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                        MORTGAGE LOAN PURCHASE AGREEMENT

This MORTGAGE LOAN PURCHASE AGREEMENT ("Agreement"), dated as of December 1,
1996, by and between Chevy Chase Preferred Capital Corporation, a Maryland
corporation having its principal office at 8401 Connecticut Avenue, Chevy Chase,
Maryland 20815 ("Purchaser") and Chevy Chase Bank, F.S.B., a federal savings
bank having its home office at 7926 Jones Branch Drive, McLean, Virginia 22101
("Seller").

                             W I T N E S S E T H :

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, certain conventional residential first mortgage loans ("Mortgage
Loans") on a servicing retained basis as described herein, and which shall be
delivered as whole loans on the Closing Date, as defined below;

WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or other
security instrument creating a first lien on a residential dwelling located in
the jurisdiction indicated on the Mortgage Loan Schedule; and

WHEREAS, Purchaser and Seller wish to prescribe the manner of the conveyance,
servicing and control of the Mortgage Loans.

NOW, THEREFORE, in consideration of the promises and mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Seller agree as
follows:

SECTION 1.  DEFINITIONS.  For purposes of this Agreement the following
capitalized terms shall have the respective meanings set forth below. Other
capitalized terms used in this Agreement and not defined herein shall have the
respective meanings set forth in the Servicing Agreement attached hereto as
Exhibit B.

"ACCEPTED SERVICING PRACTICES" means, with respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.

"ACT" means The National Housing Act, as amended from time to time.

"ADJUSTABLE RATE MORTGAGE LOAN" or "ARM" means any individual Mortgage Loan
purchased pursuant to this Agreement the interest rate of which adjusts
periodically.

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

"AGREEMENT" means this Mortgage Loan Purchase Agreement and all amendments and
supplements hereto.

"ALTA" means The American Land Title Association or any successor thereto.

"ANCILLARY INCOME" means all late charges, assumption fees, escrow account
benefits, reinstatement fees, and similar types of fees arising from or in
connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.

"APPRAISED VALUE" means the value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.

"ASSIGNMENT AND ASSUMPTION AGREEMENT" has the meaning set forth in Section 19
hereof.

"ASSIGNMENT OF MORTGAGE" means an assignment of the Mortgage delivered in blank,
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to Purchaser.

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"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the State of Maryland are
authorized or obligated by law or executive order to be closed.

"CLOSING DATE" means December 1, 1996, or such other date as is mutually agreed
upon by the parties.

"CODE" means the Internal Revenue Code of 1986, as amended.

"CONDEMNATION PROCEEDS" means all awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.

"CONVENTIONAL LOAN" means a conventional residential first lien mortgage loan
which is a Mortgage Loan.

"CONVERTIBLE MORTGAGE LOAN" means any individual Mortgage Loan purchased
pursuant to this Agreement which contains a provision whereby the Mortgagor is
permitted to convert the Mortgage Loan to a fixed rate Mortgage Loan in
accordance with the terms of the related Mortgage Note.

"CUSTODIAL ACCOUNT" means the separate trust account created and maintained
pursuant to Section 2.04 of the Servicing Agreement.

"CUT-OFF DATE" means December 1, 1996.

"DELETED MORTGAGE LOAN" means a Mortgage Loan that is repurchased or replaced
with a Qualified Substitute Mortgage Loan by Seller in accordance with the terms
of this Agreement.

"DETERMINATION DATE" means one (1) Business Day prior to the related Remittance
Date.

"DUE DATE" means the day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

"ESCROW ACCOUNT" means the separate account created and maintained pursuant to
Section 2.06 of the Servicing Agreement with respect to each Mortgage Loan, as
specified in the Servicing Agreement.

"ESCROW PAYMENTS" means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

"FHA" means the Federal Housing Administration, an agency within 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.

"FNMA" means the Federal National Mortgage Association, or any successor
thereto.

"HUD" means the Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA mortgage insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.

"INDEX", with respect to each ARM Loan, shall have the respective meaning
ascribed to it in each related Mortgage Note.

"INSURANCE PROCEEDS" means, with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

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"INTEREST RATE ADJUSTMENT DATE" means, with respect to each ARM Loan, the date,
specified in the related Mortgage Note and the Mortgage Loan Schedule, on which
the Mortgage Interest Rate is adjusted.

"LIFETIME RATE CAPS" means the provision of each Mortgage Note related to an ARM
Loan which provides for an absolute maximum Mortgage Interest Rate thereunder.
The Mortgage Interest Rate during the terms of each ARM Loan shall not at any
time exceed the amount per annum set forth on the Mortgage Loan Schedule
attached hereto as Exhibit H.

"LIQUIDATION PROCEEDS" means cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.

"LOAN-TO-VALUE RATIO" or "LTV" means, with respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the original principal amount of the
Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property
at origination and (b) if the Mortgage Loan was made to finance the acquisition
of the related Mortgaged Property, the purchase price of the Mortgaged Property.

"MARGIN" means, with respect to each ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note which amount is added to the Index in
accordance with the terms of the related Mortgage Note to determine on each
Interest Rate Adjustment Date the Mortgage Interest Rate for such Mortgage Loan.

"MONTHLY PAYMENT" means the scheduled monthly payment of principal and interest
on a Mortgage Loan.

"MORTGAGE" means the mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note; except that with respect to
real property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor.

"MORTGAGE FILE" means the items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

"MORTGAGE INTEREST RATE" means the annual rate of interest set forth in a
Mortgage Note, which, in the case of an ARM Loan, shall be adjusted from time to
time, with respect to each Mortgage Loan.

"MORTGAGE INTEREST RATE CAP" means, with respect to each ARM Loan, the limit on
each Mortgage Interest Rate adjustment as set forth in the related Mortgage
Note.

"MORTGAGE LOAN" means an individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
and all other rights, benefits, proceeds and obligations arising from or in
connection with such Mortgage Loan, excluding replaced or repurchased mortgage
loans.

"MORTGAGE LOAN DOCUMENTS" means, with respect to each Mortgage Loan, the
following documents pertaining to such Mortgage Loan:

a. The original Mortgage Note (or, with respect to the Mortgage Loan listed on
   Schedule I to Exhibit A hereto, a lost note affidavit, executed by an officer
   of Seller, with a copy of the original note attached thereto) bearing all
   intervening endorsements, if any, between the original lender (if other than
   Seller) and Seller, and endorsed "Pay to the order of _____ without recourse"
   and

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   signed in the name of Seller by an authorized officer. To the extent that
   there is no room on the face of the Mortgage Notes for endorsements, the
   endorsement may be contained on an allonge, if applicable state law so
   allows. If the Mortgage Loan was acquired by Seller in a merger, the
   endorsement must be by "[Seller], successor by merger to [name of
   predecessor]". If the Mortgage Loan was acquired or originated by Seller
   while doing business under another name, the endorsement must be by
   "[Seller], formerly known as [previous name]"; and

b. The original Assignment of Mortgage for each Mortgage Loan in form and
   substance acceptable for recording endorsed "Pay to the order of ______" and
   signed in the name of Seller. If the Mortgage Loan was acquired by Seller in
   a merger, the Assignment of Mortgage must be made by "[Seller], successor by
   merger to [name of predecessor]". If the Mortgage Loan was acquired or
   originated by Seller while doing business under another name, the Assignment
   of Mortgage must be by "[Seller], formerly known as [previous name]".

c. The original of any guarantee executed in connection with the Mortgage Note.

d. The original Mortgage, with evidence of recording thereon. If in connection
   with any Mortgage Loan, Seller cannot deliver or cause to be delivered the
   original Mortgage with evidence of recording thereon on, or prior to the
   Closing Date because of a delay caused by the public recording office where
   much Mortgage has been delivered for recordation, a photocopy of such
   Mortgage certified by Seller to be true and correct will be delivered; if
   such Mortgage has been lost or if such public recording office retains the
   original recorded Mortgage, Seller shall deliver or cause to be delivered to
   Purchaser, a photocopy of such Mortgage, certified by such public recording
   office to be a true and complete copy of the original recorded Mortgage.

e. The originals of all assumption, modification, consolidation or extension
   agreements, if any, with evidence of recording thereon or, if the originals
   thereof are unavailable, certified copies of such documents

f. Originals of all intervening assignments of the Mortgage with evidence of
   recording thereon, if such intervening assignment has been recorded.

g. The original mortgagee policy of title insurance or, in the event such
   original title policy is unavailable, a certified true copy of the related
   policy binder or commitment for title certified to be true and complete by
   the title insurance company.

h. Any security agreement, chattel mortgage or equivalent executed in connection
   with the Mortgage.

i. For Mortgage Loans with original LTVs greater than 80%, evidence of a PMI
   Policy.

"MORTGAGE LOAN SCHEDULE" means the schedule of Mortgage Loans attached hereto as
Exhibit H setting forth at least the following information with respect to each
Mortgage Loan: (1) Seller's Mortgage Loan identifying number; (2) the location
of the Mortgaged Property by city, state and zip code; (3) a code indicating
whether the Mortgaged Property is owner-occupied, second home or investor owned;
(4) the type of residential units constituting the Mortgaged Property; (5) the
original number of months to maturity; (6) the remaining months to maturity from
the Cut-off Date, based on the original amortization schedule, and, if
different, the maturity expressed in the same manner but based on the actual
amortization schedule; (7) the Loan-to-Value Ratio at origination; (8) the
Mortgage Interest Rate as of the Cut-off Date; (9) the stated maturity date;
(10) the amount of the Monthly Payment as of the Cut-off Date; (11) the original
principal amount of the Mortgage Loan; (12) the principal balance of the
Mortgage Loan as of the close of business on the Cut-off Date, after deduction
of payments of principal due on or before the Cut-off Date whether or not
collected; (13) a code indicating the purpose of the loan (i.e., purchase, rate
and term refinance, equity take-out refinance); (14) a code indicating the
documentation style (i.e. full, alternative or reduced); (15) a code indicating
whether the Mortgage Loan is a Convertible Mortgage Loan; (16) the type of
Mortgage Loan product, if any; (17)

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the first payment Due Date; (18) the initial Mortgage Interest Rate; (19) the
amount of the first Monthly Payment; and (20) the name of any Qualified Insurer
with respect to a PMI Policy; and, with respect to any ARM Loan: (1) the Margin;
(2) the Lifetime Rate Cap; (3) any Periodic Rate Caps; (4) any minimum interest
rate, if other than the Margin; (5) the first Rate Adjustment Date after the
Cut-off Date; and (6) the applicable Index, in each case, under the terms of the
Mortgage Note. With respect to the Mortgage Loans in the aggregate, the Mortgage
Loan Schedule shall set forth the following information, as of the Cut-off Date:
(1) the number of Mortgage Loans; (2) the current aggregate outstanding
principal balance of the Mortgage Loans; (3) the weighted average Mortgage
Interest Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans.

"MORTGAGE NOTE" means the note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

"MORTGAGED PROPERTY" means the real property (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.

"MORTGAGOR" means the obliger on a Mortgage Note.

"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the Board,
any Vice Chairman of the Board, the President, any Executive Vice President, any
Senior Vice President, or any Vice President and by the Treasurer, the
Controller, the Secretary, any Assistant Treasurer or any Assistant Secretary of
the Seller, and delivered to the Purchaser as required by this Agreement.

"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel for
Seller, reasonably acceptable to Purchaser.

"PERIODIC RATE CAP" means the provision of each Mortgage Note related to each
ARM Loan which provides for an absolute maximum amount by which the Mortgage
Interest Rate therein may increase or decrease on an Interest Rate Adjustment
Date above or below the Mortgage Interest Rate previously in effect. The
Periodic Rate Cap for each ARM Loan is the rate set forth on Exhibit H hereto.

"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof.

