urban Development pursuant to Sections 203 and 211 of
         the National Housing Act (any such entity and PHH Mortgage, a "HUD
         Approved Mortgagee"), and was so at the time such Mortgage Loan was
         originated (PHH Mortgage or such other entity, the "Originator") or (b)
         closed in the name of a correspondent lender under the circumstances
         described in the following sentence. If such Mortgage Loan was
         originated through a correspondent lender, such Mortgage Loan met the
         Originator's underwriting criteria at the time of origination and was
         originated in accordance with the Originator's policies and procedures
         and the Originator acquired such Mortgage Loan from the correspondent
         lender contemporaneously with the origination thereof. The Mortgage
         Loans that BGRMT is selling to Purchaser were originated by or on
         behalf of PHH Mortgage and subsequently assigned to BGRMT;

                  (xxxii) All of the terms of the related Mortgage Note
         pertaining to interest rate adjustments, payment adjustments and
         adjustments of the outstanding principal balance, if any, are
         enforceable and such adjustments will not affect the priority of the
         lien of the related Mortgage; all such adjustments on such Mortgage
         Loan have been made properly and in accordance with the provisions of
         such Mortgage Loan;

                  (xxxiii) To the best of the applicable Seller's knowledge, the
         related Mortgagor is not the subject of any insolvency proceeding;

                                       14
<PAGE>

                  (xxxiv) Unless otherwise disclosed in the Prospectus
         Supplement or the Mortgage Loan Schedule, no Mortgage Loan contains
         provisions pursuant to which Monthly Payments are (a) paid or partially
         paid with funds deposited in any separate account established by the
         applicable Seller, the Mortgagor, or anyone on behalf of the Mortgagor,
         (b) paid by any source other than the Mortgagor or (c) contains any
         other similar provisions which may constitute a "buydown" provision.
         The Mortgage Loan is not a graduated payment mortgage loan and the
         Mortgage Loan does not have a shared appreciation or other contingent
         interest feature;

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

                  (xxxvi) Any principal advances made to the Mortgagor prior to
         the Cut-off Date have been consolidated with the outstanding principal
         amount secured by the Mortgage, and the secured principal amount, as
         consolidated, bears a single interest rate and single repayment term.
         The consolidated principal amount does not exceed the original
         principal amount of the Mortgage Loan;

                  (xxxvii) Unless otherwise disclosed in the Prospectus
         Supplement or the Mortgage Loan Schedule, no Mortgage Loan has a
         balloon payment feature. With respect to any Mortgage Loan with a
         balloon payment feature, the Mortgage Note is payable in Monthly
         Payments based on a thirty year amortization schedule and has a final
         Monthly Payment substantially greater than the preceeding Monthly
         Payment which is sufficient to amortize the remaining principal balance
         of the Mortgage Loan;

                  (xxxviii)If the residential dwelling on the Mortgaged Property
         is a condominium unit or a unit in a planned unit development (other
         than a de minimis planned unit development) such condominium or planned
         unit development project meets the eligibility requirements of the
         Underwriting Guide;

                  (xxxix) No Mortgage Loan is subject to the provisions of the
         Homeownership and Equity Protection Act of 1994;

                  (xl) Unless otherwise disclosed in the Prospectus Supplement
         or the Mortgage Loan Schedule, no Mortgage Loan was made in connection
         with (a) the construction or rehabilitation of a Mortgaged Property or
         (b) facilitating the trade-in or exchange of a Mortgaged Property;

                  (xli) The applicable Seller has no knowledge of any
         circumstances or condition with respect to the Mortgage, the Mortgaged
         Property (or with respect to a Cooperative Loan, the acceptance of
         assignment and assumption of lease agreement, the Cooperative Unit or
         the cooperative project), the Mortgagor or the Mortgagor's credit
         standing that can reasonably be expected to cause the Mortgage Loan to
         be an unacceptable investment, cause the Mortgage Loan to become
         delinquent, or adversely affect the value of the Mortgage Loan;



                                       15
<PAGE>

                  (xlii) Unless otherwise disclosed in the Prospectus Supplement
         or the Mortgage Loan Schedule, interest on each Mortgage Loan is
         calculated on the basis of a 360-day year consisting of twelve 30-day
         months;

                  (xliii) To the best of applicable Seller's knowledge, the
         Mortgaged Property is in material compliance with all applicable
         environmental laws pertaining to environmental hazards including,
         without limitation, asbestos, and neither the applicable Seller nor, to
         the applicable Seller's knowledge, the related Mortgagor, has received
         any notice of any violation or potential violation of such law;

                  (xliv) No Mortgage Loan is subject to negative amortization;

