<PAGE>   1
                                                                     EXHIBIT 4.1





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



                     UNION PLANTERS MORTGAGE FINANCE CORP.,
                                  AS DEPOSITOR,

                   UNION PLANTERS BANK, NATIONAL ASSOCIATION,
                               AS MASTER SERVICER,

                            THE BANK OF NEW YORK, AS
                                     TRUSTEE

                                       AND

                  UNION PLANTERS BANK, NATIONAL ASSOCIATION, AS
                          CONTRACT OF INSURANCE HOLDER


                                   ----------


                  SERIES 2000-1 POOLING AND SERVICING AGREEMENT

                            DATED AS OF JULY 1, 2000


                                   ----------



                     UNION PLANTERS MORTGAGE FINANCE CORP.,

                MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-1


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


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         THIS SERIES 2000-1 POOLING AND SERVICING AGREEMENT, dated as of July 1,
2000, is made with respect to the formation of UPMFC Trust 2000-1 (the "Trust")
among UNION PLANTERS MORTGAGE FINANCE CORP., a Delaware corporation (the
"Depositor"), UNION PLANTERS BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacity as master servicer, the "Master Servicer"), THE
BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"),
and UNION PLANTERS BANK, NATIONAL ASSOCIATION, a national banking association,
as contract of insurance holder (the "Contract of Insurance Holder") under this
Agreement and the Standard Terms to Pooling and Servicing Agreement, May 1998
Edition (the "Standard Terms"), all the provisions of which are incorporated
herein as modified hereby and shall be a part of this Agreement as if set forth
herein in full (this Agreement, with the Standard Terms so incorporated, the
"Pooling and Servicing Agreement"). Capitalized terms used and not otherwise
defined herein shall have the respective meanings given them in the Standard
Terms.

                              PRELIMINARY STATEMENT

         The Depositor has duly authorized the formation of the Trust to issue a
Series of Certificates with an aggregate initial principal amount of
$127,282,880, to be known as the Mortgage Pass-Through Certificates, Series
2000-1 (the "Certificates"). The Certificates consist of 10 Classes that in the
aggregate evidence the entire beneficial ownership interest in the Trust.

         In accordance with Section 10.01 of the Standard Terms, the Trustee
will make an election to treat all of the assets of the Trust as a real estate
mortgage investment conduit (the "REMIC") for federal income tax purposes. The
"startup day" for purposes of the REMIC Provisions is the Closing Date.

                                GRANTING CLAUSES

         The Depositor hereby bargains, sells, conveys, assigns and transfers to
the Trustee, in trust and as provided in this Pooling and Servicing Agreement,
without recourse (except as provided herein) and for the exclusive benefit of
the Holders of the Certificates, all of the Depositor's right, title and
interest in and to, and any and all benefits accruing to the Depositor from, (a)
the Assets listed in Schedule I hereto, together with the related Asset
Documents, and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing, including, without limitation, all rights to
receive all principal and interest payments due on the Assets after the Cut-off
Date, including such scheduled payments received by the Depositor or Seller on
or prior to the Cut-off Date, and Principal Prepayments, Net Insurance Proceeds,
Net Liquidation Proceeds, Repurchase Prices and other unscheduled collections
received on the Assets on and after the Cut-off Date; (b) the security interests
in the Mortgaged Properties granted by the Obligors pursuant to the related
Assets; (c) all funds relating to the Assets on deposit in the Certificate
Account or the Distribution Account for the Certificates and all proceeds
thereof, whether in the form of cash, instruments, securities or other
properties; (d) any and all rights, privileges and benefits accruing to the
Depositor under the Sales Agreement with respect to the Assets (provided that
the Depositor shall retain its rights to indemnification from




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the Seller under such Sales Agreement, but also hereby conveys its rights to
such indemnification to the Trustee as its assignee), including the rights and
remedies with respect to the enforcement of any and all representations,
warranties and covenants under such Sales Agreement; and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any Standard
Hazard Insurance Policy, VA Guaranty or FHA Insurance, or any other insurance
policy relating to any of the Assets, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables that at any time constitute all or part or are included in the
proceeds of any of the foregoing) as specified herein (the items referred to in
clauses (a) through (e) above shall be collectively referred to herein as the
"Trust Estate").

         The Trustee acknowledges the foregoing, accepts the trusts hereunder in
accordance with the provisions hereof and the Standard Terms and agrees to
perform the duties herein or therein required to the best of its ability to the
end that the interests of the Holders of the Certificates may be adequately and
effectively protected.

SECTION 1.  STANDARD TERMS; RESTATEMENT OF DECLARATION OF TRUST.

         (a)      The Depositor, the Master Servicer, the Trustee, and the
Contract of Insurance Holder each acknowledge that the Standard Terms prescribe
certain obligations of the Depositor, the Master Servicer, the Trustee, and the
Contract of Insurance Holder with respect to the Certificates. The Depositor,
the Master Servicer, the Trustee, and the Contract of Insurance Holder each
agree to observe and perform such prescribed duties, responsibilities and
obligations, and acknowledge that, except to the extent inconsistent with the
provisions of this Agreement, the Standard Terms are and shall be a part of this
Pooling and Servicing Agreement to the same extent as if set forth herein in
full.

         (b)      This Agreement amends and restates the Declaration of Trust in
all respects. The Trustee will be acting not in its individual capacity but
solely as Trustee hereunder. The office of the Trust will be in the care of the
Trustee at the Corporate Trust Office. The actions heretofore taken by the
Trustee under the authority of the Declaration of Trust are hereby ratified and
confirmed.

SECTION 2.  DEFINED TERMS.

         With respect to the Certificates and in addition to or in replacement
for the definitions set forth in Section 1.01 of the Standard Terms, the
following definitions shall be assigned to the defined terms set forth below:

         "Book-Entry Certificates": The Class A-1 Certificates.