"PMI POLICY" means a policy of primary mortgage guaranty insurance issued by a
Qualified Insurer.

"PRINCIPAL PREPAYMENT" means any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.

"PURCHASE PRICE" means the price paid on the Closing Date by Purchaser to Seller
in exchange for the Mortgage Loans purchased on the Closing Date as set forth in
Section 3 of this Agreement.

"PURCHASER" means Chevy Chase Preferred Capital Corporation, its designees,
successors or assigns.

"QUALIFIED APPRAISER" means an appraiser who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of the
Mortgage Loan, and such appraiser and the appraisal made by such appraiser both
satisfy the requirements of Title XI of the Federal Institutions Reform,
Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.

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"QUALIFIED INSURER" means an insurance company which is: duly qualified as such
under the laws of the state in which the related Mortgaged Property is located;
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided; approved as an insurer by FNMA
with respect to primary mortgage insurance; and, with respect to hazard and
flood insurance, rated by Best's in one of its two highest categories.

"QUALIFIED SUBSTITUTE MORTGAGE LOAN" means a mortgage loan eligible to be
substituted by Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by Seller in the month of substitution); (ii) have a
Mortgage Interest Rate equal to, or not more than 1.00% greater than, the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity equal to, or not more than one year less than that of the Deleted
Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan (i.e.,
Mortgage Loan with the same Mortgage Interest Rate Caps or fixed rate); and (v)
comply with each representation and warranty (respecting individual Mortgage
Loans) set forth in Section 8.02 hereof.

"REMITTANCE DATE" is defined in the Servicing Agreement.

"REPURCHASE PRICE" means, with respect to any Mortgage Loan, a price equal to
(i) the unpaid principal balance of such Mortgage Loan plus (ii) interest on
such unpaid principal balance of such Mortgage Loan at the Mortgage Interest
Rate from the last date through which interest has been paid and distributed to
Purchaser to the date of repurchase, less amounts received or advanced, if any,
by Seller in respect of such repurchased Mortgage Loan.

"RESPA" means the Real Estate Settlement Procedures Act, as amended.

"SELLER" means Chevy Chase Bank, F.S.B., its successors and assigns.

"SERVICING AGREEMENT" means the agreement, attached hereto as Exhibit B, to be
entered into by Seller, as servicer, and Purchaser.

"SERVICING FEE" means the fee to be paid to Seller by Purchaser for servicing
each Mortgage Loan as more specifically defined in the Servicing Agreement.

"SERVICING FEE RATE" means the rate specified in the Servicing Agreement.

"SERVICING FILE" means with respect to each Mortgage Loan, the file retained by
Seller during the period in which Seller is acting as servicer pursuant to the
Servicing Agreement consisting of originals of all documents in the Mortgage
File which are not delivered to Purchaser and copies of the Mortgage Loan
Documents.

"STATED PRINCIPAL BALANCE" means as to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously received by Purchaser with respect to the related Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.

[SECTION 2. RESERVED.]

SECTION 3. AGREEMENT TO PURCHASE.  Seller agrees to sell and Purchaser agrees to
purchase, at a price of par, Mortgage Loans having an aggregate principal
balance on the Cut-off Date of $300,078,499.10, or such other amount as agreed
by Purchaser and Seller as evidenced by the actual aggregate principal balance
of the Mortgage Loans accepted by Purchaser on the Closing Date.  The initial
principal amount of the Mortgage Loans shall be the aggregate principal balance
of the Mortgage Loans, so computed as of the Cut-off Date, after application of
scheduled payments of principal due on or before the Cut-off Date whether or not
collected.

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In addition to the Purchase Price as described above, Purchaser shall pay to
Seller, at closing, accrued interest on the initial principal amount of the
related Mortgage Loans at the weighted average Mortgage Interest Rate of those
Mortgage Loans, minus any amounts attributable to Servicing Fees as provided in
the Servicing Agreement from the Cut-off Date through the day prior to the
Closing Date, inclusive.

The Purchase Price plus accrued interest as set forth in the preceding paragraph
shall be paid on the Closing Date by wire transfer of immediately available
funds.

Purchaser shall be entitled to (1) all scheduled principal due after the Cut-off
Date, (2) all other recoveries of principal collected on or after the Cut-off
Date (provided, however, that all scheduled payments of principal due on or
before the Cut-off Date and collected after the Cut-off Date shall belong, and
be paid, to Seller), and (3) all payments of interest on the Mortgage Loans net
of applicable Servicing Fees collected on or after the Cut-off Date (minus that
portion of any such payment which is allocable to the period prior to the Cut-
off Date). The outstanding principal balance of each Mortgage Loan as of the
Cut-off Date is determined after application of payments of principal due on or
before the Cut-off Date whether or not collected, together with any unscheduled
principal prepayments collected prior to the Cut-off Date; provided, however,
that payments of scheduled principal and interest prepaid for a Due Date beyond
the Cut-off Date shall not be applied to the principal balance as of the Cut-off
Date. Such prepaid amounts shall be the property of Purchaser. Any such prepaid
amounts shall be deposited into the Custodial Account, which account is
established for the benefit of Purchaser for subsequent remittance to Purchaser.

SECTION 4. ADDITIONAL MORTGAGE LOANS.  From time to time Purchaser may agree to
purchase additional Mortgage Loans offered for sale by Seller ("Supplemental
Sale"). Such Supplemental Sale shall be evidenced by one or more Supplemental
Mortgage Loan Schedules (sequentially labeled Exhibit H-1, Exhibit H-2, etc.),
executed by the parties.  Each such Supplemental Sale shall, in all respects, be
governed by this Agreement, including all Exhibits and Schedules hereto, with
the following exceptions:

a. The Closing Date, Cut-Off Date and Remittance Date (collectively, "Contract
   Dates") stated in this Agreement or in any Exhibit or Schedule attached
   hereto shall each be as set forth on the applicable Supplemental Mortgage
   Loan Schedule. All other relevant dates and time periods in the Agreement
   shall be deemed to be adjusted in order to conform to the amended Contract
   Dates.

b. Any other exception mutually agreed between the parties and contained on the
   applicable Supplemental Mortgage Loan Schedule.

SECTION 5. EXAMINATION OF MORTGAGE FILES.  Prior to the date hereof, Seller has
(a) delivered to Purchaser in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) made the
related Mortgage File available to Purchaser for examination at Seller's offices
or such other location as shall otherwise be agreed upon by Purchaser and
Seller. The fact that Purchaser has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect
Purchaser's (or its successor's) rights to demand repurchase, substitution or
other relief as provided herein.

SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.

6.01. Conveyance of Mortgage Loans; Possession of Files.  Seller hereby agrees
to sell, transfer, assign and convey to Purchaser on the Closing Date, without
recourse, but subject to the terms of this Agreement, all right, title and
interest of Seller in and to the Mortgage Loans and the Mortgage Files and all
rights and obligations arising under the documents contained therein. The
Servicing File shall be retained by Seller in accordance with the terms of the
Servicing Agreement and, as provided therein, shall be appropriately identified
in Seller's books and records to clearly reflect the sale of the related
Mortgage Loan to Purchaser.

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On and after the Closing Date, each Mortgage and related Mortgage Note shall be
possessed solely by Purchaser.  All rights arising out of the Mortgage Loans
including, but not limited to, all funds received by Seller after the Cut-off
Date in connection with a Mortgage Loan shall be vested in Purchaser provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by Seller in trust for the benefit of Purchaser as the
owner of the Mortgage Loans pursuant to the terms of this Agreement.

The sale of each Mortgage Loan shall be reflected on Seller's balance sheet and
other financial statements as a sale of assets by Seller.

6.02. Delivery of Mortgage Loan Documents.  On the Closing Date, Seller shall
deliver to Purchaser the Mortgage Loan Documents with respect to each Mortgage
Loan set forth on the Mortgage Loan Schedule.  Seller shall forward to Purchaser
original documents evidencing an assumption, modification, consolidation,
conversion or extension of any Mortgage Loan entered into after the Closing Date
within two (2) weeks of their execution, provided, however, that Seller shall
provide Purchaser with a certified true copy of any such document submitted for
recordation within two (2) weeks of its execution, and shall promptly provide
the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within ninety (90) days of its submission for
recordation.

In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
Purchaser within 90 days following the Closing Date (other than with respect to
the Assignments of Mortgage which shall be delivered to Purchaser in blank and
recorded subsequently by Purchaser), and in the event that Seller does not cure
such failure within 30 days of discovery or receipt of written notification of
such failure from Purchaser, the related Mortgage Loan shall, upon the request
of Purchaser, be repurchased by Seller at the price and in the manner specified
in Subsection 8.03. The foregoing repurchase obligation shall not apply in the
event that Seller cannot deliver, or cause to be delivered, such original or
copy of any document submitted for recordation to the appropriate public
recording office within the specified period due to a delay caused by the
recording office in the applicable jurisdiction; provided that Seller shall
instead deliver, or cause to be delivered, a recording receipt of such recording
office or, if such recording receipt is not available, an officer's certificate
of a servicing officer of Seller confirming that such documents have been
accepted for recording; provided that, upon request of Purchaser and delivery by
Purchaser to Seller of a schedule of the related Mortgage Loans, Seller shall
reissue and deliver to Purchaser said officer's certificate relating to the
related Mortgage Loans.

Seller shall pay all initial recording fees, if any, for the Assignments of
Mortgage and any other fees or costs in transferring all original documents to
Purchaser. Purchaser shall be responsible for recording the Assignments of
Mortgage and shall be reimbursed by Seller for the reasonable costs associated
therewith pursuant to the preceding sentence.

SECTION 7. SERVICING OF THE MORTGAGE LOANS.  The Mortgage Loans have been sold
by Seller to Purchaser on a servicing retained basis.  Purchaser shall retain
Seller as independent contract servicer of the Mortgage Loans pursuant to and in
accordance with the terms and conditions contained in the Servicing Agreement.
Purchaser and Seller shall execute the Servicing Agreement on the Closing Date
in the form attached hereto as Exhibit B.  Pursuant to the Servicing Agreement,
Seller shall begin servicing the Mortgage Loans on behalf of Purchaser and shall
be entitled to the Servicing Fee and any Ancillary Income with respect to such
Mortgage Loans from the Closing Date until the termination of the Servicing
Agreement with respect to any of the Mortgage Loans as set forth in the
Servicing Agreement.

SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER; REMEDIES FOR
           BREACH.