                  (xlv) No Mortgage Loan is a "High-Cost Home Loan" as defined
         in the New Jersey Home Ownership Act effective November 27, 2003;

                  (xlvi) Each Mortgage Loan, at the time it was made, complied
         in all material respects with applicable local, state and federal laws,
         including, but not limited to, all applicable predatory and abusive
         lending laws;

                  (xlvii) Each Mortgage Loan is a "qualified mortgage" as
         defined under Section 860G(a)(3) of the Code and the Treasury
         regulations promulgated thereunder;

                  (xlviii) None of the Mortgage Loans are "high cost loans" as
         defined by the applicable predatory- and abusive- lending laws;

                  (xlix) With respect to each Cooperative Loan, a cooperative
         lien search has been made by a company competent to make the same which
         company is acceptable to FNMA and qualified to do business in the
         jurisdiction where the Cooperative Unit is located;

                  (l) With respect to each Cooperative Loan, (i) the terms of
         the related proprietary lease is longer than the terms of the
         Cooperative Loan, (ii) there is no provision in any proprietary lease
         which requires the Mortgagor to offer for sale the Cooperative Assets
         owned by such Mortgagor first to the Cooperative, (iii) there is no
         prohibition in any proprietary lease against pledging the Cooperative
         Assets or assigning the proprietary lease and (iv) the recognition
         agreement is on a form of agreement published by the Aztech Document
         Systems, Inc. or includes provisions which are no less favorable to the
         lender than those contained in such agreement;

                  (li) With respect to each Cooperative Loan, each original UCC
         financing statement, continuation statement or other governmental
         filing or recordation necessary to create or preserve the perfection
         and priority of the first priority lien and security interest in the
         Cooperative Assets and proprietary lease has been timely and properly
         made. Any security agreement, chattel mortgage or equivalent document
         related to the Cooperative Loan and delivered to the Mortgagor or its
         designee establishes in the Mortgagor a valid and subsisting perfected
         first lien on and security interest in the Mortgaged Property described
         therein, and the Mortgagor has full right to sell and assign the same;
         and



                                       16
<PAGE>

                  (lii) With respect to each Cooperative Loan, each acceptance
         of assignment and assumption of lease agreement contains enforceable
         provisions such as to render the rights and remedies of the holder
         thereof adequate for the realization of the benefits of the security
         provided thereby. The acceptance of assignment and assumption of lease
         agreement contains an enforceable provision for the acceleration of the
         payment of the unpaid principal balance of the Mortgage Note in the
         event the Cooperative Unit is transferred or sold without the consent
         of the holder thereof.

It is understood and agreed that the representations and warranties set forth in
this Section 3.1 will inure to the benefit of the Purchaser, its successors and
assigns, notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or assignment of Mortgage or the examination of any Mortgage File.

                  B. REMEDIES FOR BREACH.

                  1. With respect to the representations and warranties
contained herein that are made to the knowledge or the best knowledge of the
related Seller or as to which the related Seller has no knowledge, if it is
discovered that the substance of any such representation and warranty is
inaccurate and the inaccuracy materially and adversely affects the value of the
related Mortgage Loan, or the interest therein of the Purchaser or the
Certificateholders, then notwithstanding the related Seller's lack of knowledge
with respect to the substance of such representation and warranty being
inaccurate at the time the representation and warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation and warranty and the
related Seller shall take such action described in the following paragraph of
this Section 3.2(a) in respect of such Mortgage Loan.

                  Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by either Seller of any representation, warranty or covenant in
Section 3.1(b) hereof in respect of any Mortgage Loan which materially adversely
affects the value of such Mortgage Loan or the interest therein of the Purchaser
or the Certificateholders, the applicable Seller shall deliver such missing
document or cure such defect or breach within 90 days from the date such Seller
was notified of such missing document, defect or breach, and if such Seller does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the applicable Seller shall repurchase such
Mortgage Loan from the Trust Fund at the Purchase Price within 90 days after the
date on which such Seller was notified (subject to Section 3.2(c)) of such
missing document, defect or breach. If such defect or breach can ultimately be
cured but is not reasonably expected to be cured within the 90-day period, then
the applicable Seller shall have such additional time, if any, as is reasonable,
to cure such defect or breach, provided that the applicable Seller has commenced
curing or correcting such defect or breach and is diligently pursuing the same.
In lieu of repurchasing any such Mortgage Loan as provided above, the applicable
Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which
case it shall become a Defective Mortgage Loan) and substitute one or more
Eligible Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 3.2(c). If the breach of representation and warranty that
gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant
to this Section 3.2 was the representation and warranty set forth in clause
(xlvi) of