         "Carryover Interest Amount": With respect to each Class of Certificates
and each Distribution Date, all amounts that were distributable on such Class as
Interest Distribution Amounts on any previous Distribution Dates that remain
undistributed.


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         "Claims Administrator": Union Planters Bank, National Association, a
national banking association, or any successor thereof.

         "Class A Certificates": The Class A-1 Certificates.

         "Class A-1 Certificates": The Class A-1 Certificates created pursuant
to Section 3 hereof.

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

         "Class B-1 Certificates": The Class B-1 Certificates created pursuant
to Section 3 hereof.

         "Class B-2 Certificates": The Class B-2 Certificates created pursuant
to Section 3 hereof.

         "Class B-3 Certificates": The Class B-3 Certificates created pursuant
to Section 3 hereof.

         "Class B-4 Certificates": The Class B-4 Certificates created pursuant
to Section 3 hereof.

         "Class B-5 Certificates": The Class B-5 Certificates created pursuant
to Section 3 hereof.

         "Class B-6 Certificates": The Class B-6 Certificates created pursuant
to Section 3 hereof.

         "Class PO Certificates": The Class PO Certificates created pursuant to
Section 3 hereof.

         "Class PO Deferred Amount": With respect to each Mortgage Loan for
which a Realized Loss occurs, the PO Percentage of such Realized Loss; provided,
however, that the Class PO Deferred Amount distributable on any Distribution
Date shall not exceed the excess, if any, of the Available Distribution Amount
remaining after giving effect to distributions in Section 5 herein over the
Interest Distribution Amount payable to the most senior Class of Subordinate
Certificates then outstanding; and provided further, that no distributions shall
be made in respect of the Class PO Deferred Amount after the Credit Support
Depletion Date.

         "Class PO Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the sum of the PO Percentage of the principal
portions of all scheduled Monthly Payments on the Mortgage Loans due on the
related Due Date, whether or not received on or prior to the related
Determination Date, plus (ii) the sum of the PO Percentages of all unscheduled
payments or collections of principal in respect of the Mortgage Loans received
during the preceding calendar month (including the PO Percentage of the
principal portion of proceeds of the repurchase of a Mortgage Loan, full and
partial Mortgagor prepayments, Foreclosure Advances and Net Liquidation
Proceeds).

         "Class R Certificates": The Class R Certificates, which represent
beneficial ownership of the REMIC Residual Interest.

         "Class X Certificates": The Class X-1 Certificates, created pursuant to
Section 3 hereof.

         "Class X-1 Certificates": The Class X-1 Certificates created pursuant
to Section 3 hereof.


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         "Closing Date": July 27, 2000.

         "Contract of Insurance Holder": Union Planters Bank, National
Association, a national banking association, or any successor appointed as
herein provided. Notices to the Contract of Insurance Holder shall be sent to
Union Planters Bank, National Association, 7130 Goodlett Farms Parkway, Cordova,
Tennessee 38018 Attn: UPMFC Trust 2000-1, or its successor in interest.

         "Corporate Trust Office": The address set forth hereinbelow under
"Trustee".

         "Credit Support Depletion Date": The first Distribution Date on which
the Certificate Principal Balances of each Class of the Class B Certificates
equals zero.

         "Cut-off Date": July 1, 2000.

         "Declaration of Trust": The declaration of trust, dated July 27, 2000,
by and between The Bank of New York, as settlor, and The Bank of New York, as
trustee, which established the Trust.

         "Determination Date": With respect to any Distribution Date, the 15th
calendar day of the month in which such Distribution Date occurs or, if such day
is not a Business Day, the immediately succeeding Business Day.

         "Discount Mortgage Loan": Each Mortgage Loan with a Net Rate less than
7.700% per annum.

         "Due Date": With respect to any Distribution Date, the first calendar
day of the month in which such Distribution Date occurs.

         "ERISA Restricted Certificates": The Class B, Class X, Class PO and
Class R Certificates.

         "Interest Accrual Period": With respect to each Distribution Date and
with respect to the Class X-1 Certificates, the calendar month preceding the
month in which the Distribution Date occurs. Interest on the Class X-1
Certificates will be computed on the basis of a 360-day year consisting of
twelve 30-day months. The Interest Accrual Period with respect to all other
Classes of Certificates (other than the Class PO Certificates) will be as
provided in the Standard Terms.

         "Interest Distribution Amount": For any Class of Certificates (other
than the Class PO Certificates) on any Distribution Date, interest accrued on
such Class during the related Interest Accrual Period at the applicable
Pass-Through Rate on the related Certificate Principal Balance or Notional
Principal Amount, as the case may be, less Net Interest Shortfalls. No interest
shall be payable on the Class PO Certificates.

         "Net Interest Shortfalls": With respect to each Distribution Date, the
sum of (i) Soldiers' and Sailors' Shortfalls and (ii) Due Date Interest
Shortfalls, less Compensating Interest, each for the related Collection Period.


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         "Non-Discount Mortgage Loan": Each Mortgage Loan with a Net Rate equal
to or greater than 7.700% per annum.

         "Non-PO Percentage": With respect to any Discount Mortgage Loan, the
Net Rate divided by 7.700% per annum; and with respect to any Non-Discount
Mortgage Loan, 100%.

         "Notional Principal Amount": The Notional Principal Amount of the Class
X-1 Certificates on any date shall equal the aggregate Principal Balance of each
of the Non-Discount Mortgage Loans at the beginning of the related Collection
Period (or as of the Cut-off Date in the case of the first Distribution Date).

         "Pass-Through Rate": With respect to each Class of Certificates, on any
Distribution Date, the per annum rate for such Class set forth in the table in
Section 3 hereof.

         "PO Percentage": With respect to any Discount Mortgage Loan, (i) 7.700%
per annum minus the related Net Rate (ii) divided by 7.700% per annum; and with
respect to any Non-Discount Mortgage Loan, 0%.

         "Principal Balance": With respect to any Mortgage Loan as of any Due
Date, the unpaid principal balance of such Mortgage Loan as of the Cut-off Date
reduced by all payments in respect of principal received or advanced from the
Cut-off Date through such Due Date.