8.01. Representations and Warranties Regarding Seller.  Seller represents,
warrants and covenants to Purchaser that as of the date hereof and as of the
Closing Date:

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a. Due Organization and Authority; Enforceability. Seller is a federal savings
   bank duly organized, validly existing and in good standing under the laws of
   the United States and has all licenses necessary to carry on its business as
   now being conducted in each state wherein it owns or leases any material
   properties or where a Mortgaged Property is located.  Seller is in compliance
   with the laws of any such state to the extent necessary to ensure the
   enforceability of the related Mortgage Loan in accordance with the terms of
   this Agreement; Seller has the full corporate power, authority and legal
   right to hold, transfer and convey the Mortgage Loans and to execute and
   deliver this Agreement and to perform its obligations hereunder; the
   execution, delivery and performance of this Agreement (including all
   instruments of transfer to be delivered pursuant to this Agreement) by Seller
   and the consummation of the transactions contemplated hereby have been duly
   and validly authorized; this Agreement and all agreements contemplated hereby
   have been duly executed and delivered and constitute the valid, legal,
   binding and enforceable obligations of Seller subject to bankruptcy laws and
   other similar laws of general application affecting rights of creditors and
   subject to the application of the rules of equity, including those respecting
   the availability of specific performance, none of which will materially
   interfere with the realization of the benefits provided thereunder,
   regardless of whether such enforcement is sought in a proceeding in equity or
   at law; and all requisite corporate action has been taken by Seller to make
   this Agreement and all agreements contemplated hereby valid and binding upon
   Seller in accordance with their terms;

b. Ordinary Course of Business. The consummation of the transactions
   contemplated by this Agreement are in the ordinary course of business of
   Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
   the Mortgages by Seller pursuant to this Agreement are not subject to the
   bulk transfer or any similar statutory provisions in effect in any applicable
   jurisdiction;

c. No Conflicts. Neither the execution and delivery of this Agreement, the sale
   of the Mortgage Loans to Purchaser, the consummation of the transactions
   contemplated hereby, nor the fulfillment of or compliance with the terms and
   conditions of this Agreement, will conflict with or result in a breach of any
   of the terms, conditions or provisions of Seller's charter or by-laws or any
   legal restriction or any agreement or instrument to which 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 Seller or its
   property is subject, or result in the creation or imposition of any lien,
   charge or encumbrance that would have an adverse effect upon any of its
   properties pursuant to the terms of any mortgage, contract, deed of trust or
   other instrument, or impair the ability of Purchaser to realize on the
   Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability
   of Purchaser to realize the full amount of any mortgage insurance benefits
   accruing pursuant to this Agreement;

d. Ability to Perform; Solvency. 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. Seller is solvent and the sale of the Mortgage
   Loans will not cause Seller to become insolvent. The sale of the Mortgage
   Loans is not undertaken with the intent to hinder, delay or defraud any of
   Seller's creditors;

e. No Litigation Pending. There is no action, suit, proceeding or investigation
   pending or threatened against Seller, before any court, administrative agency
   or other tribunal asserting the invalidity of this Agreement, seeking to
   prevent the consummation of any of the transactions contemplated by this
   Agreement or which, either in any one instance or in the aggregate, could
   result in any material adverse change in the business, operations, financial
   condition, properties or assets of Seller, or in any material impairment of
   the right or ability of Seller to carry on its business substantially as now
   conducted, or in any material liability on the part of Seller, or which would
   draw into question the validity of this Agreement or the Mortgage Loans or of
   any action taken or to be taken in connection with the obligations of Seller
   contemplated herein, or which would be

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<PAGE>

   likely to impair materially the ability of Seller to perform under the terms
   of this Agreement;

f. No Consent Required. No consent, approval, authorization or order of, or
   registration or filing with, or notice to any court or governmental agency or
   body including HUD is required for the execution, delivery and performance by
   Seller of or compliance by Seller with this Agreement or the Mortgage Loans,
   the delivery of a portion of the Mortgage Files to Purchaser or the sale of
   the Mortgage Loans or the consummation of the transactions contemplated by
   this Agreement, or if required, such approval has been obtained prior to the
   Closing Date;

g. Selection Process. The Mortgage Loans were selected from among the
   outstanding one-to four-family mortgage loans in Seller's portfolio at the
   Closing Date as to which the representations and warranties set forth in
   Subsection 8.02 could be made and such selection was not made in a manner so
   as to affect adversely the interests of Purchaser;

h. Initial Portfolio. The aggregate characteristics of the Mortgage Loans are as
   set forth under the heading " Business and Strategy--Description of Initial
   Portfolio" in the Prospectus of Purchaser dated November 26, 1996;

i. No Untrue Information. Neither this Agreement nor any information, statement,
   tape, diskette, report, form, or other document furnished or to be furnished
   pursuant to this Agreement or in connection with the transactions
   contemplated hereby contains or will contain any untrue statement of a
   material fact or omits or will omit to state a material fact necessary to
   make the statements contained herein or therein not misleading; and

j. No Brokers. Seller has not dealt with any broker, investment banker, agent or
   other person that may be entitled to any commission or compensation in
   connection with the sale of the Mortgage Loans.

8.02. Representations and Warranties Regarding Individual Mortgage Loans.
Seller hereby represents and warrants to Purchaser that, as to each Mortgage
Loan, as of the Closing Date:

a. Mortgage Loans as Described. The information set forth in the Mortgage Loan
   Schedule is complete, true and correct in all material respects;

b. Payments Current; Status. All payments required to be made up to, but not
   including, the Cut-off Date for the Mortgage Loan under the terms of the
   Mortgage Note have been made and credited. No payment required under the
   Mortgage Loan is delinquent nor has any payment under the Mortgage Loan been
   30 days or more delinquent more than once within the twelve (12) months prior
   to the Cut-off Date. The Mortgage Loan is not, and has not been at any time
   in the preceding twelve months, (i) classified, (ii) in nonaccrual status or
   (iii) renegotiated due to the deterioration of the financial condition of the
   Mortgagor;

c. No Outstanding Charges. There are no defaults in complying with the terms of
   the Mortgage, and all taxes, governmental assessments, insurance premiums,
   water, sewer and municipal charges, leasehold payments or ground rents which
   previously became due and owing have been paid, or an escrow of funds has
   been established in an amount sufficient to pay for every such item which
   remains unpaid and which has been assessed but is not yet due and payable.
   Seller has not advanced funds, or induced, solicited or knowingly received
   any advance of funds by a party other than the Mortgagor, directly or
   indirectly, for the payment of any amount required under the Mortgage Loan,
   except for interest accruing from the date of the Mortgage Note or date of
   disbursement of the Mortgage Loan proceeds, whichever is earlier, to the day
   which precedes by one month the Due Date of the first installment of
   principal and interest;

d. Original Terms Unmodified. The terms of the Mortgage Note and Mortgage have
   not been impaired, waived, altered or modified in any respect except by a
   written instrument which has been recorded (if necessary to protect the
   interests of

                                       10
<PAGE>

   Purchaser) and which has been delivered to Purchaser and the terms of which
   are reflected in the Mortgage Loan Schedule, if applicable. The substance of
   any such waiver, alteration or modification has been approved by the title
   insurer, if any, to the extent required by the policy, and its terms are
   reflected on the Mortgage Loan Schedule, if applicable. No Mortgagor has been
   released, in whole or in part, except in connection with an assumption
   agreement, which assumption agreement is part of the Mortgage Loan File
   delivered to Purchaser and the terms of which are reflected in the Mortgage
   Loan Schedule;

e. No Defenses. The Mortgage Loan is not subject to any right of rescission,
   set-off, counterclaim or defense, including without limitation the defense of
   usury, nor will the operation of any of the terms of the Mortgage Note or the
   Mortgage, or the exercise of any right thereunder, render either the Mortgage
   Note or the Mortgage unenforceable, in whole or in part and no such right of
   rescission, set-off, counterclaim or defense has been asserted with respect
   thereto, and no Mortgagor is now or was, at the time of origination of the
   related Mortgage Loan, a debtor in any state or Federal bankruptcy or
   insolvency proceeding;

f. Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings or
   other improvements upon the Mortgaged Property are insured by a generally
   acceptable insurer against loss by fire, hazards of extended coverage and
   such other hazards as are set forth in Section 2.10 of the Servicing
   Agreement. If such coverage would be required by a lender subject to
   applicable federal flood insurance laws, the Mortgage Loan is covered by a
   flood insurance policy which meets all current federal guidelines and
   conforms to FNMA guidelines, as well as all additional requirements set forth
   in Section 2.10 of the Servicing Agreement. All individual insurance policies
   contain a standard mortgagee clause naming Seller and its successors and
   assigns as mortgagee, and all premiums thereon have been paid. The Mortgage
   for each Mortgage Loan obligates the Mortgagor thereunder to maintain the
   hazard insurance policy at the Mortgagor's cost and expense, and on the
   Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
   and maintain such insurance at such Mortgagor's cost and expense, and to seek
   reimbursement therefor from the Mortgagor. Where required by state law or
   regulation, the Mortgagor has been given an opportunity to choose the carrier
   of the required hazard insurance, provided the policy is not a "master" or
   "blanket" hazard insurance policy covering a condominium, or any hazard
   insurance policy covering the common facilities of a planned unit
   development. The hazard insurance policy is the valid and binding obligation
   of the insurer, is in full force and effect, and will be in full force and
   effect and inure to the benefit of Purchaser upon the consummation of the
   transactions contemplated by this Agreement. Seller has not engaged in, and
   has no knowledge that the Mortgagors have engaged in, any act or omission
   which would impair the coverage of any such policy, the benefits of the
   endorsement provided for herein, or the validity and binding effect of either
   including, without limitation, no unlawful fee, commission, kickback or other
   unlawful compensation or value of any kind has been or will be received,
   retained or realized by any attorney, firm or other person or entity, and no
   such unlawful items have been received, retained or realized by Seller;

g. Compliance with Applicable Laws. All applicable federal, state and local laws
   and regulations including, without limitation, usury, truth-in-lending, real
   estate settlement procedures, consumer credit protection, fair housing, equal
   credit opportunity and disclosure laws applicable to the Mortgage Loan have
   been complied with, the consummation of the transactions contemplated hereby
   will not involve the violation of any such laws or regulations, and Seller
   shall maintain in its possession, available for Purchaser's inspection, and
   shall deliver to Purchaser upon demand, evidence of such compliance.

h. No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
   subordinated or rescinded, in whole or in part, and the Mortgaged Property
   has not been released from the lien of the Mortgage, in whole or in part, nor
   has any instrument been executed that would effect any such release,
   cancellation, subordination or rescission. Seller has not waived the
   performance by the Mortgagor of any action, if the Mortgagor's failure to
   perform such action would cause the Mortgage Loan to be in default, nor has
   Seller waived any default resulting from any action or inaction by the
   Mortgagor;

                                       11
<PAGE>

i. Location and Type of Mortgaged Property. The Mortgaged Property is located in
   the state identified in the Mortgage Loan Schedule and consists of a single
   parcel of real property with a detached single family residence erected
   thereon, or a townhouse, or a two- to four-family dwelling, or an individual
   condominium unit in a condominium project, or an individual unit in a planned
   unit development, provided, however, that any condominium unit or planned
   unit development shall conform with requirements acceptable to FNMA regarding
   such dwellings. As of the date of origination, no portion of any Mortgaged
   Property is used for commercial purposes;

j. Valid First Lien. The Mortgage is a valid, subsisting, enforceable and
   perfected first lien on the related Mortgaged Property, including all
   buildings and improvements on the Mortgaged Property and all installations
   and mechanical, electrical, plumbing, heating and air conditioning systems
   located in or annexed to such buildings, and all additions alterations and
   replacements made at any time with respect to the foregoing. The lien of the
   Mortgage is subject only to:

   1.  the lien of current real property taxes and assessments not yet due and
       payable;

   2.  covenants, conditions and restrictions, rights of way, easements and
       other matters of the public record as of the date of recording acceptable
       to prudent mortgage lending institutions generally and specifically
       referred to in the lender's title insurance policy delivered to the
       originator of the Mortgage Loan and (a) specifically referred to or
       otherwise considered in the appraisal made for the originator of the
       Mortgage Loan or (b) which do not adversely affect the Appraised Value of
       the Mortgaged Property set forth in such appraisal; and

   3.  other matters to which like properties are commonly subject which do not
       materially interfere with the benefits of the security intended to be
       provided by the Mortgage or the use, enjoyment, value or marketability of
       the related Mortgaged Property.