                                       17
<PAGE>

Section 3.1, then PHH Mortgage shall pay to the Trust Fund, concurrently with
and in addition to the remedies provided in the preceding three sentences, an
amount equal to any liability, penalty or expense that was actually incurred and
paid out of or on behalf of the Trust Fund, and that directly resulted from such
breach, or if incurred and paid by the Trust Fund thereafter, concurrently with
such payment. It is understood and agreed that the obligation of the applicable
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
Purchaser. Notwithstanding the foregoing, in recognition of the Trust's rights
against PHH Mortgage with respect to the Mortgage Loans acquired by it from PHH
Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall have the
right to cause PHH Mortgage to repurchase directly any Defective Mortgage Loan
(other than as a result of a breach by BGRMT of Section 3.1(b)(iii) or
3.1(b)(xv) hereof, in which case the Purchaser shall have the right to cause
BGRMT to repurchase directly the Defective Mortgage Loan) acquired hereunder by
the Purchaser from BGRMT.

                  2. Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 3.2(a), must be effected prior
to the date which is two years after the Closing Date and in accordance with
Section 2.03 of the Pooling and Servicing Agreement.

                  In addition, the applicable Seller shall obtain at its own
expense and deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on the Trust Fund,
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 REMIC to fail
to qualify as a REMIC at any time that any Certificate is outstanding.

                  3. Upon discovery by the Purchaser, a 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 applicable Seller shall
repurchase such Mortgage Loan from the Trust Fund at the Purchase Price or,
subject to the limitations set forth in Section 2.03 of the Pooling and
Servicing Agreement, substitute one or more Eligible Substitute Mortgage Loans
for the affected Mortgage Loan within 60 days of the earlier of discovery or
receipt of such notice with respect to such affected Mortgage Loan. Such
repurchase or substitution shall be made by the applicable Seller if the
affected Mortgage Loan's status as a non-qualified mortgage is or results from a
breach of any representation, warranty or covenant made by the applicable
Seller. Any such repurchase or substitution shall be made in the same manner as
set forth in Section 3.2(a).

                  C. PURCHASER REPRESENTATIONS AND WARRANTIES. The Purchaser
hereby represents and warrants to the Sellers as of the Closing Date (or if
otherwise specified below, as of the date so specified) that:





                                       18
<PAGE>


                  1. the Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware;

                  2. the Purchaser has full corporate power to own its property,
to carry on its business as presently conducted and to enter into and perform
its obligations under this Agreement;

                  3. the execution and delivery by the Purchaser of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Purchaser; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated hereby, nor
compliance with the provisions hereof, will conflict with or result in a breach
of, or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Purchaser or its properties or the certificate of formation or limited liability
company agreement of the Purchaser, except those conflicts, breaches or defaults
which would not reasonably be expected to have a material adverse effect on the
Purchaser's ability to enter into this Agreement and to consummate the
transactions contemplated hereby;

                  4. the execution, delivery and performance by the Purchaser of
this Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have already been
obtained, given or made;

                  5. this Agreement has been duly executed and delivered by the
Purchaser and, assuming due authorization, execution and delivery by the
Sellers, constitutes a valid and binding obligation of the Purchaser enforceable
against it in accordance with its terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the rights
of creditors generally); and

                  6. except as previously disclosed in the Prospectus
Supplement, there are no actions, suits or proceedings pending or, to the
knowledge of the Purchaser, threatened against the Purchaser, before or by any
court, administrative agency, arbitrator or governmental body (i) with respect
to any of the transactions contemplated by this Agreement or (ii) with respect
to any other matter which in the judgment of the Purchaser if determined
adversely to the Purchaser would reasonably be expected to materially and
adversely affect the Purchaser's ability to perform its obligations under this
Agreement; and the Purchaser is not in default with respect to any order of any
court, administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by this Agreement;



                                       19
<PAGE>

                                      IV.

                               SELLER'S COVENANTS

                  A. COVENANTS OF THE SELLERS. Each Seller hereby covenants
that, except for the transfer hereunder with respect to the Mortgage Loans, each
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur or assume any Lien on, any Mortgage Loan, whether now existing or
hereafter created, or any interest therein; each Seller will notify the Trustee,
on behalf of the Trust Fund, of the existence of any Lien (other than as
provided above) on any Mortgage Loan immediately upon discovery thereof; and
each Seller will defend the right, title and interest of the Trustee, on behalf
of the Trust Fund, in, to and under the Mortgage Loans, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the respective Seller.

                                       V.