         "Principal Distribution Amount": The sum of the Senior Principal
Distribution Amount and the Subordinate Principal Distribution Amount.

         "Private Certificates": The Class B, Class X, Class PO and Residual
Certificates.

         "Pro Rata Portion": With respect to any Distribution Date and Class of
Subordinate Certificates, the amount equal to the fraction, the numerator of
which is such Class's Certificate Principal Balance immediately prior to such
Distribution Date and the denominator of which is the aggregate of the
Certificate Principal Balances of the Class B Certificates immediately prior to
such Distribution Date.

         "Rating Agency": Each of Fitch, Inc., One State Street, New York, New
York 10004, and Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007.

         "Realized Loss": (a) With respect to each defaulted Mortgage Loan with
respect to which a Foreclosure Advance has been made, the excess, if any, of the
aggregate of all Advances made with respect to such Mortgage Loan over all
recoveries, including recoveries in respect of the related FHA Insurance or VA
Guaranty, as applicable, made in respect of such Mortgage Loan, (b) with respect
to any other Liquidated Loan other than in connection with a claim under FHA
Insurance or a VA Guaranty, the excess, if any, of the Scheduled Principal
Balance of the Liquidated Loan, plus accrued and unpaid interest on such
Liquidated Loan, plus amounts reimbursable to the Master Servicer for previously
unreimbursed Advances, minus Net Liquidation Proceeds collected in respect of
the Liquidated Loan, and (c) the excess, if any, of (1) the aggregate
Certificate Principal Balance of the Class A, Class R, Class PO and Class B


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Certificates after giving effect to distributions of principal on such
Distribution Date and after taking into account preceding clauses (a) and (b)
over (2) the aggregate Scheduled Principal Balance of the Mortgage Loans at the
end of the related Collection Period.

         "Regular Certificates": The Class A Certificates, Class B Certificates,
Class PO Certificates and Class X Certificates.

         "Residual Certificates": The Class R Certificates.

         "Rule 144A Certificates": The Class B Certificates, Class X
Certificates, Class PO Certificates and Residual Certificates.

         "Scheduled Principal Balance": With respect to any Mortgage Loan as of
any Due Date, the unpaid principal balance thereof as of the Cut-off Date as
specified in the related amortization schedule at such time reduced by all
previous curtailments and by the payment of principal due on such Mortgage Loan
from the Cut-Off Date through such Due Date irrespective of any delinquencies in
payment of such Mortgage Loan.

         "Senior Accelerated Distribution Percentage": For any Distribution Date
occurring prior to the Distribution Date in August 2005, 100%, and for any
Distribution Date on or after the August 2005 Distribution Date will be as
follows:

                  (i)      for any Distribution Date from August 2005 through
         July 2006, the Senior Percentage for such Distribution Date plus 70% of
         the Subordinate Percentage for such Distribution Date;

                  (ii)     for any Distribution Date from August 2006 through
         July 2007, the Senior Percentage for such Distribution Date plus 60% of
         the Subordinate Percentage for such Distribution Date;

                  (iii)    for any Distribution Date from August 2007 through
         July 2008, the Senior Percentage for such Distribution Date plus 40% of
         the Subordinate Percentage for such Distribution Date;

                  (iv)     for any Distribution Date from August 2008 through
         July 2009, the Senior Percentage for such Distribution Date plus 20% of
         the Subordinate Percentage for such Distribution Date; and

                  (v)      for any Distribution Date after July 2009, the Senior
         Percentage for such Distribution Date;

provided, however, that on any Distribution Date on which the Senior Percentage
exceeds 97.31%, the Senior Accelerated Distribution Percentage for such
Distribution Date will equal 100%.

         Any scheduled reduction to the Senior Accelerated Distribution
Percentage described above shall not be made as of any Distribution Date unless
(i) the average monthly percentage of Mortgage Loans delinquent 90 days or more
over the last six months (calculated as the arithmetic


                                      S-6
<PAGE>   8

mean of the percentage values for each of the preceding six months determined by
dividing the aggregate outstanding Scheduled Principal Balance of Mortgage Loans
90 days or more delinquent in that month by the aggregate outstanding
Certificate Principal Balance of the Class B Certificates in that month, after
giving effect to distributions in such month) is less than 200%, and (ii)
aggregate 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 15%, 20%, 25%, 30% or
35%, respectively, of the sum of the initial Certificate Principal Balances of
the Class B Certificates. Notwithstanding the foregoing, upon reduction of the
Certificate Principal Balances of the Class A-1 Certificates to zero, the Senior
Accelerated Distribution Percentage will equal 0%.

         "Senior Certificates": The Class R, Class A, Class PO and Class X
Certificates.

         "Senior Percentage": On the initial Distribution Date, approximately
97.31%, and thereafter for each succeeding Distribution Date will be
recalculated to equal the percentage equal to the aggregate Certificate
Principal Balance of the Senior Certificates (other than the Class X and Class
PO Certificates) immediately prior to such Distribution Date divided by the
aggregate Certificate Principal Balance of the Senior Certificates (other than
the Class X and Class PO Certificates) and the Subordinate Certificates
immediately prior to the Distribution Date.

         "Senior Non-PO Principal Distribution Amount": With respect to any
Distribution Date, the sum of the amounts described in clauses (i) through (ii)
below.

                  (i)      the product of (A) the then-applicable Senior
         Percentage and (B) the sum of the Non-PO Percentages of the principal
         portions of all Monthly Payments on the Mortgage Loans due on the
         related Due Date, whether or not received on or prior to the related
         Determination Date; plus

                  (ii)     the product of (A) the then-applicable Senior
         Accelerated Distribution Percentage and (B) the sum of the Non-PO
         Percentages of all of the unscheduled payments or collections of
         principal in respect of the Mortgage Loans received during the
         preceding calendar month (including the Non-PO Percentage of the
         principal portion of proceeds of the repurchase of a Mortgage Loan,
         full and partial Mortgagor prepayments, Foreclosure Advances and Net
         Liquidation Proceeds).