   Any security agreement, chattel mortgage or equivalent document related to
   and delivered in connection with the Mortgage Loan establishes and creates a
   valid, subsisting, enforceable and perfected first lien and first priority
   security interest on the property described therein and Seller has full right
   to sell and assign the same to Purchaser. The Mortgaged Property was not, as
   of the date of origination of the Mortgage Loan, subject to a mortgage, deed
   of trust, deed to secure debt or other security instrument creating a lien
   subordinate to the lien of the Mortgage (except any such subordinate loan
   which was created in connection with the origination of the related Mortgage
   Loan details of which are contained in the related Mortgage File);

k. Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any
   other agreement executed and delivered by a Mortgagor in connection with a
   Mortgage Loan are genuine, and each is the legal, valid and binding
   obligation of the maker thereof enforceable in accordance with its terms. All
   parties to the Mortgage Note, the Mortgage and any other such related
   agreement had legal capacity to enter into the Mortgage Loan and to execute
   and deliver the Mortgage Note, the Mortgage and any such agreement, and the
   Mortgage Note, the Mortgage and any other such related agreement have been
   duly and properly executed by such parties. No fraud, error, omission,
   misrepresentation, negligence or similar occurrence with respect to a
   Mortgage Loan has taken place on the part of any Person, including without
   limitation, the Mortgagor, any appraiser, any builder or developer, or any
   other party involved in the origination of the Mortgage Loan. Seller has
   reviewed all of the documents constituting the Servicing File and has made
   such inquiries as it deems necessary to make and confirm the accuracy of the
   representations set forth herein;

l. Full Disbursement of Proceeds. The Mortgage Loan has been closed and the
   proceeds of the Mortgage Loan have been fully disbursed and there is no
   requirement for future advances thereunder, and any and all requirements as
   to completion of any on-site

                                       12
<PAGE>

   or off-site improvement and as to disbursements of any escrow funds therefor
   have been complied with. All costs, fees and expenses incurred in making or
   closing the Mortgage Loan and the recording of the Mortgage were paid, and
   the Mortgagor is not entitled to any refund of any amounts paid or due under
   the Mortgage Note or Mortgage;

m. Ownership. Seller is the sole owner of record and holder of the Mortgage Loan
   and the indebtedness evidenced by each Mortgage Note, except for the
   assignments of mortgage which have been sent for recording and upon
   recordation, Seller will be the owner of record of each Mortgage and the
   indebtedness evidenced by each Mortgage Note, and upon the sale of the
   Mortgage Loans to Purchaser, Seller will retain the Mortgage Files or any
   part thereof with respect thereto not delivered to Purchaser in trust only
   for the purpose of servicing and supervising the servicing of each Mortgage
   Loan. The Mortgage Loan is not assigned or pledged, and Seller has good,
   indefeasible and marketable title thereto, and has full right to transfer and
   sell the Mortgage Loan to Purchaser free and clear of any encumbrance,
   equity, participation interest, lien, pledge, charge, claim or security
   interest, and has full right and authority subject to no interest or
   participation of, or agreement with, any other party, to sell and assign each
   Mortgage Loan pursuant to this Agreement and following the sale of each
   Mortgage Loan, Purchaser will own such Mortgage Loan free and clear of any
   encumbrance, equity, participation interest, lien, pledge, charge, claim or
   security interest. Seller intends to relinquish all rights to possess,
   control and monitor the Mortgage Loan, except indirectly for purposes of
   servicing the Mortgage Loan as set forth in the Servicing Agreement. After
   the Closing Date, Seller will have no right to modify or alter the terms of
   the sale of the Mortgage Loan and Seller will have no obligation or right to
   repurchase the Mortgage Loan or substitute another Mortgage Loan, except as
   provided in this Agreement;

n. Doing Business. All parties which have had any interest in the Mortgage Loan,
   whether as mortgagee, assignee, pledges or otherwise, are (or, during the
   period in which they held and disposed of such interest, were) (1) in
   compliance with any and all applicable licensing requirements of the laws of
   the state wherein the Mortgaged Property is located, and (2) either (i)
   organized under the laws of such state, or (ii) qualified to do business in
   such state, or (iii) a federal savings and loan association, a savings bank
   or a national bank having a principal office in such state, or (3) not doing
   business in such state;

o. LTV, PMI Policy.  If the original LTV of each Conventional Loan exceeded 80%,
   the excess over 75% is and will be insured as to payment defaults by a PMI
   Policy until the LTV of such Conventional Loan is reduced to at least 80% and
   such Loan otherwise meets Seller's ordinary requirements for cancellation of
   PMI. All provisions of such PMI Policy have been and are being complied with,
   such policy is valid and remains in full force and effect, and all premiums
   due thereunder have been paid. No action, inaction, or event has occurred and
   no state of facts exists that has, or will result in the exclusion from,
   denial of, or defense to coverage by the PMI Policy. Any Conventional Loan
   subject to a PMI Policy obligates the Mortgagor thereunder to maintain the
   PMI Policy and to pay all premiums and charges in connection therewith. The
   Mortgage Interest Rate for each Conventional Loan as set forth on the
   Mortgage Loan Schedule is net of any such insurance premium;

p. Title Insurance. The Mortgage Loan is covered by an ALTA lender's title
   insurance policy or other generally acceptable form of policy or insurance
   acceptable to FNMA and each such title insurance policy is issued by a title
   insurer acceptable to FNMA and qualified to do business in the jurisdiction
   where the Mortgaged Property is located, insuring Seller, its successors and
   assigns, as to the first priority lien of the Mortgage in the original
   principal amount of the Mortgage Loan, subject only to the exceptions
   contained in clauses (1), (2) and (3) of paragraph (j) of this Subsection
   8.02, and against any loss by reason of the invalidity or unenforceability of
   the lien resulting from the provisions of the Mortgage providing for
   adjustment to the Mortgage Interest Rate and Monthly Payment. Where required
   by state law or regulation, the Mortgagor has been given the opportunity to
   choose the carrier of the required mortgage title insurance.

                                       13
<PAGE>

   Additionally, such lender's title insurance policy affirmatively insures
   ingress and egress, and against encroachments by or upon the Mortgaged
   Property or any interest therein. Seller, its successor and assigns, are the
   sole insureds under such lender's title insurance policy, and such lender's
   title insurance policy is valid and remains in full force and effect and will
   be in force and effect upon the consummation of the transactions contemplated
   by this Agreement. No claims have been made under such lender's title
   insurance policy, and no prior holder of the related Mortgage, including
   Seller, has done, by act or omission, anything which would impair the
   coverage of such lender's title insurance policy, including without
   limitation, no unlawful fee, commission, kickback or other unlawful
   compensation or value of any kind has been or will be received, retained or
   realized by any attorney, firm or other person or entity, and no such
   unlawful items have been received, retained or realized by Seller;

q. No Defaults. No default, breach, violation or event which would permit
   acceleration exists under the Mortgage or the Mortgage Note and no event
   which, with the passage of time or with notice and the expiration of any
   grace or cure period, would constitute a default, breach, violation or event
   which would permit acceleration, and neither Seller nor its predecessors have
   waived any default, breach, violation or event which would permit
   acceleration;

r. No Mechanics' Liens. There are no mechanics' or similar liens or claims which
   have been filed for work, labor or material (and no rights are outstanding
   that under law could give rise to such liens) affecting the related Mortgaged
   Property which are or may be liens prior to, or equal with, the lien of the
   related Mortgage;

s. Location of Improvements; No Encroachments. All improvements which were
   considered in determining the Appraised Value of the Mortgaged Property lay
   wholly within the boundaries and building restriction lines of the Mortgaged
   Property, and no improvements on adjoining properties encroach upon the
   Mortgaged Property. No improvement located on or being part of the Mortgaged
   Property is in violation of any applicable zoning law or regulation;

t. Origination; Payment Terms. The Mortgage Loan was originated by a mortgagee
   approved by the Secretary of Housing and Urban Development pursuant to
   Sections 203 and 211 of the Act, a savings and loan association, a savings
   bank, a commercial bank, credit union, insurance company or similar
   institution which is supervised and examined by a federal or state authority.
   The documents, instruments and agreements submitted for loan underwriting
   were not falsified and contain no untrue statement of material fact or omit
   to state a material fact required to be stated therein or necessary to make
   the information and statements therein not misleading. Principal payments on
   the Mortgage Loan commenced no more than sixty (60) days after funds were
   disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate,
   as well as the Lifetime Rate Cap and the Periodic Rate Cap if the Mortgage
   Loan is an ARM Loan, are as set forth on Exhibit H hereto. The Mortgage Note
   is payable on the first day of each month in equal monthly installments of
   principal and interest, which installments of interest are subject to change
   if the Mortgage Loan is an ARM Loan due to the adjustments to the Mortgage
   Interest Rate on each Interest Rate Adjustment Date, with interest calculated
   and payable in arrears, sufficient to amortize the Mortgage Loan fully by the
   stated maturity date, over an original term of not more than thirty (30)
   years from commencement of amortization. There is no negative amortization
   with respect to any Mortgage Loan. Each Convertible Mortgage Loan contains a
   provision allowing the Mortgagor to convert the Mortgage Note from an
   adjustable interest rate Mortgage Note to a fixed interest rate Mortgage Note
   in accordance with the terms of the Mortgage Note or a rider to the related
   Mortgage Note;

u. Customary Provisions. The Mortgage contains customary and enforceable
   provisions such as to render the rights and remedies of the holder thereof
   adequate for the realization against the Mortgaged Property of the benefits
   of the security provided thereby, including, (i) in the case of a Mortgage
   designated as a deed of trust, by trustee's sale, and (ii) otherwise by
   judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
   foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
   proper procedures, the holder of the

                                       14
<PAGE>

    Mortgage Loan will be able to deliver good and merchantable title to the
    Mortgaged Property. There is no homestead or other exemption available to a
    Mortgagor which would interfere with the right to sell the Mortgaged
    Property at a trustee's sale or the right to foreclose the Mortgage, subject
    to applicable federal and state laws and judicial precedent with respect to
    bankruptcy and right of redemption or similar law. The Mortgage contains
    due-on-sale provisions providing for the acceleration of the payment of the
    unpaid principal balance of such Mortgage Loan in the event that all or any
    part of the Mortgaged Property is sold or transferred without the prior
    written consent of the Mortgagee;

v.  Conformance with Agency and Underwriting Standards.   The Mortgage Loan was
    underwritten in accordance with the underwriting standards of Seller (a copy
    of which is attached hereto as Exhibit J), or FNMA's underwriting standards
    (except that the principal balance of certain Mortgage Loans may have
    exceeded the limits of FNMA), in each case in effect at the time the
    Mortgage Loan was originated. The Mortgage Note and Mortgage are on forms
    acceptable to FNMA, except with respect to Mortgage Loans underwritten in
    accordance with the underwriting guidelines of Seller, which are on forms
    acceptable to Purchaser, in Purchaser's sole discretion, as evidenced by
    Purchaser's purchase of the related Mortgage Loans, and, in either case,
    Seller has not made any representations to a Mortgagor that are inconsistent
    with the mortgage instruments used. All Mortgage Loans have full asset
    verification;

w.  Occupancy of the Mortgaged Property. As of the Closing Date, the Mortgaged
    Property is lawfully occupied under applicable law. All inspections,
    licenses and certificates required to be made or issued with respect to all
    occupied portions of the Mortgaged Property and, with respect to the use and
    occupancy of the same, including but not limited to certificates of
    occupancy and fire underwriting certificates, have been made or obtained
    from the appropriate authorities. Unless otherwise specified on the
    description of characteristics for the Mortgage Loans contained on the
    Mortgage Loan Schedule attached as Exhibit H and delivered pursuant to
    Section 10 on the Closing Date, the Mortgagor represented at the time of
    origination of the Mortgage Loan that the Mortgagor would occupy the
    Mortgaged Property as the Mortgagor's primary residence;

x.  No Additional Collateral. The Mortgage Note is not and has not been secured
    by any collateral except the lien of the corresponding Mortgage and the
    security interest of any applicable security agreement or chattel mortgage
    referred to in clause (j) above;

y.  Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a
    trustee, authorized and duly qualified under applicable law to serve as
    such, has been properly designated and currently so serves and is named in
    the Mortgage, and no fees or expenses are or will become payable by
    Purchaser to the trustee under the deed of trust, except in connection with
    a trustee's sale after default by the Mortgagor;

z.  Acceptable Investment. There are no circumstances or conditions with respect
    to the Mortgage, the Mortgaged Property, the Mortgagor, the Mortgage File or
    the Mortgagor's credit standing that can reasonably be expected to cause the
    Mortgage Loan to become delinquent, or adversely affect the value or
    marketability of the Mortgage Loan;

aa. Delivery of Mortgage Documents. The Mortgage Note, the Mortgage, the
    Assignment of Mortgage and any other Mortgage Loan Documents for each
    Mortgage Loan have been delivered to Purchaser. Seller is in possession of a
    complete, true and accurate Mortgage File in compliance with Exhibit A
    hereto, except for such documents the originals of which have been delivered
    to Purchaser;0

bb. Condominiums/Planned Unit Developments. If the Mortgaged Property is a
    condominium unit or a planned unit development, it is acceptable to FNMA or
    is located in a condominium or planned unit development project which has
    received project approval from FNMA;