                         INDEMNIFICATION BY PHH MORTGAGE
                       WITH RESPECT TO THE MORTGAGE LOANS

                  A. INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS. PHH
Mortgage shall indemnify and hold harmless the Purchaser from and against any
loss, liability or expense arising from the breach by either Seller of its
representations and warranties in Section 3.1 of this Agreement (other than as a
result of a breach by BGRMT of Section 3.1(b)(iii) or 3.1(b)(xv) hereof, in
which case BGRMT shall indemnify and hold harmless the Purchaser from and
against any loss, liability or expense arising from such breach) which
materially and adversely affects the Purchaser's interest in any Mortgage Loan
or from the failure by either Seller to perform its obligations under this
Agreement in any material respect, provided that neither PHH Mortgage nor BGRMT
shall have any obligation to indemnify the Purchaser in respect of any loss,
liability or expense that arises as a result of the Purchaser's willful
malfeasance, bad faith or gross negligence or as a result of the breach by the
Purchaser of its obligations hereunder.

                  B. LIMITATION ON LIABILITY OF THE SELLERS. None of the
directors, officers, employees or agents of either Seller shall be under any
liability to the Purchaser, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement. Except as and to the extent
expressly provided in the Pooling and Servicing Agreement or this Agreement, the
Sellers shall not be under any liability to the Trust Fund, the Trustee or the
Certificateholders. The Sellers and any director, officer, employee or agent of
each Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.



                                       20
<PAGE>

                                      VI.

                                   TERMINATION

                  A. TERMINATION. The respective obligations and
responsibilities of each Seller and the Purchaser created hereby shall
terminate, except for each Seller's indemnity obligations as provided herein,
upon the termination of the Trust Fund pursuant to the terms of the Pooling and
Servicing Agreement.

                                      VII.

                            MISCELLANEOUS PROVISIONS

                  A. AMENDMENT. This Agreement may be amended from time to time
by the Sellers and the Purchaser by written agreement signed by the Sellers and
the Purchaser.

                  B. GOVERNING LAW. This Agreement shall be governed by and
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.

                  C. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, postage prepaid, addressed as
follows:

                       (i) if to the PHH Mortgage:

                           PHH Mortgage Corporation
                           3000 Leadenhall Road
                           Mail Stop LGL
                           Mt. Laurel, NJ  08054
                           Attention: General Counsel

or, such other address as may hereafter be furnished to the Purchaser and BGRMT
in writing by PHH Mortgage.

                      (ii) if to BGRMT:

                           c/o PHH Mortgage Corporation, as  Administrator
                           3000 Leadenhall Road
                           Mail Stop LGL
                           Mt. Laurel, NJ  08054
                           Attention: General Counsel

or, such other address as may hereafter be furnished to the Purchaser and PHH
Mortgage in writing by Trust.



                                       21
<PAGE>

                     (iii) if to the Purchaser:

                           PHH Mortgage Capital LLC
                           3000 Leadenhall Road
                           Mail Stop LGL
                           Mt. Laurel, New Jersey 08054
                           Attention: General Counsel

or such other address as may hereafter be furnished to the Sellers in writing by
the Purchaser.

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

                  E. RELATIONSHIP OF PARTIES. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the parties
hereto, and the services of each Seller shall be rendered as an independent
contractor and not as agent for the Purchaser.

                  F. COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts together shall constitute one and the same Agreement.

                  G. FURTHER AGREEMENTS. The Purchaser and the Sellers each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement. The Purchaser and each Seller agrees to use its best reasonable
efforts to take all actions necessary to be taken by it to cause the
Certificates to be issued and rated in the highest rating category by each of
the Rating Agencies, with the Certificates to be offered pursuant to the
Purchaser's shelf registration statement, and each party will cooperate with the
other in connection therewith.

                  H. INTENTION OF THE PARTIES. It is the intention of the
parties that the Purchaser is purchasing, and the Sellers are selling, the
Mortgage Loans, rather than a loan by the Purchaser to the Sellers secured by
the Mortgage Loans. Accordingly, the parties hereto each intend to treat this
transaction with respect to the Mortgage Loans for federal income tax purposes
as a sale by the Sellers, and a purchase by the Purchaser, of the Mortgage
Loans. The Purchaser will have the right to review the Mortgage Loans and the
related documents to determine the characteristics of the Mortgage Loans which
will affect the federal income tax consequences of owning the Mortgage Loans and
the Sellers will cooperate with all reasonable requests made by the Purchaser in
the course of such review.