         "Senior Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Senior Non-PO Principal Distribution Amount
and the Class PO Principal Distribution Amount, each with respect to such
Distribution Date. With respect to any Distribution Date, if the Available
Distribution Amount remaining after the distribution of interest to the Senior
Certificates (other than the Class PO Certificates) is insufficient to
distribute the full Senior Principal Distribution Amount, the Senior Non-PO
Principal Distribution Amount and the Class PO Principal Distribution Amount
will be reduced in proportion to the Non-PO Percentages and the PO Percentages,
respectively, of the Mortgage Loans responsible for such shortfall.


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         "Servicing Fee Rate": 1.00% per annum with respect to each Mortgage
Loan with a Mortgage Rate greater than 8.625% per annum, 0.75% per annum with
respect to each Mortgage Loan with a Mortgage Rate less than or equal to 8.625%
per annum, but greater than 8.000% per annum, and 0.50% per annum with respect
to each Mortgage Loan with a Mortgage Rate less than or equal to 8.000% per
annum.

         "Subordinate Certificates": The Class B Certificates.

         "Subordinate Percentage": 100% less the Senior Percentage.

         "Subordinate Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (a) the balance of the Available Distribution
Amount remaining after the distribution of the Interest Distribution Amount
allocable to the Senior Certificates, the Senior Principal Distribution Amount,
Class PO Deferred Amount and the Interest Distribution Amount allocable to the
Subordinate Certificates and (b) the sum of the amounts described in clauses (i)
through (ii) below:

         (i) the product of (A) the then-applicable Subordinate Percentage and
(B) the sum of the Non-PO Percentages of the principal portion of all Monthly
Payments on the Mortgage Loans due on the related Due Date, whether or not
received on or prior to the related Determination Date; plus

         (ii) the sum of the Non-PO Percentages of the portion of all
unscheduled payments or collections of principal in respect of the Mortgage
Loans received during the preceding calendar month (including the Non-PO
Percentages of the principal portion of proceeds of the repurchase of a Mortgage
Loan, full and partial Mortgagor prepayments, Foreclosure Advances and Net
Liquidation Proceeds) allocable to the Subordinate Certificates.

         "Trustee": The Bank of New York, a New York banking corporation, not in
its individual capacity but solely as Trustee under this Pooling and Servicing
Agreement, or any successor trustee appointed as herein provided. Notices to the
Trustee shall be sent to Corporate Trust Department, 101 Barclay Street, New
York, New York 10286, Attn: UPMFC Trust 2000-1 (the "Corporate Trust Office"),
or its successor in interest.

         "Trustee Fee Rate": 0.012% per annum.

         "Underwriter": Morgan Stanley & Co. Incorporated (whose address is 1585
Broadway, New York, New York 10036).

         "Weighted Average Net Asset Rate": With respect to any Distribution
Date, the weighted average of the Asset Rates applicable to the Monthly Payments
that were due during the related Collection Period on Mortgage Loans that were
Outstanding at the beginning of the related Prepayment Period, less the
Servicing Fee Rate and the Trustee Fee Rate.


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SECTION 3.  CERTIFICATES.

         The aggregate initial principal amount of Certificates that may be
executed and delivered under this Pooling and Servicing Agreement is limited to
$127,282,880 except for Certificates executed and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Certificates pursuant to
Sections 5.04 or 5.07 of the Standard Terms. The Certificates shall be issued in
ten Classes having the designations, initial Certificate Principal Balances,
initial Notional Principal Amounts, Pass-Through Rates and Final Scheduled
Distribution Dates set forth or described below:

<TABLE>
<CAPTION>
                      INITIAL                                     FINAL
                    CERTIFICATE                                 SCHEDULED
                     PRINCIPAL         PASS THROUGH            DISTRIBUTION
DESIGNATION           BALANCE              RATE                   DATE(4)
-----------         -----------        ------------            ------------
<S>               <C>                  <C>                   <C>
    A-1           $121,906,000            7.700%             December 25, 2024
    B-1           $  1,145,000            7.700%             August 25, 2000
    B-2           $    318,207            7.700%             December 25, 2024
    B-3           $    318,207            7.700%             December 25, 2024
    B-4           $    318,207            7.700%             December 25, 2024
    B-5           $    318,207            7.700%             December 25, 2024
    B-6           $    957,268            7.700%             December 25, 2024
    X-1                     (1)              (2)             July 25, 2012
    PO            $  2,001,684            0.000%             December 25, 2024
    R                       (3)              (3)             August 25, 2000
</TABLE>

                  (1)      The Class X-1 Certificates shall have no Certificate
         Principal Balance, and will bear interest based on its Notional
         Principal Amount.

                  (2)      The Pass-Through Rate for the Class X-1 Certificates
         on each Distribution Date will be equal to the excess of (i) the
         Weighted Average Net Asset Rate, as of the first day of the related
         Collection Period, with respect to the Non-Discount Mortgage Loans over
         (ii) 7.700% per annum.

                  (3)      The Class R Certificates shall represent the residual
         interest in the REMIC. The Class R Certificates shall have a
         Certificate Principal Balance of $100 (unless previously paid) and a
         Pass-Through Rate of 7.700% per annum.

                  (4)      For purposes of Treasury Regulation
         ss.1.860G-1(a)(4), the latest possible maturity date of each Class of
         Certificates shall be the Final Scheduled Distribution Date.


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SECTION 4.  DENOMINATIONS.

         The Book-Entry Certificates will be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates will be held by the Beneficial Owners
through the book-entry facilities of the Clearing Agency, in minimum
denominations of $1,000 and integral multiples of $1 in excess thereof.