                                       15
<PAGE>

cc. Transfer of Mortgage Loans. The Assignment of Mortgage with respect to each
    Mortgage Loan is in recordable form and is acceptable for recording under
    the laws of the jurisdiction in which the Mortgaged Property is located;

dd. Assumability. The Mortgage Loan Documents provide that a related Mortgage
    Loan may only be assumed if the party assuming such Mortgage Loan meets
    certain credit requirements stated in the Mortgage Loan Documents, except
    that with respect to Mortgage Loans underwritten in accordance with the
    underwriting guidelines of Seller, the Mortgage Loan Documents relating to
    such Mortgage Loans do not preclude assumability;

ee. No Buydown Provisions; No Graduated Payments or Contingent Interests. The
    Mortgage Loan does not contain provisions pursuant to which Monthly Payments
    are paid or partially paid with funds deposited in any separate account
    established by Seller, the Mortgagor, or anyone on behalf of the Mortgagor,
    or paid by any source other than the Mortgagor nor does it contain 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;

ff. RESERVED

gg. Mortgaged Property Undamaged; No Condemnation Proceedings. There is no
    proceeding pending or threatened for the total or partial condemnation of
    the Mortgaged Property. The Mortgaged Property is undamaged by waste, fire,
    earthquake or earth movement, windstorm, flood, tornado or other casualty so
    as to affect adversely the value of the Mortgaged Property as security for
    the Mortgage Loan or the use for which the premises were intended and each
    Mortgaged Property is in good repair. There have not been any condemnation
    proceedings with respect to the Mortgaged Property and Seller has no
    knowledge of any such proceedings in the future;

hh. Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
    origination and collection practices used by Seller with respect to the
    Mortgage Loan have in all respects been in compliance with Accepted
    Servicing Practices, applicable laws and regulations, and have in all
    respects been legal and proper. With respect to escrow deposits and Escrow
    Payments, all such payments are in the possession of, or under the control
    of, Seller, and there exist no deficiencies in connection therewith for
    which customary arrangements for repayment thereof have not been made. All
    Escrow Payments have been collected in full compliance with state and
    federal law and the provisions of the related Mortgage Note and Mortgage. An
    escrow of funds is not prohibited by applicable law and has been established
    in an amount sufficient to pay for every item that remains unpaid and has
    been assessed but is not yet due and payable. No escrow deposits or Escrow
    Payments or other charges or payments due Seller have been capitalized under
    the Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments to
    the Monthly Payment, if the Mortgage Loan is an ARM Loan, have been made in
    strict compliance with state and federal law and the terms of the related
    Mortgage and Mortgage Note on the related Interest Rate Adjustment Date.
    With respect to each ARM Loan, the Mortgage Interest Rate adjusts as set
    forth herein. If, pursuant to the terms of the Mortgage Note, another index
    was selected for determining the Mortgage Interest Rate, the same index was
    used with respect to each Mortgage Note which required a new index to be
    selected, and such selection did not conflict with the terms of the related
    Mortgage Note. Seller executed and delivered any and all notices required
    under applicable law and the terms of the related Mortgage Note and Mortgage
    regarding the Mortgage Interest Rate and the Monthly Payment adjustments.
    Any interest required to be paid pursuant to state, federal and local law
    has been properly paid and credited;

ii. Other Insurance Policies. No action, inaction or event has occurred and no
    state of facts exists or has existed that has resulted or could result in
    the exclusion from, denial of, or defense to coverage under any hazard
    insurance policy or PMI Policy. In connection with the placement of any such
    insurance, no commission, fee, or other compensation has been or will be
    received by Seller or by any officer, director, or employee of Seller or any
    designee of Seller or any

                                       16
<PAGE>

    corporation in which Seller or any officer, director, or employee had a
    financial interest at the time of placement of such insurance;

jj. No Violation of Environmental Laws. There is no pending action or proceeding
    directly involving the Mortgaged Property in which compliance with any
    environmental law, rule or regulation is an issue; there is no violation of
    any environmental law, rule or regulation with respect to the Mortgaged
    Property; and nothing further remains to be done to satisfy in full all
    requirements of each such law, rule or regulation constituting a
    prerequisite to use and enjoyment of said property;

kk. Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not notified
    Seller and Seller has no knowledge of any relief requested or allowed to the
    Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;

ll. Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
    Property signed prior to the approval of the Mortgage Loan application by a
    Qualified Appraiser who had no interest, direct or indirect, in the
    Mortgaged Property or in any loan made on the security thereof, and whose
    compensation is not affected by the approval or disapproval of the Mortgage
    Loan, and the appraisal and appraiser both satisfy the requirements of FNMA
    and Title XI of the Federal Institutions Reform, Recovery, and Enforcement
    Act of 1989 and the regulations promulgated thereunder, all as in effect on
    the date the Mortgage Loan was originated;0

mm. Disclosure Materials. The Mortgagor has received all disclosure materials
    required by and Seller complied with all applicable law with respect to the
    making of the Mortgage Loans;

nn. Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was
    made in connection with the construction or rehabilitation of a Mortgaged
    Property or facilitating the trade-in or exchange of a Mortgaged Property;

oo. Value of Mortgaged Property. Seller has no knowledge of any circumstances
    existing that could reasonably be expected to adversely affect the value or
    the marketability of any Mortgaged Property or Mortgage Loan;

pp. No Defense to Insurance Coverage. No action has been taken or failed to be
    taken, no event has occurred and no state of facts exists or has existed on
    or prior to the Closing Date (whether or not known to Seller on or prior to
    such date) which has resulted or will result in an exclusion from, denial
    of, or defense to coverage under any primary mortgage insurance (including,
    without limitation, any exclusions, denials or defenses which would limit or
    reduce the availability of the timely payment of the full amount of the loss
    otherwise due thereunder to the insured) whether arising out of actions,
    representations, errors, omissions, negligence, or fraud of Seller, the
    related Mortgagor or any party involved in the application for such
    coverage, including the appraisal, plans and specifications and other
    exhibits or documents submitted therewith to the insurer under such
    insurance policy, or for any other reason under such coverage, but not
    including the failure of such insurer to pay by reason of such insurer's
    breach of such insurance policy or such insurer's financial inability to
    pay;

qq. Escrow Analysis. With respect to each Mortgage, Seller has within the last
    twelve months (unless such Mortgage was originated within such twelve month
    period) analyzed the required Escrow Payments for each Mortgage and adjusted
    the amount of such payments so that, assuming all required payments are
    timely made, any deficiency will be eliminated on or before the first
    anniversary of such analysis, or any overage will be refunded to the
    Mortgagor, in accordance with RESPA and any other applicable law;

rr. Prior Servicing. Each Mortgage Loan has been serviced in all material
    respects in compliance with Accepted Servicing Practices; provided that, in
    the event any Mortgage Loan was not so serviced, Seller shall not be
    required to repurchase such Mortgage Loan unless such breach had, and
    continues to have, a material and

                                       17
<PAGE>

    adverse effect on the value of the related Mortgage Loan or the interest of
    Purchaser therein; and

ss. lost notes.  With respect to each Mortgage Loan listed on Schedule I to
    Exhibit A hereto, the failure to deliver the original Mortgage Note to the
    Purchaser will not materially and adversely affect the value of the related
    Mortgage Loan or interest of the Purchaser therein.

8.03. Remedies for Breach of Representations and Warranties.  It is understood
and agreed that the representations and warranties set forth in Subsections 8.01
and 8.02 shall survive the sale of the Mortgage Loans to Purchaser and shall
inure to the benefit of Purchaser, notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage File. Upon discovery by either Seller or
Purchaser of a breach of any of representations and warranties contained in this
Section 8 which materially and adversely affects the value of the Mortgage Loans
or the interest of Purchaser, the party discovering such breach shall give
prompt written notice to the other.

Promptly after discovery of a breach of any representation or warranty, Seller
shall notify Purchaser of such breach and the details thereof. Within sixty (60)
days of the earlier of (i) notice by Seller pursuant to the immediately
preceding sentence or (ii) notice by Purchaser to Seller of any breach of a
representation or warranty with respect to a Mortgage Loan, Seller shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, Seller shall, at Purchaser's option, repurchase such
Mortgage Loan at the Repurchase Price, unless Seller elects to substitute a
Qualified Substitute Mortgage Loan for such Mortgage Loan pursuant to this
Subsection. In the event that a breach shall involve any representation or
warranty set forth in Subsection 8.01, and such breach cannot be cured within
sixty (60) days of the earlier of either discovery by or notice to Seller of
such breach, all of the Mortgage Loans shall, at Purchaser's option, be
repurchased by Seller at the Repurchase Price. However, if the breach shall
involve a representation or warranty set forth in Subsection 8.02 and Seller
discovers or receives notice of any such breach within two (2) years of the
Closing Date, Seller may, at Seller's option and provided that Seller has a
Qualified Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as
provided above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and
substitute in its place a Qualified Substitute Mortgage Loan or Loans, provided
that any such substitution shall be effected not later than two (2) years after
the Closing Date. If Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Subsection 8.03 shall be
accomplished by either (a) if the Servicing Agreement is in effect, by deposit
in the Custodial Account of the amount of the Repurchase Price for payment to
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution or (b) if the Servicing
Agreement is no longer in effect, by direct remittance of the Repurchase Price
to Purchaser in accordance with Purchaser's instructions.

At the time of repurchase or substitution, Purchaser and Seller shall arrange
for the reassignment of the Deleted Mortgage Loan to Seller and the delivery to
Seller of any documents held by Purchaser relating to the Deleted Mortgage Loan.
In addition, upon any such repurchase, all funds maintained in the Escrow
Account with respect to such Deleted Mortgage Loan shall be transferred to
Seller. In the event of a repurchase or substitution, Seller shall,
simultaneously with such reassignment, give written notice to Purchaser that
such repurchase or substitution has taken place, amend the Mortgage Loan
Schedule to reflect the withdrawal of the Deleted Mortgage Loan from this
Agreement, and, in the case of substitution, identify a Qualified Substitute
Mortgage Loan and amend the Mortgage Loan Schedule to reflect the addition of
such Qualified Substitute Mortgage Loan to this Agreement. In connection with
any such substitution, Seller shall be deemed to have made as to such Qualified
Substitute Mortgage Loan the representations and warranties set forth in this
Agreement except that all such representations and warranties set forth in this
Agreement shall be deemed made as of the date of such substitution. Seller shall
effect such substitution by delivering to Purchaser for such Qualified
Substitute Mortgage Loan the documents

                                       18
<PAGE>

required by Subsection 6.03, with the Mortgage Note endorsed as required by
Subsection 6.03. No substitution will be made in any calendar month after the
Determination Date for such month. Seller shall deposit in the Custodial Account
the Monthly Payment, or in the event that the Servicing Agreement is no longer
in effect remit directly to Purchaser in accordance with Purchaser's
instructions the Monthly Payment less the Servicing Fee due, if any, on such
Qualified Substitute Mortgage Loan or Loans in the month following the date of
such substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by Seller. For the
month of substitution, payments to Purchaser shall include the Monthly Payment
due on any Deleted Mortgage Loan in the month of substitution, and Seller shall
thereafter be entitled to retain all amounts subsequently received by Seller in
respect of such Deleted Mortgage Loan.