                  I. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Sellers, the Purchaser and their respective successors and assigns. The
obligations of the Sellers under this Agreement cannot be assigned or delegated
to a third party without the consent of the Purchaser, which


                                       22
<PAGE>

consent shall be at the Purchaser's sole discretion. The parties hereto
acknowledge that the Purchaser is acquiring the Mortgage Loans for the purpose
of assigning the Mortgage Loans to the Trustee, on behalf of the Trust Fund, for
the benefit of the Certificateholders. As an inducement to the Purchaser to
purchase the Mortgage Loans, each Seller acknowledges and consents to the
assignment by the Purchaser to the Trustee, on behalf of the Trust Fund of all
of the Purchaser's rights against the Sellers pursuant to this Agreement and to
the enforcement or exercise of any right or remedy against the Sellers pursuant
to this Agreement by the Purchaser. Such enforcement of a right or remedy by the
Trustee, on behalf of the Trust Fund, shall have the same force and effect as if
the right or remedy had been enforced or exercised by the Purchaser directly.

                  J. SURVIVAL. The representations and warranties made herein by
each Seller and the provisions of Article V hereof shall survive the purchase of
the Mortgage Loans hereunder.



                                       23
<PAGE>

                  IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.

                            PHH MORTGAGE CAPITAL LLC
                                  as Purchaser


                            By: ______________________________________
                            Name:
                            Title:


                            PHH MORTGAGE CORPORATION
                                    as Seller


                            By: ______________________________________
                            Name:
                            Title:


                            BISHOP'S GATE RESIDENTIAL MORTGAGE TRUST
                                    as Seller

                            By:     PHH MORTGAGE CORPORATION,
                                    as Administrator


                            By: ______________________________________
                            Name:
                            Title:


<PAGE>


                                    Exhibit 1

                             MORTGAGE LOAN SCHEDULE

                                (Filed Manually)




                                       J-1


<PAGE>


                                    EXHIBIT K

                ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
                   (ADDITIONAL COLLATERAL SERVICING AGREEMENT)

                            (Available Upon Request)




                                       K-1



<PAGE>


                                    EXHIBIT L

                                   [Reserved]




                                       L-1


<PAGE>


                                    EXHIBIT M

                          FORM OF FORM 10-K CERTIFICATE

                  I, [identify the certifying individual], certify that:

                  1. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution or servicing reports filed in
respect of periods included in the year covered by this annual report, of the
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement
dated March 1, 2005 (the "Agreement") among PHH Mortgage Capital LLC (the
"Depositor"), PHH Mortgage Corporation (the "Master Servicer") and Citibank,
N.A. (the "Trustee");

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

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

                  4. I am responsible for reviewing the activities performed by
the Master Servicer under the Agreement and based upon my knowledge and the
annual compliance review required under the Agreement, and except as disclosed
in the reports, the Master Servicer has fulfilled its obligations under the
Agreement; and

                  5. The reports disclose all significant deficiencies relating
to the Master Servicer's compliance with the minimum servicing standards based
upon the report provided by an independent public accountant, after conducting a
review in compliance with the Uniform Single Attestation Program for Mortgage
Bankers as set forth in the Agreement, that is included in these reports.

                  In giving the certifications above, I have reasonably relied
on the information provided to me by the following unaffiliated parties: the
Trustee.

Date:____________

_________________________________*
[Signature]
Name:
Title:

* - to be signed by the Chief Executive Officer of the Master Servicer



                                       M-1

<PAGE>



                                    EXHIBIT N

         FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE


PHH Mortgage Corporation
3000 Leadenhall Road
Mt. Laurel, New Jersey 08054

                  Re:    PHHMC Mortgage Pass-Through Certificates, Series 2005-2

                  Reference is made to the Pooling and Servicing Agreement,
dated as of March 1, 2005 (the "Trust Agreement"), by and among Citibank, N.A.
(the "Trustee"), PHH Mortgage Corporation, as master servicer (the "Master
Servicer"), and PHH Mortgage Capital LLC, as depositor (the "Depositor"). The
Trustee, hereby certifies to the Master Servicer, and its officers, directors
and affiliates, and with the knowledge and intent that they will rely upon this
certification, that:

                  (i)      The Trustee has reviewed the annual report on Form
                           10-K for the fiscal year _____, and all reports on
                           Form 8-K containing distribution reports filed in
                           respect of periods included in the year covered by
                           that annual report, relating to the above-referenced
                           trust;

                  (ii)     Based on my knowledge, the information set forth in
                           the reports on Form 10-K and Form 8-K referenced in
                           (i) above (including the distribution reports) does
                           not contain any untrue statement of material fact
                           subject to the accuracy of the information provided
                           to us by the Master Servicer and includes all
                           information required to be stated therein; and

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

Date:



                                    Citibank, N.A., as Trustee


                                    By:      ____________________________
                                    Name:    ____________________________
                                    Title:   ____________________________




                                       N-1