         The Class B, Class X, Class PO and Class R Certificates will be issued
in certificated, fully-registered form. Each Class of the Class B Certificates
will be issued in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof, except that one Certificate of each Class may be
issued in a different denomination that evidences the remainder of the aggregate
initial Certificate Principal Balance of each such Class. The Class PO
Certificates will be issued in minimum Percentage Interests equal to 50%. The
Class X Certificates and the Class R Certificates will be issued in minimum
Percentage Interests equal to 10%.

SECTION 5.  DISTRIBUTIONS.

         (a)      On each Distribution Date, the Trustee (or the Paying Agent on
behalf of the Trustee) shall distribute the Available Distribution Amount (less
the Trustee Fee) in the following manner and in the following order of priority:

(i)      First, concurrently, to each Class of Senior Certificates (other than
the Class PO Certificates), (A) first, its Interest Distribution Amount for such
Distribution Date; and (B) second, the related Carryover Interest Amount for
such Distribution Date, if any; provided that, if the Available Distribution
Amount on any Distribution Date is insufficient to distribute the full amount of
the Interest Distribution Amounts or the Carryover Interest Amounts for all
Classes of Senior Certificates (other than the Class PO Certificates), then the
Available Distribution Amount shall be allocated pro rata among such Classes
based upon their respective Interest Distribution Amounts or Carryover Interest
Amounts, as applicable, for such Distribution Date;

(ii)     Second, the Senior Non-PO Principal Distribution Amount shall be
allocated sequentially, first, to the Class R Certificates and second, to the
Class A-1 Certificates in each case in reduction of the Certificate Principal
Balance of each such Class of Certificates, until it has been reduced to zero.

         provided, however, that on any Distribution Date on which (A) the
         aggregate Principal Balance of the Mortgage Loans is less than the
         aggregate Certificate Principal Balance of the Senior Certificates
         immediately prior to such Distribution Date or (B) the Credit Support
         Depletion Date has occurred, the Senior Non-PO Principal Distribution
         Amount will be allocated among the Senior Certificates (other than the
         Class PO and Class X Certificates) pro rata based upon their respective
         Certificate Principal Balances;

(iii)    Third, to the Class PO Certificates, the amount of the Class PO
Principal Distribution Amount, if any, in reduction of the Certificate Principal
Balance of such Class, until it has been reduced to zero;


                                      S-10
<PAGE>   12

(iv)     Fourth, to the Class PO Certificates, the amount of the Class PO
Deferred Amount, if any, that has not previously been distributed pursuant to
this clause (iv) on any prior Distribution Date; provided, however, that amounts
allocated under this paragraph shall only be distributed out of amounts
otherwise distributable as principal on the Class B Certificates;

(v)      Fifth, to the Class B-1 Certificates, the related Interest Distribution
Amount for such Distribution Date;

(vi)     Sixth, to the Class B-1 Certificates, the Class B-1 Certificates' Pro
Rata Portion of the Subordinate Principal Distribution Amount in reduction of
the Certificate Principal Balance of such Class, until it has been reduced to
zero;

(vii)    Seventh, to the Class B-2 Certificates, the related Interest
Distribution Amount for such Distribution Date;

(viii)   Eighth, to the Class B-2 Certificates, the Class B-2 Certificates' Pro
Rata Portion of the Subordinate Principal Distribution Amount in reduction of
the Certificate Principal Balance of such Class, until it has been reduced to
zero;

(ix)     Ninth, to the Class B-3 Certificates, the related Interest Distribution
Amount for such Distribution Date;

(x)      Tenth, to the Class B-3 Certificates, the Class B-3 Certificates' Pro
Rata Portion of the Subordinate Principal Distribution Amount in reduction of
the Certificate Principal Balance of such Class, until it has been reduced to
zero;

(xi)     Eleventh, to the Class B-4 Certificates, the related Interest
Distribution Amount for such Distribution Date;

(xii)    Twelfth, to the Class B-4 Certificates, the Class B-4 Certificates' Pro
Rata Portion of the Subordinate Principal Distribution Amount in reduction of
the Certificate Principal Balance of such Class, until it has been reduced to
zero;

(xiii)   Thirteenth, to the Class B-5 Certificates, the related Interest
Distribution Amount for such Distribution Date;

(xiv)    Fourteenth, to the Class B-5 Certificates, the Class B-5 Certificates'
Pro Rata Portion of the Subordinate Principal Distribution Amount in reduction
of the Certificate Principal Balance of such Class, until it has been reduced to
zero;

(xv)     Fifteenth to the Class B-6 Certificates, the related Interest
Distribution Amount for such Distribution Date;

(xvi)    Sixteenth, to the Class B-6 Certificates, the Class B-6 Certificates'
Pro Rata Portion of the Subordinate Principal Distribution Amount in reduction
of the Certificate Principal Balance of such Class, until it has been reduced to
zero;


                                      S-11
<PAGE>   13

(xvii)   Seventeenth, to the Trustee, for any unpaid expenses (including,
without limitation, indemnification amounts required to be paid under the
Pooling and Servicing Agreement, if any); and

(xviii)  Finally, any remainder to the holders of the Class R Certificates.

         (b)      All distributions or allocations made with respect to each
Class on each Distribution Date shall be allocated pro rata among the
outstanding Certificates of such Class based on their respective Percentage
Interests. So long as the Book-Entry Certificates are registered in the name of
a Clearing Agency or its nominee, the Trustee shall make all distributions or
allocations on such Certificates by wire transfers of immediately available
funds to the Clearing Agency or its nominee. In the case of Certificates issued
in fully-registered, certificated form, payment shall be made either (i) by
check mailed to the address of each Certificateholder as it appears in the
Certificate Register on the Record Date immediately prior to such Distribution
Date or (ii) by wire transfer of immediately available funds to the account of a
Holder at a bank or other entity having appropriate facilities therefor, if such
Holder shall have so notified the Trustee in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date and such
Holder is (A) with respect to any Class B Certificates issued on the Closing
Date in certificated, fully-registered form, the registered owner of Class B
Certificates with an aggregate initial Certificate Principal Balance of at least
$1,000,000 or 100% of their respective aggregate initial Certificate Principal
Balance, and (B) with respect to the Residual Certificates, Class PO
Certificates or Class X Certificates, the registered owner of the Residual
Certificates, Class PO Certificates or Class X Certificates evidencing an
aggregate Percentage Interest of at least 50%. The Trustee may charge any Holder
its standard wire transfer fee for any payment made by wire transfer. Final
distribution on the Certificates will be made only upon surrender of the
Certificates at the offices of the Trustee set forth in the notice of such final
distribution sent by the Trustee to all Certificateholders pursuant to Section
9.01 of the Standard Terms.