For any month in which Seller substitutes a Qualified Substitute Mortgage Loan
for a Deleted Mortgage Loan, Seller shall determine the amount (if any) by which
the aggregate principal balance of all Qualified Substitute Mortgage Loans as of
the date of substitution is less than the aggregate Stated Principal Balance of
all Deleted Mortgage Loans (after application of scheduled principal payments
due in the month of substitution). The amount of such shortfall shall be
distributed by Seller directly to Purchaser in accordance with Purchaser's
instructions within two (2) Business Days of such substitution.

In addition to such repurchase or substitution obligation, Seller shall
indemnify Purchaser and hold it harmless against any losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
Seller representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of Seller set forth in this
Subsection 8.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify Purchaser as provided in this Subsection 8.03 constitute the
sole remedies of Purchaser respecting a breach of the foregoing representations
and warranties.

Any cause of action against Seller relating to or arising out of the breach of
any representations and warranties made in Subsections 8.01 and 8.02 shall
accrue as to any Mortgage Loan upon (i) discovery of such breach by Purchaser or
notice thereof by Seller to Purchaser, (ii) failure by Seller to cure such
breach or repurchase such Mortgage Loan as specified above, and (iii) demand
upon Seller by Purchaser for compliance with this Agreement.

SECTION 9. CLOSING.  The closing for the purchase and sale of the Mortgage Loans
shall take place on the Closing Date. At Purchaser's option, the closing shall
be either: by telephone, confirmed by letter or wire as the parties shall agree,
or conducted in person, at such place as the parties shall agree.

Such closing shall be subject to the following conditions:

a. all of the representations and warranties of Seller under this Agreement and
   under the Servicing Agreement (with respect to each Mortgage Loan, as
   specified therein) shall be true and correct as of the Closing Date and no
   event shall have occurred which, with notice or the passage of time, would
   constitute a default under this Agreement or an Event of Default under the
   Servicing Agreement;

b. Purchaser shall have received, or Purchaser's attorneys shall have received
   in escrow, all closing documents as specified in Section 10 of this
   Agreement, in such forms as are agreed upon and acceptable to Purchaser, duly
   executed by all signatories other than Purchaser as required pursuant to the
   terms hereof;

c. Seller shall have delivered and released to Purchaser all Mortgage Loan
   Documents with respect to each Mortgage Loan; and

d. all other terms and conditions of this Agreement shall have been complied
   with.

                                       19
<PAGE>

Subject to the foregoing conditions, Purchaser shall pay to Seller on the
Closing Date the Purchase Price, plus accrued interest pursuant to Section 3 of
this Agreement, by wire transfer of immediately available funds to the account
designated by Seller.

SECTION 10. CLOSING DOCUMENTS.  The closing documents for the Mortgage Loans to
be purchased on the Closing Date shall consist of fully executed originals of
the following documents:

a. this Agreement;

b. the Servicing Agreement, dated as of the Cut-off Date, in the form of Exhibit
   B hereto;

c. a Custodial Account Letter Agreement or a Custodial Account Certification, as
   applicable, as required under the Servicing Agreement;

d. an Escrow Account Letter Agreement or an Escrow Account Certification, as
   applicable, as required under the Servicing Agreement;

e. an Officer's Certificate, in the form of Exhibit C hereto, including all
   attachments thereto;

f. an Opinion of Counsel of Seller (who may be an employee of Seller), in the
   form of Exhibit D hereto;

g. a Security Release Certification, in the form of Exhibit E or Exhibit F. if
   applicable, hereto executed by any person, as requested by Purchaser, if any
   of the Mortgage Loans have at any time been subject to any security interest,
   pledge or hypothecation for the benefit of such person;

h. a certificate or other evidence of merger or change of name, signed or
   stamped by the applicable regulatory authority, if any of the Mortgage Loans
   were acquired by Seller by merger or acquired or originated by Seller while
   conducting business under a name other than its present name, if applicable;

i. Exhibit H to this Agreement; and

j. the underwriting guidelines of Seller to be attached hereto as Exhibit J.


Seller shall bear the risk of loss of the closing documents until such time as
they are received by Purchaser or its attorneys.

SECTION 11. COSTS.  Purchaser shall pay all legal fees and expenses of its
attorneys. All other costs and expenses incurred in connection with the transfer
and delivery of the Mortgage Loans including recording fees, fees for recording
Assignments of Mortgage, fees for title policy endorsements and continuations,
if applicable, Seller's attorney's fees, shall be paid by Seller.

SECTION 12. MERGER OR CONSOLIDATION OF SELLER.  Seller will keep in full effect
its existence, rights and franchises as a federal savings bank, and will obtain
and preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.

Any Person into which Seller may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Seller shall be
a party, or any Person succeeding to the business of Seller, shall be the
successor of Seller hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person shall have a tangible net worth of at least $30,000,000.

                                       20
<PAGE>

SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.  The sale and
delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule is mandatory from and after the date of the execution of this
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate Purchaser for the losses and damages
incurred by Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of Seller's failure to deliver (i) each of the
Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii)
one or more Mortgage Loans otherwise acceptable to Purchaser on or before the
Closing Date. Seller hereby grants to Purchaser a lien on, and a continuing
security interest in, each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance by Seller of its
obligations under this Agreement, and Seller agrees that it shall hold such
Mortgage Loans in custody for Purchaser subject to Purchaser's (i) right to
reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under the terms
of this Agreement and to require another Mortgage Loan (or Qualified Substitute
Mortgage Loan) to be substituted therefor, and (ii) obligation to pay the
Purchase Price plus accrued interest as set forth in Section 3 hereof for the
Mortgage Loans. All rights and remedies of Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.

SECTION 14. NOTICES.  All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed, by registered
or certified mail, return receipt requested, or, if by other means, when
received by the other party at the address as follows:

  If to Seller:       Chevy Chase Bank, F.S.B.
                      8401 Connecticut Avenue
                      Chevy Chase, Maryland 20815
                      Attention: General Counsel

  If to Purchaser:    Chevy Chase Preferred Capital Corporation
                      8401 Connecticut Avenue
                      Chevy Chase, Maryland 20815
                      Attention: President

or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).

SECTION 15. SEVERABILITY CLAUSE.  Any part, provision, representation or
warranty of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good faith, to
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.

SECTION 16. COUNTERPARTS.  This Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.

SECTION 17. GOVERNING LAW.  This Agreement shall be deemed in effect when a
fully executed counterpart thereof is received by Purchaser in the State of
Maryland and

                                       21
<PAGE>

shall be deemed to have been made in the State of Maryland. The Agreement shall
be construed in accordance with the laws of the State of Maryland and the
obligations, rights and remedies of the parties hereunder shall be determined-in
accordance with the substantive laws of the State of Maryland (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.

SECTION 18. INTENTION OF THE PARTIES.  It is the intention of the parties that
Purchaser is purchasing, and Seller is selling the Mortgage Loans and not a debt
instrument of Seller or another security. Accordingly, the parties hereto each
intend to treat the transaction for Federal income tax purposes as a sale by
Seller, and a purchase by Purchaser, of the Mortgage Loans.

SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.  This
Agreement shall bind and inure to the benefit of and be enforceable by Seller
and Purchaser and the respective permitted successors and assigns of Seller and
the successors and assigns of Purchaser. This Agreement shall not be assigned,
pledged or hypothecated by Seller to a third party without the consent of
Purchaser. This Agreement may be assigned, pledged or hypothecated by Purchaser
without the prior consent of Seller. If Purchaser assigns all or any of its
rights as Purchaser hereunder, the assignee of Purchaser will become the
"Purchaser" hereunder to the extent of such assignment. Any assignment by
Purchaser shall be accompanied by the delivery and execution of an Assignment
and Assumption Agreement (the "Assignment and Assumption Agreement")
substantially in the form attached hereto as Exhibit G. The Servicer shall be
required to remit all amounts required to be remitted to Purchaser hereunder to
said assignee commencing with the first Remittance Date falling after receipt of
said copy of the related Assignment and Assumption Agreement provided that
Seller receives said copy no later than three (3) Business Days immediately
prior to the first day of the month of the related Remittance Date.

SECTION 20. WAIVERS.  No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.

SECTION 21. EXHIBITS.  The exhibits to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement.

SECTION 22. GENERAL INTERPRETIVE PRINCIPLES.  For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

a. the terms defined in this Agreement have the meanings assigned to them in
   this Agreement and include the plural as well as the singular, and the use of
   any gender herein shall be deemed to include the other gender;

b. accounting terms not otherwise defined herein have the meanings assigned to
   them in accordance with generally accepted accounting principles;

c. references herein to "Articles", "Sections," "Subsections," "Paragraphs," and
   other subdivisions without reference to a document are to designated
   Articles, Sections, Subsections, Paragraphs and other subdivisions of this
   Agreement;

d. reference to a Subsection without further reference to a Section is a
   reference to such Subsection as contained in the same Section in which the
   reference appears, and this rule shall also apply to Paragraphs and other
   subdivisions;

e. the words "herein", "hereof", "hereunder" and other words of similar import
   refer to this Agreement as a whole and not to any particular provision; and

f. the term "include" or "including" shall mean without limitation by reason of
   enumeration.

SECTION 23. REPRODUCTION OF DOCUMENTS.  This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter

                                       22
<PAGE>

furnished, may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties agree that
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

SECTION 24. FURTHER AGREEMENTS.  Seller and Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.

SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE.  To the extent permitted by
applicable law, each of the Assignments of Mortgage is subject to recordation in
all appropriate public offices for real property records in all the counties or
their comparable jurisdictions in which any or all of the Mortgaged Properties
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected at Seller's expense for a single recordation
with respect to each Assignment of Mortgage in the event recordation is either
necessary under applicable law or requested by Purchaser at its sole option.


IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of
the date and year first above written.


ATTEST:                               CHASE PREFERRED CAPITAL CORPORATION
                                        (Purchaser)


Joel A. Friedman                By:   Stephen Halpin

                                      Name:  Stephen Halpin

                                      Title: Executive Vice President, Chief
                                             Financial Officer and Treasurer



ATTEST:                               CHEVY CHASE BANK, F.S.B. (Seller)


Sherry Leigh Hughes             By:   Joel A. Friedman

                                      Name:  Joel A. Friedman

                                      Title: Senior Vice President
                                             and Controller

                                       23
<PAGE>

                                   EXHIBIT A
                        CONTENTS OF EACH MORTGAGE FILE

With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items which shall be available for inspection by Purchaser and which
shall be delivered to Purchaser pursuant to Section 6.03 of the Mortgage Loan
Purchase Agreement (the "Agreement"):

1.  The original Mortgage Note (or, with respect to the Mortgage Loan listed on
    Schedule I to Exhibit A hereto, a lost note affidavit, executed by an
    officer of Seller, with a copy of the original note attached thereto)
    bearing all intervening endorsements, if any, between the original lender
    (if other than Seller) and Seller, and endorsed "Pay to the order of _____
    without recourse" and signed in the name of Seller by an authorized officer.
    To the extent that there is no room on the face of the Mortgage Notes for
    endorsements, the endorsement may be contained on an allonge, if applicable
    state law so allows. If the Mortgage Loan was acquired by Seller in a
    merger, the endorsement must be by "[Seller], successor by merger to [name
    of predecessor]". If the Mortgage Loan was acquired or originated by Seller
    while doing business under another name, the endorsement must be by
    "[Seller], formerly known as [previous name].

2.  The original of any guarantee executed in connection with the Mortgage Note.

3.  The original Mortgage, with evidence of recording thereon. If in connection
    with any Mortgage Loan, Seller cannot deliver or cause to be delivered the
    original Mortgage with evidence of recording thereon on or prior to the
    Closing Date because of a delay caused by the public recording office where
    such Mortgage has been delivered for recordation, a photocopy of such
    Mortgage certified by Seller to be true and correct will be delivered; if
    such Mortgage has been lost or if such public recording office retains the
    original recorded Mortgage, Seller shall deliver or cause to be delivered to
    Purchaser, a photocopy of such Mortgage, certified by such public recording
    office to be a true and complete copy of the original recorded Mortgage.

4.  The originals of all assumption, modification, consolidation or extension
    agreements, if any, with evidence of recording thereon or certified copies
    of such documents if the originals thereof are unavailable.

5.  The original Assignment of Mortgage for each Mortgage Loan endorsed "Pay to
    the order of ___ " and signed in the name of Seller by an authorized
    officer. If the Mortgage Loan was acquired by Seller in a merger, the
    Assignment of Mortgage must be made by "[Seller], successor by merger to
    [name of predecessor]". If the Mortgage Loan was acquired or originated by
    Seller while doing business under another name, the Assignment of Mortgage
    must be by "[Seller], formerly known as [previous name]".

6.  Originals of all intervening assignments of the Mortgage with evidence of
    recording thereon if such intervening assignment has been recorded.

7.  The original mortgagee policy of title insurance or, in the event such
    original title policy is unavailable, a certified true copy of the related
    policy binder or commitment for title certified to be true and complete by
    the title insurance company.

8.  Any original security agreement, chattel mortgage or equivalent executed in
    connection with the Mortgage.

9.  The original hazard insurance policy and, if required, flood insurance
    policy, in accordance with Section 8.02(f) of the Agreement.

10. Residential loan application.

11. Mortgage Loan closing statement.

12. Verification of employment and income.

13. Verification of acceptable evidence of source and amount of down payment.

                                       24
<PAGE>

14. Credit report on the Mortgagor(s).

15. Residential appraisal report.

16. Photograph of the Mortgaged Property.

17. Survey of the Mortgaged Property, if any.

18. Copy of each instrument necessary to complete identification of any
    exception set forth in the exception schedule in the title policy, i.e., map
    or plat, restrictions, easements, sewer agreements, home association
    declarations, etc.

19. All required disclosure statements.

20. If available, termite report, structural engineer's report, water
    portability and septic certification.

21. Sales contract.

22. Tax receipts, insurance premium receipts, ledger sheets, insurance claim
    files, correspondence, current and historical computerized data files, and
    all other processing, underwriting and closing papers and records which are
    customarily contained in a mortgage loan file and which are required to
    document the Mortgage Loan or to service the Mortgage Loan.

23. For Mortgage Loans with original LTVs greater than 80%, evidence of a PMI
    Policy.

                                       25
<PAGE>

                                   EXHIBIT B
                             [SERVICING AGREEMENT]

                                       26
<PAGE>

                                   EXHIBIT C
                    FORM OF SELLER'S OFFICER'S CERTIFICATE


I, _________ , hereby certify that I am the duly elected [Vice] President of
Chevy Chase Bank, F.S.B., a federal savings bank organized under the laws of the
United States ("Seller") and further certify as follows:

1. Attached hereto as Exhibit 1 is a true, correct and complete copy of
   Seller's Charter  which is in full force and effect on the date hereof and
   which has been in effect without amendment, waiver, rescission or
   modification since

2. Attached hereto as Exhibit 2 is a true, correct and complete copy of the
   bylaws of Seller which are in effect on the date hereof and which have been
   in effect without amendment, waiver, rescission or modification since

3. Attached hereto as Exhibit 3 is a certificate of corporate existence of
   Seller issued by the Office of Thrift Supervision within 90 days of the date
   hereof, and no event has occurred since the date thereof which would render
   such certificate inaccurate.

4. Attached hereto as Exhibit 4 is a true, correct and complete copy of the
   corporate resolutions of the Board of Directors of Seller authorizing Seller
   to execute and deliver the Mortgage Loan Purchase Agreement, dated as of
   __________, 1996, by and between Chevy Chase Preferred Capital Corporation
   ("Purchaser") and Seller (the "Purchase Agreement"), and to endorse the
   mortgage notes and execute the assignments of mortgages by original or
   facsimile signature, and such resolutions are in effect on the date hereof
   and have been in effect without amendment, waiver, rescission or modification
   since

5. Either (i) no consent, approval, authorization or order of any court or
   governmental agency or body is required for the execution, delivery and
   performance by Seller of or compliance by Seller with the Purchase Agreement,
   the sale of the mortgage loans or the consummation of the transactions
   contemplated by the Purchase Agreement; or (ii) any required consent,
   approval, authorization or order has been obtained by Seller.

6. Neither the consummation of the transactions contemplated by, nor the
   fulfillment of the terms of, the Purchase Agreement conflicts or will
   conflict with or results or will result in a breach of or constitutes or will
   constitute a default under the charter or by-laws of Seller, the terms of any
   indenture or other agreement or instrument to which Seller is a party or by
   which it is bound or to which it is subject, or any statute or order, rule,
   regulations, writ, injunction or decree of any court, governmental authority
   or regulatory body to which Seller is subject or by which it is bound.

7. To the best of my knowledge, there is no action, suit, proceeding or
   investigation pending or threatened against Seller which, in my judgment,
   either in any one instance or in the aggregate, may result in any material
   adverse change in the business, operations, financial condition, properties
   or assets of Seller or in any material impairment of the right or ability of
   Seller to carry on its business substantially as now conducted or in any
   material liability on the part of Seller or which would draw into question
   the validity of the Purchase Agreement or the Mortgage Loans or of any action
   taken or to be taken in connection with the transactions contemplated hereby,
   or which would be likely to impair materially the ability of Seller to
   perform under the terms of the Purchase Agreement.

8. Each person listed on Exhibit 5 attached hereto who, as an officer or
   representative of Seller, signed the Purchase Agreement and any other
   document delivered prior to or on the date hereof in connection with any
   purchase described in the Purchase Agreement was, at the respective times of
   such signing and delivery, and is now, a duly elected or appointed, qualified
   and acting officer or representative of Seller, who holds the office set
   forth opposite his or her name on Exhibit 5, and the signatures of such
   persons appearing on such documents are their genuine signatures.

                                       27
<PAGE>

9. Seller is duly authorized to engage in the transactions described and
   contemplated in the Purchase Agreement.



                         [SIGNATURES ON FOLLOWING PAGE]

                                       28
<PAGE>

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of Chevy
Chase Bank, F.S.B.


Dated:________________________, 1996           By:___________________________

______________________________

____________________________________  Name: _________________________________

____________________________________  Title:    Vice President
                                            _________________________________


I, __________________________, a Vice President of Chevy Chase Bank, F.S.B.,
hereby certify that ________ is the duly elected, qualified and acting Vice
President of Seller and that the signature appearing above is [her] [his]
genuine signature.

  IN WITNESS WHEREOF, I have hereunto signed my name.



Dated:________________________, 1996           By:___________________________

______________________________

____________________________________  Name: _________________________________

____________________________________  Title:    Vice President
                                            _________________________________


<PAGE>

                                   EXHIBIT D
                     FORM OF OPINION OF COUNSEL TO SELLER
                              November ___, 1996

_________________________________

_________________________________

_________________________________


Dear Sirs:

You have requested my opinion, as General Counsel of Chevy Chase Bank, F.S.B.
("Seller"), with respect to certain matters in connection with the sale by
Seller of the Mortgage Loans pursuant to that certain Mortgage Loan Purchase and
Warranties Agreement by and between Seller and Chevy Chase Preferred Capital
Corporation ("Purchaser"), dated as of  December 1, 1996 (the "Purchase
Agreement") which sale is in the form of whole loans, delivered pursuant to a
Purchase Agreement and serviced pursuant to an Servicing Agreement, dated as of
December 1, 1996, by and between Seller and Purchaser (the "Servicing
Agreement"). Capitalized terms not otherwise defined herein have the meanings
set forth in the Purchase Agreement and the Servicing Agreement.

I have examined the following documents:

1.  the Purchase Agreement;

2.  the Servicing Agreement;

3.  the form of Assignment of Mortgage;

4.  the form of endorsement of the Mortgage Notes; and

5.  such other documents, records and papers as we have deemed necessary and
relevant as a basis for this opinion.

To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of Seller contained in the Purchase Agreement. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.

Based upon the foregoing, it is my opinion that:

1. Seller is a federal savings bank duly organized, validly existing and in
   good standing under the laws of the United States and is qualified to
   transact business in, and is in good standing under all applicable laws;

2. Seller has the power to engage in the transactions contemplated by the
   Purchase Agreement and all requisite power, authority and legal right to
   execute and deliver the Purchase Agreement and to perform and observe the
   terms and conditions of such agreements.

3. The Purchase Agreement has been duly authorized, executed and delivered by
   Seller and is a legal, valid and binding agreement enforceable in accordance
   with its respective terms against Seller, subject to bankruptcy laws and
   other similar laws of general application affecting rights of creditors and
   subject to the application of the rules of equity, including those respecting
   the availability of specific performance, none of which will materially
   interfere with the realization of the benefits provided thereunder or with
   Purchaser's ownership of the Mortgage Loans.

4. Seller has been duly authorized to allow certain specified officers to
   execute any and all documents by original signature in order to complete the
   transactions contemplated by the Purchase Agreement and, by original or
   facsimile signature, in order to execute the endorsements to the Mortgage
   Notes and the Assignments of Mortgages, and the original or facsimile
   signature of the officer at Seller

                                       30
<PAGE>

   executing the endorsements to the Mortgage Notes and the Assignments of
   Mortgages represents the legal and valid signature of said officer of Seller.

5. Either (i) no consent, approval, authorization or order of any court or
   governmental agency or body is required for the execution, delivery and
   performance by Seller of or compliance by Seller with the Purchase Agreement
   and the sale of the Mortgage Loans or the consummation of the transactions
   contemplated by the Purchase Agreement or (ii) any required consent,
   approval, authorization or order has been obtained by Seller.

6. Neither the consummation of the transactions contemplated by, nor the
   fulfillment of the terms of, the Purchase Agreement conflicts or will
   conflict with or results or will result in a breach of or constitutes or will
   constitute a default under the charter or by-laws of Seller, the terms of any
   indenture or other agreement or instrument to which Seller is a party or by
   which it is bound or to which it is subject, or violates any statute or
   order, rule, regulations, writ, injunction or decree of any court,
   governmental authority or regulatory body to which Seller is subject or by
   which it is bound.

7. There is no action, suit, proceeding or investigation pending or, to the
   best of my knowledge, threatened against Seller which, in my judgment, either
   in any one instance or in the aggregate, may result in any material adverse
   change in the business, operations, financial condition, properties or assets
   of Seller or in any material impairment of the right or ability of Seller to
   carry on its business substantially as now conducted or in any material
   liability on the part of Seller or which would draw into question the
   validity of the Purchase Agreement or the Mortgage Loans or of any action
   taken or to be taken in connection with the transactions contemplated
   thereby, or which would be likely to impair materially the ability of Seller
   to perform under the terms of the Purchase Agreement.

8. The sale of each Mortgage Note and Mortgage as and in the manner
   contemplated by the Purchase Agreement is sufficient to fully transfer to
   Purchaser all right, title and interest of Seller thereto as noteholder and
   mortgagee.