         (c)      Any amounts remaining in the Distribution Account on any
Distribution Date after all allocations and distributions required to be made by
this Pooling and Servicing Agreement have been made, and any amounts remaining
in the REMIC after payment in full of all of the Regular Interests therein and
any administrative expenses associated with the Trust, will be distributed to
the Holders of the Class R Certificates.

SECTION 6.  ALLOCATION OF REALIZED LOSSES.

         (a)      On each Distribution Date, after all required distributions
have been made on the Certificates pursuant to Section 5 above, the Non-PO
Percentage of Realized Losses, if any, shall be allocated on such Distribution
Date in the following manner and in the following order of priority:

(i)      First, to the Class B-6 Certificates, to be applied in reduction of the
Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;


                                      S-12
<PAGE>   14

(ii)     Second, to the Class B-5 Certificates, to be applied in reduction of
the Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

(iii)    Third, to the Class B-4 Certificates, to be applied in reduction of the
Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

(iv)     Fourth, to the Class B-3 Certificates, to be applied in reduction of
the Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

(v)      Fifth, to the Class B-2 Certificates, to be applied in reduction of the
Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

(vi)     Sixth, to the Class B-1 Certificates, to be applied in reduction of the
Certificate Principal Balance of such Class of Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and

(vii)    Finally, to the Class A Certificates and the Class R Certificates, pro
rata, based on their respective Certificate Principal Balances immediately prior
to such Distribution Date to be applied in reduction of the Certificate
Principal Balances of such Classes of Certificates, until each such Certificate
Principal Balance has been reduced to zero.

         (b)      On each Distribution Date, after all required distributions
have been made on the Certificates pursuant to Section 5 above, the PO
Percentage of Realized Losses, if any, shall be allocated on such Distribution
Date to the Class PO Certificates in reduction of the Certificate Principal
Balance of such Certificates, until such Class's Certificate Principal Balance
has been reduced to zero.

SECTION 7.  REMITTANCE REPORTS.

         (a)      The Remittance Report for each Distribution Date shall
identify the following items, in addition to the items specified in Section 4.01
of the Standard Terms:

                  (1)      the Interest Distribution Amount for each Class for
         such Distribution Date and the Carryover Interest Amount, for each
         Class of the Certificates for such Distribution Date;

                  (2)      the amount to be distributed on such Distribution
         Date on each Class of the Certificates to be applied to reduce the
         Certificate Principal Balance of such Class, separately identifying any
         portion of such amount attributable to any prepayments;


                                      S-13
<PAGE>   15

                  (3)      the aggregate amount, if any, of the Class PO
         Deferred Amount allocated for such Distribution Date, and the aggregate
         amount, if any, of the Class PO Deferred Amount distributed on such
         Distribution Date;

                  (4)      the aggregate amount, if any, to be distributed on
         the Residual Certificates;

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

                  (6)      the aggregate Interest Distribution Amount remaining
         unpaid, if any, and the aggregate Carryover Interest Amount remaining
         unpaid, if any, for each Class of Certificates, after giving effect to
         all distributions to be made on such Distribution Date.

         In the case of information furnished pursuant to clauses (1), (2) and
(3) above, the amounts shall be expressed, with respect to any Class A, Class R,
Class PO or Class B Certificate, as a dollar amount per $1,000 denomination, and
in the case of the Class X Certificates, as a dollar amount per $1,000,000
Notional Principal Amount denomination.

         (b)      In addition to mailing a copy of the related Remittance Report
to each Certificateholder on each Distribution Date in accordance with Section
4.01 of the Standard Terms, on each Distribution Date, the Trustee shall mail a
copy of the related Remittance Report to the Underwriter (to the attention of
the person, if any, reported to the Trustee by the Underwriter), to the Seller
and to The Bloomberg (to the address and to the person, if any specified to the
Trustee by the Underwriter). The Trustee shall not be obligated to mail any
Remittance Report to The Bloomberg unless and until the Underwriter shall have
notified the Trustee in writing of the name and address to which such reports
are to be mailed, which notice, once delivered, will be effective for all
Distribution Dates after the date such notice is received by the Trustee unless
and until superseded by a subsequent notice.

SECTION 8.  MASTER SERVICER MAY RETAIN SERVICING FEES FROM COLLECTIONS.

         The Master Servicer may retain its Servicing Fee and any other
servicing compensation provided for herein and in the Standard Terms from gross
interest collections on the Assets prior to depositing such collections into the
Certificate Account.

SECTION 9.  REMIC ADMINISTRATION.

         For purposes of the REMIC Provisions, all of the Certificates (except
the Class R Certificates) will be designated as the Regular Interests in the
REMIC, and the Class R Certificates will be designated as the Residual Interest
in the REMIC.

SECTION 10.  VOTING RIGHTS.

         The Voting Rights applicable to the Certificates shall be allocated
one-half of 1% to each of the Class R Certificates and the Class X-1
Certificates, and 99% to each Class of the Class A


                                      S-14
<PAGE>   16

Certificates, Class PO Certificates and the Class B Certificates, in proportion
with their respective Certificate Principal Balances on any date of
determination.

SECTION 11.  MODIFICATIONS OF STANDARD TERMS.

         The following modifications to the Standard Terms shall be in effect
with respect to the Certificates only.