9. The Mortgages have been duly assigned and the Mortgage Notes have been duly
   endorsed as provided in the Purchase Agreement. The Assignments of Mortgage
   are in recordable form, except for the insertion of the name of the assignee,
   and upon the name of the assignee being inserted, and to the best of my
   knowledge, are acceptable for recording under the laws of the states in which
   such recording would occur. The endorsement of the Mortgage Notes, the
   delivery to Purchaser of the Assignments of Mortgage, and the delivery of the
   original endorsed Mortgage Notes to Purchaser, are sufficient to permit
   Purchaser to avail itself of all protection available under applicable law
   against the claims of any present or future creditors of Seller, and are
   sufficient to prevent any other sale, transfer, assignment, pledge or
   hypothecation of the Mortgages and the Mortgage Notes by Seller from being
   enforceable.

This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that Purchaser or purchasers to which
you initially and directly resell the Mortgage Loans may rely on this opinion as
if it were addressed to them as of its date.

Very truly yours,


Leslie A. Nicholson, Jr.
General Counsel

                                       31
<PAGE>

                                   EXHIBIT E

                                                              December ___, 1996

Federal Home Loan Bank of Atlanta (the "Association")

_____________________________________________

_____________________________________________

Attention: __________________________________

Re: Notice of Sale and Release of Collateral


Gentlemen:

This letter serves as notice that Chevy Chase Bank, F.S.B. ("Bank") has
committed to sell to Chevy Chase Preferred Capital Corporation ("Purchaser")
under a Mortgage Loan Purchase Agreement, dated as of December 1, 1996, certain
mortgage loans originated by the Bank. The Bank warrants that the mortgage loans
to be sold to Purchaser are in addition to and beyond any collateral required to
secure advances made by the Association to the Bank.

The Bank acknowledges that the mortgage loans to be sold to Purchaser shall not
be used as additional or substitute collateral for advances made by the
Association. Purchaser understands that the balance of the Bank's mortgage loan
portfolio may be used as collateral or additional collateral for advances made
by the Association, and confirms that it has no interest therein.

Execution of this letter by the Association shall constitute a full and complete
release of any security interest, claim, or lien which the Association may have
against the mortgage loans to be sold to Purchaser.

Very truly yours,

Chevy Chase Bank, F.S.B.


By: ____________________________________________________________

Name:___________________________________________________________

Title: _________________________________________________________

Date:  _________________________________________________________


Acknowledged and approved:

Federal Home Loan Bank of Atlanta


By: ____________________________________________________________

Name:___________________________________________________________

Title: _________________________________________________________

Date:  _________________________________________________________

                                       32
<PAGE>

                                   EXHIBIT F
                    FORM OF SECURITY RELEASE CERTIFICATION

                        I. Release of Security Interest

The financial institution named below hereby relinquishes any and all right,
title and interest it may have in all Mortgage Loans to be purchased by Chevy
Chase Preferred Capital Corporation from Chevy Chase Bank, F.S.B. pursuant to
that certain Mortgage Loan Purchase Agreement, dated as of December 1, 1996, and
certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
Chevy Chase Bank, F.S.B. or its designees, as of the date and time of the sale
of such Mortgage Loans to Chevy Chase Preferred Capital Corporation.

  Name of Financial Institution
  Address of Financial Institution

By: ____________________________________________________________

Name:___________________________________________________________

Title: _________________________________________________________

Date:  _________________________________________________________



                         II. Certification of Release

Chevy Chase Bank, F.S.B. (the "Company") hereby certifies to Chevy Chase
Preferred Capital Corporation that, as of the date and time of the sale of the
above-mentioned Mortgage Loans to Chevy Chase Preferred Capital Corporation, the
security interests in the Mortgage Loans released by the above-named financial
institution comprise all security interests relating to or affecting any and all
such Mortgage Loans. The Company warrants that, as of such time, there are and
will be no other security interests affecting any or all of such Mortgage Loans.

  Chevy Chase Bank, F.S.B.


By: ____________________________________________________________

Name:___________________________________________________________

Title: _________________________________________________________

                                       33
<PAGE>

                                   EXHIBIT G
                  FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

  ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _____, between ____, a corporation
("Assignor") and ____, a corporation ("Assignee"):

For good and valuable consideration the receipt and sufficiency of which hereby
are acknowledged, and of the mutual covenants herein contained, the parties
hereto hereby agree as follows:

1.  The Assignor hereby grants, transfers and assigns to Assignee, as Purchaser,
all of the right, title and interest of Assignor with respect to the mortgage
loans listed on Exhibit A attached hereto ("Mortgage Loans"), and with respect
to such Mortgage Loans, in, to and under (a) that certain Mortgage Loan Purchase
Agreement ("Purchase Agreement"), dated December 1 , 1996 by and between Chevy
Chase Bank, F.S.B. ("Seller") and Chevy Chase Preferred Capital Corporation
("Purchaser"); and (b) that certain Servicing Agreement dated as of December 1,
1996, by and between Purchaser and Chevy Chase Bank, F.S.B. ("Servicer")
("Servicing Agreement"; the Servicing Agreement and the Purchase Agreement are
collectively referred to as the "Agreements").

2.  The Assignor warrants and represents to, and covenants with, the Assignee
that:

  a. The Assignor is the lawful owner of the Mortgage Loans with the full right
     to transfer the Mortgage Loans free from any and all claims and
     encumbrances whatsoever;

  b. The Assignor has not received notice of, and has no knowledge of, any
     offsets, counterclaims or other defenses available to Seller with respect
     to the Agreements or the Mortgage Loans;

  c. The Assignor has not waived or agreed to any waiver under, or agreed to any
     amendment or other modification of, the Agreements. The Assignor has no
     knowledge of, and has not received notice of, any waivers under or
     amendments or other modifications of, or assignments of rights or
     obligations under, the Agreements; and

  d. Neither the Assignor nor anyone acting on its behalf has offered,
     transferred, pledged, sold or otherwise disposed of the Mortgage Loans or
     any interest in the Mortgage Loans, or solicited any offer to buy or accept
     a transfer, pledge or other disposition of the Mortgage Loans, or any
     interest in the Mortgage Loans or otherwise approached or negotiated with
     respect to the Mortgage Loans, or any interest in the Mortgage with any
     person in any manner, or made any general solicitation by means of general
     advertising or in any other manner, or taken any other action which would
     constitute a distribution of the Mortgage Loans under the Securities Act of
     1933, as amended (the "1933 Act") or which would render the disposition of
     the Mortgage Loans a violation of Section 5 of the 1933 Act or require
     registration pursuant thereto.

3.  The Assignee warrants and represents to, and covenants with, Assignor and
    Seller pursuant to the Agreements that:

  a. The Assignee is a corporation duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation, and has
     all requisite corporate power and authority to acquire, own and purchase
     the Mortgage Loans;

  b. The Assignee has full corporate power and authority to execute, deliver and
     perform under this Assignment and Assumption Agreement, and to consummate
     the transactions set forth herein. The execution, delivery and performance
     of the Assignee of this Assignment and Assumption Agreement, and the
     consummation by it of the transactions contemplated hereby, have been duly
     authorized by all necessary corporate action of the Assignee. This
     Assignment and Assumption Agreement has been duly executed and delivered by
     the Assignee and constitutes the valid and legally binding obligation of


                                       34
<PAGE>

     the Assignee enforceable against the Assignee in accordance with its
     respective terms;

  c. To the best of Assignee's knowledge, no material consent, approval, order
     or authorization of, or declaration, filing or registration with, any
     governmental entity is required to be obtained or made by the Assignee in
     connection with the execution, delivery or performance by the Assignee of
     this Assignment and Assumption Agreement, or the consummation by it of the
     transactions contemplated hereby;

  d. The Assignee agrees to be bound, as Purchaser, by all of the terms,
     covenants and conditions of the Agreements, the Mortgage Loans, and from
     and after the date hereof, the Assignee assumes for the benefit of each of
     Seller and the Assignor all of the Assignor's obligations as Purchaser
     thereunder, including, without limitation, the limitation on assignment set
     forth in Section 19 of the Purchase Agreement;

  e. The Assignee understands that the Mortgage Loans have not been registered
     under the 1933 Act or the securities laws of any state;

  f. The purchase price being paid by the Assignee for the Mortgage Loans is in
     excess of $250,000 and will be paid by cash remittance of the full purchase
     price within sixty (60) days of the sale;

  g. The Assignee is acquiring the Mortgage Loans for investment for its own
     account only and not for any other person;

  h. The Assignee considers itself a sophisticated institutional investor having
     such knowledge and experience in financial and business matters that it is
     capable of evaluating the merits and risks of investment in the Mortgage
     Loans;

  i. The Assignee has been furnished with all information regarding the Mortgage
     Loans that it has requested from the Assignor or Seller;

  j. Neither the Assignee nor anyone acting on its behalf has offered,
     transferred, pledged, sold or otherwise disposed of the Mortgage Loans or
     any interest in the Mortgage Loans, or solicited any offer to buy or accept
     a transfer, pledge or other disposition of the Mortgage Loans or any
     interest in the Mortgage Loans, or otherwise approached or negotiated with
     respect to the Mortgage Loans or any interest in the Mortgage Loans with
     any person in any manner which would constitute a distribution of the
     Mortgage Loans under the 1933 Act or which would render the disposition of
     the Mortgage Loans a violation of Section 5 of the 1933 Act or require
     registration pursuant thereto, nor will it act, nor has it authorized or
     will it authorize any person to act, in such manner with respect to the
     Mortgage Loans; and

  k. Either: (1) the Assignee is not an employee benefit plan ("Plan") within
     the meaning of section 3(3) of the Employee Retirement Income Security Act
     of 1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of
     section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
     Assignee is not directly or indirectly purchasing the Mortgage Loans on
     behalf of, investment manager of, as named fiduciary of, as Trustee of, or
     with assets of, a Plan; or (2) the Assignee's purchase of the Mortgage
     Loans will not result in a prohibited transaction under section 406 of
     ERISA or section 4975 of the Code.

4. a.  The Assignee's address for purposes of all notices and correspondence
       related to the Mortgage Loans and the Agreements is:

   b.  The Assignee's wire instructions for purposes of all remittances and
       payments related to the Mortgage Loans are:

   c.  The Assignor's address for purposes for all notices and correspondence
       related to the Mortgage Loans and this Agreement is:

                                       35
<PAGE>

5.  This Agreement shall be construed in accordance with the substantive laws of
the State of Maryland (without regard to conflicts of laws principles) and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws, except to the extent preempted by federal law.

6.  This Agreement shall inure to the benefit of the successors and assigns of
the parties hereto. This Agreement may not be assigned by the Assignee without
the express written consent of the Assignor. Any entity into which the Assignor
or Assignee may be merged or consolidated shall, without the requirement for any
further writing, be deemed the Assignor or Assignee, respectively, hereunder.

7.  No term or provision of this Agreement may be waived or modified unless such
waiver or modification is in writing and signed by the party against whom such
waiver or modification is sought to be enforced.

8.  This Agreement shall survive the conveyance of the Mortgage Loans and the
assignment of the Agreements by the Assignor.

9.  Notwithstanding the assignment of the Agreements by either the Assignor or
Assignee, this Agreement shall not be deemed assigned by the Assignor or the
Assignee unless assigned by separate written instrument.

10.   For the purpose for facilitating the execution of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute and be one and the same
instrument.

IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
Agreement to be executed by their duly authorized officers as of the date first
above written.


  ASSIGNOR


By: ____________________________________________________________

Name:___________________________________________________________

Title: _________________________________________________________

Taxpayer Identification No.: ___________________________________



  ASSIGNEE


By: ____________________________________________________________

Name:___________________________________________________________

Title: __________________________________________________________

Taxpayer Identification No.: ____________________________________

                                       36
<PAGE>

                                   EXHIBIT H
                            MORTGAGE LOAN SCHEDULE

                                       37