         (a)      Section 1.01 of the Standard Terms is hereby amended as
                  follows:

                           (1) the definition of "Mortgage Loan Documents" is
                  hereby amended by adding the following to the end of paragraph
                  (c) thereof, immediately following the semicolon:

                           and the original assignment of the Mortgage from the
                           related Seller either in blank or to the Trustee or
                           its Custodian, in the form specified in the related
                           Sales Agreement (or a copy thereof certified to be a
                           true and correct reproduction of the original
                           thereof);

                           (2) the definition of "Certificate Principal Balance"
                  is hereby amended by deleting the reference to "Section
                  3.07(d)" in the first sentence thereof and replacing such
                  reference with "Section 3.07(c)".

                           (3) the definition of "Repurchase Price" is hereby
                  amended by deleting the reference to "Section 2.04" in the
                  first sentence thereof and replacing such reference with
                  "Section 2.05".

                           (4) the definition of "Non-U.S. Person" is hereby
                  amended by deleting such definition in its entirety and
                  replacing it with the following:

                           Any Person other than a U.S. Person.

                           (5) the definition of "U.S. Person" is hereby amended
                  by deleting such definition in its entirety and replacing it
                  with the following:


                                    (i) A citizen or resident of the United
                           States, (ii) a corporation created or organized in or
                           under the laws of the United States, any state
                           thereof or the District of Columbia, including an
                           entity treated as a corporation for federal income
                           tax purposes, (iii) a partnership (unless Treasury
                           regulations are adopted that provide otherwise)
                           created or organized in or under the laws of the
                           United States, any state thereof or the District of
                           Columbia, including an entity treated as a
                           partnership for federal income tax purposes, none of
                           the interests in which are owned, directly or
                           indirectly through one or more intermediate entities,
                           by a Non-U.S. Person, (iv) an estate the income of
                           which is includible in gross


                                      S-15
<PAGE>   17

                           income for United States federal income tax purposes,
                           regardless of its source, (v) a trust if a court
                           within the United States is able to exercise primary
                           supervision over the administration of such trust and
                           one or more United States fiduciaries have the
                           authority to control all substantial decisions of the
                           trust (or to the extent provided in applicable
                           Treasury regulations, certain trusts in existence on
                           August 20, 1996 that are eligible to be treated as
                           United States persons), or (vi) a foreign person who
                           would be subject to United States taxation on a net
                           basis on income derived from a Certificate.

         (b)      Section 2.05(a)(i) of the Standard Terms is hereby amended by
deleting the term "Section 2.05(g)" in the fourth sentence thereof and replacing
such term with "Section 2.05(d)".

         (c)      Section 3.01 of the Standard Terms is hereby amended by adding
the following to the end of clause (i) in the second paragraph thereof:

         other than in a manner consistent with the provisions of Section
3.03(b) hereof

         (d)      Section 3.09(a) of the Standard Terms is hereby amended as
follows:

                  (1) the fourth sentence is hereby amended by deleting the
         words "before the end" and replacing these words with "by the end of
         the tenth month", and by adding the parenthetical clause "(the "REO
         Holding Period")" after the word "acquired" but before the word
         "after",

                  (2) the fifth sentence is hereby amended by deleting the
         phrase "such 3 year period" in each location where it is used, and
         replacing such phrase in each location with the phrase "the REO Holding
         Period",

                  (3) the sixth sentence is hereby amended by deleting the
         phrase "period longer than two years", and replacing such phrase with
         the phrase "longer period", and

                  (4) the seventh sentence is hereby amended by deleting the
         phrase "the 3 year period", and replacing such phrase with the phrase
         "the REO Holding Period".

         (e)      Section 12.02 of the Standard Terms is hereby deleted in its
entirety and replace with the following:

Section 12.02. Regarding the Contract of Insurance Holder, the Master Servicer
and the Trustee.

         (a)      The Contract of Insurance Holder, the Master Servicer and the
Trustee (including any successor Trustee) shall at all times be approved by HUD
as a mortgagee. The Contract of Insurance Holder shall not resign from the
obligations and duties imposed on it by this Agreement as Contract of Insurance
Holder except upon a determination that by reason of a change in legal
requirements or requirements imposed by the FHA (including, without limitation,


                                      S-16
<PAGE>   18

loss of its status as a HUD approved mortgagee) the performance of its duties
under this Agreement would cause it to be in violation of such legal
requirements or FHA imposed requirements in a manner which would result in a
material adverse effect on the Contract of Insurance Holder or cause it to
become ineligible to hold the FHA Insurance. Any such determination permitting
the resignation of the Contract of Insurance Holder shall be evidenced by an
Opinion of Counsel to such effect delivered and acceptable to the Trustee. Upon
receiving such notice of resignation, the FHA Insurance shall be transferred to
a qualified successor appointed by the Master Servicer (which qualified
successor must be a HUD approved mortgagee) by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Contract of
Insurance Holder and one copy to the successor contract of insurance holder.

         (b)      If at any time the Contract of Insurance Holder shall become
incapable of acting, or shall fail to perform its obligations hereunder, or its
long-term credit rating assigned by Moody's Investors Service, Inc. shall fall
below "A3" (or such other credit rating as may be determined by the Rating
Agencies from time to time) or shall be adjudged as bankrupt or insolvent, or a
receiver of the Contract of Insurance Holder or of its property shall be
appointed, or any public officer shall take charge or control of the Contract of
Insurance Holder or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or the Contract of Insurance Holder
shall fail to be "well capitalized" within the meaning of the Federal Deposit
Insurance Act and the regulations thereunder, then, in any such case the Master
Servicer shall remove the Contract of Insurance Holder and appoint a successor
contract of insurance holder (which successor must be a HUD approved mortgagee)
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the Contract of Insurance Holder so removed and one copy to the
successor contract of insurance holder. Upon removal of the Contract of
Insurance Holder, the outgoing Contract of Insurance Holder shall take all
action required to maintain the benefits of the FHA Insurance; provided that, if
the Contract of Insurance Holder is removed because it has failed to be "well
capitalized" as provided in the preceding sentence, the Depositor and Master
Servicer each shall bear the expenses incurred in connection with such transfer.

         (c)      Any resignation or removal of the Contract of Insurance Holder
and appointment of a successor contract of insurance holder pursuant to any of
the provisions of this Section 12.02 shall become effective upon acceptance of
appointment by the successor contract of insurance holder.

         (f)      Exhibit 6 of the Standard Terms is hereby amended by inserting
in Section 3(ii)(C), between the words "Purchaser" and "are", the following:

         , and the transactions in connection with the servicing, operation and
         management of the Trust,

         (g)      Exhibit 7-A of the Standard Terms is hereby amended by
deleting Section 3 in its entirety and replacing it with the following:


                                      S-17
<PAGE>   19

         3.       The Transferee is a Non-U.S. Person.

         (h)      Exhibit 7-B of the Standard Terms is hereby amended by
deleting Section 3 in its entirety and replacing it with the following:

         3.       The Transferee is a U.S. Person.

SECTION 12.  GOVERNING LAW.

         The Pooling and Servicing Agreement shall be construed in accordance
with and governed by the laws of the State of New York applicable to agreements
made and to be performed therein. The parties hereto agree to submit to the
personal jurisdiction of all federal and state courts sitting in the State of
New York and hereby irrevocably waive any objection to such jurisdiction. In
addition, the parties hereto hereby irrevocably waive any objection that they
may have to the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement in any federal or state court sitting in the State
of New York, and further irrevocably waive any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.

SECTION 13.  FORMS OF CERTIFICATES.

         Each of the Schedules and Exhibits attached hereto or referenced herein
are incorporated herein by reference as contemplated by the Standard Terms. Each
Class of Certificates shall be in substantially the related form attached
hereto, as set forth in the Index to Schedules and Exhibits attached hereto.

SECTION 14.  COUNTERPARTS.

         This Pooling and Servicing Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.

SECTION 15.  ENTIRE AGREEMENT.

         This Pooling and Servicing Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and fully
supersedes any prior or contemporaneous agreements relating to such subject
matter.



                            [Signature Page Follows]


                                      S-18
<PAGE>   20


         IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Trustee,
and the Contract of Insurance Holder each have caused this Pooling and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized and their respective signatures duly attested all as of the day and
year first above written.

                                    UNION PLANTERS MORTGAGE FINANCE
                                    CORP., AS DEPOSITOR

                                    By: /s/ Douglas R. Miller
                                        ---------------------
                                    Name: Douglas R. Miller
                                    Title: President


                                    UNION PLANTERS BANK, NATIONAL
                                    ASSOCIATION, AS MASTER SERVICER

                                    By: /s/ Mark E. Mosteller
                                        ---------------------
                                    Name: Mark E. Mosteller
                                    Title: Executive Vice President


                                    THE BANK OF NEW YORK, AS TRUSTEE

                                    By: /s/ Lauren L. Shamilzadeh
                                        -------------------------
                                    Name: Lauren L. Shamilzadeh
                                    Title: Assistant Treasurer


                                    UNION PLANTERS BANK, NATIONAL
                                    ASSOCIATION, AS CONTRACT OF INSURANCE HOLDER

                                    By: /s/ Mark E. Mosteller
                                        ---------------------
                                    Name: Mark E. Mosteller
                                    Title: Executive Vice President
ACKNOWLEDGED AND AGREED


UNION PLANTERS BANK, NATIONAL ASSOCIATION, AS
CLAIMS ADMINISTRATOR


By: /s/ Mark E. Mosteller
    ---------------------
Name: Mark E. Mosteller
Title: Executive Vice President


                                      S-19
<PAGE>   21


STATE OF TENNESSEE      )
                        )   s.
COUNTY OF SHELBY        )


         The foregoing instrument was acknowledged before me in the County of
Shelby this 24th day of July, 2000 by Douglas R. Miller, the President of Union
Planters Mortgage Finance Corp., a Delaware corporation, on behalf of the
corporation.



                                                      /s/ Deborah K. McDaniel
                                                    --------------------------
                                                      Notary Public

My Commission expires: March 27, 2001




STATE OF TENNESSEE      )
                        )   s.
COUNTY OF SHELBY        )


         The foregoing instrument was acknowledged before me in the County of
Shelby this 24th day of July, 2000 by Mark E. Mosteller, an Executive Vice
President of Union Planters Bank, National Association, a national banking
association, on behalf of the association.



                                                      /s/ Deborah K. McDaniel
                                                    --------------------------
                                                      Notary Public

My Commission expires:  March 27, 2001


                                      S-20
<PAGE>   22


STATE OF NEW YORK       )
                        )   s.
COUNTY OF BRONX         )


         The foregoing instrument was acknowledged before me in the City of New
York, this 25th day of July, 2000, by Lauren L. Shamilzadeh, an Assistant
Treasurer of The Bank of New York, a New York banking corporation, on behalf of
the corporation.

                                                          /s/ Henry Baez
                                                          --------------
                                                          Notary Public

My Commission expires:  September 27, 2001


                                      S-21
<PAGE>   23



                         INDEX TO SCHEDULES AND EXHIBITS


SCHEDULE I                 Mortgage Loan Schedule
EXHIBIT A-1                Form of Class A-1 Certificate
EXHIBIT X-1                Form of Class X-1 Certificate
EXHIBIT PO                 Form of Class PO Certificate
EXHIBIT B-1                Form of Class B-1 Certificate
EXHIBIT B-2                Form of Class B-2 Certificate
EXHIBIT B-3                Form of Class B-3 Certificate
EXHIBIT B-4                Form of Class B-4 Certificate
EXHIBIT B-5                Form of Class B-5 Certificate
EXHIBIT B-6                Form of Class B-6 Certificate
EXHIBIT R                  Form of Class R Certificate