EXHIBIT 4.1

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                        ASSET BACKED FUNDING CORPORATION,
                                    Depositor

                   ------------------------------------------
                                     Seller

                   ------------------------------------------
                                    Servicer

                                       and

                   ------------------------------------------
                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                                Dated as of , 200

                                   200 - Trust

                     Asset-Backed Certificates, Series 200 -


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                                TABLE OF CONTENTS

                                                                            Page
                                    ARTICLE I

                                   DEFINITIONS

Section 1.01      Defined Terms ...............................................3
Section 1.02      Accounting .................................................44

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01      Conveyance of Mortgage Loans ...............................44
Section 2.02      Acceptance by Trustee ......................................47
Section 2.03      Repurchase or Substitution of Mortgage Loans
                  by the Seller ..............................................48
Section 2.04      Representations and Warranties of the Seller with Respect
                  to the Mortgage Loans ......................................51
Section 2.05      Representations, Warranties and Covenants of the
                  Servicer ...................................................52
Section 2.06      Representations and Warranties of the Depositor ............53
Section 2.07      Issuance of Certificates and the Uncertificated Regular
                  Interests ..................................................55
Section 2.08      Representations and Warranties of the Seller ...............56
Section 2.09      Covenants of the Seller ....................................57

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

Section 3.01      Servicer to Act as Servicer ................................58
Section 3.02      Collection of Mortgage Loan Payments .......................60
Section 3.03      Realization Upon Defaulted Mortgage Loans ..................61
Section 3.04      Collection Account and Distribution Account ................62
Section 3.05      Permitted Withdrawals From the Collection Account ..........64
Section 3.06      Establishment of Escrow Accounts; Deposits in Escrow
                  Accounts ...................................................65
Section 3.07      Permitted Withdrawals From Escrow Account ..................65
Section 3.08      Payment of Taxes, Insurance and Other Charges; Collections
                  Thereunder .................................................66
Section 3.09      Transfer of Accounts .......................................67
Section 3.10      Maintenance of Hazard Insurance ............................67
Section 3.11      Maintenance of Mortgage Impairment Insurance Policy ........68


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Section 3.12      Fidelity Bond, Errors and Omissions Insurance ..............68
Section 3.13      Title, Management and Disposition of REO Property ..........69
Section 3.14      Due-on-Sale Clauses; Assumption and Substitution
                  Agreements .................................................71
Section 3.15      Notification of Adjustments ................................72
Section 3.16      Optional and Mandatory Purchases of Mortgage Loans by
                  Seller .....................................................72
Section 3.17      Trustee to Cooperate; Release of Files .....................73
Section 3.18      Servicing Compensation .....................................74
Section 3.19      Annual Statement as to Compliance ..........................74
Section 3.20      Annual Independent Certified Public Accountants' Reports ...74
Section 3.21      Access to Certain Documentation and Information Regarding
                  the Mortgage Loans .........................................75
Section 3.22      Reserved ...................................................76
Section 3.23      Obligations of the Servicer in Respect of Compensating
                  Interest ...................................................76
Section 3.24      Obligations of the Servicer in Respect of Mortgage Interest
                  Rates and Monthly Payments .................................76
Section 3.25      Investment of Funds in the Collection Account and the
                  Distribution Account .......................................76
Section 3.26      Liability of Servicer; Indemnification .....................77
Section 3.27      Reports of Foreclosure and Abandonment of Mortgaged
                  Properties .................................................78
Section 3.28      Claims Under the PMI Policy ................................79

                                   ARTICLE IV

                                  FLOW OF FUNDS

Section 4.01      Interest Distributions .....................................79
Section 4.02      Distributions of Principal and Monthly Excess Cashflow
                  Amounts ....................................................80
Section 4.03      Allocation of Losses .......................................83
Section 4.04      Method of Distribution .....................................84
Section 4.05      Distributions on Book-Entry Certificates ...................84
Section 4.06      Statements .................................................84
Section 4.07      Remittance Reports; Advances ...............................87
Section 4.08      Class N Reserve Fund .......................................88
Section 4.09      HLTV Reserve Account .......................................89
Section 4.10      REMIC Distributions ........................................90

                                    ARTICLE V

                                THE CERTIFICATES

Section 5.01      The Certificates ...........................................93
Section 5.02      Registration of Transfer and Exchange of Certificates ......94
Section 5.03      Mutilated, Destroyed, Lost or Stolen Certificates ..........98
Section 5.04      Persons Deemed Owners ......................................99
Section 5.05      Appointment of Paying Agent ................................99


                                      -ii-


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                                   ARTICLE VI

                   THE SELLER, THE SERVICER AND THE DEPOSITOR

Section 6.01      Liability of the Seller, the Servicer and the Depositor ... 99
Section 6.02      Merger or Consolidation of, or Assumption of the
                  Obligations of, the Seller, the Servicer or the
                  Depositor ................................................. 99
Section 6.03      Limitation on Liability of the Servicer and Others ........100
Section 6.04      Servicer Not to Resign ....................................100
Section 6.05      Delegation of Duties ......................................101

                                   ARTICLE VII

                                     DEFAULT

Section 7.01      Servicer Events of Termination ............................102
Section 7.02      Trustee to Act; Appointment of Successor ..................104
Section 7.03      Waiver of Defaults ........................................105
Section 7.04      Notification to Certificateholders ........................105
Section 7.05      Survivability of Servicer Liabilities .....................105

                                  ARTICLE VIII

                                   THE TRUSTEE

Section 8.01      Duties of Trustee .........................................105
Section 8.02      Certain Matters Affecting the Trustee .....................107
Section 8.03      Trustee Not Liable for Certificates or Mortgage Loans .....108
Section 8.04      Trustee May Own Certificates ..............................109
Section 8.05      Seller to Pay Trustee Fees and Expenses ...................109
Section 8.06      Eligibility Requirements for Trustee ......................110
Section 8.07      Resignation or Removal of Trustee .........................110
Section 8.08      Successor Trustee .........................................111
Section 8.09      Merger or Consolidation of Trustee ........................111
Section 8.10      Appointment of Co-Trustee or Separate Trustee .............112
Section 8.11      Limitation of Liability ...................................113
Section 8.12      Trustee May Enforce Claims Without Possession of
                  Certificates ..............................................113
Section 8.13      Suits for Enforcement .....................................114
Section 8.14      Waiver of Bond Requirement ................................114
Section 8.15      Waiver of Inventory, Accounting and Appraisal
                  Requirement ...............................................114
Section 8.16      Compliance with National Housing Act of 1934 ..............114


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                                   ARTICLE IX

                     REMIC AND GRANTOR TRUST ADMINISTRATION

Section 9.01      REMIC Administration ......................................114
Section 9.02      Prohibited Transactions and Activities ....................118
Section 9.03      Indemnification with Respect to Certain Taxes and Loss of
                  REMIC Status ..............................................118
Section 9.04      REO Property ..............................................119
Section 9.05      Grantor Trust Administration ..............................119

                                    ARTICLE X

                                   TERMINATION

Section 10.01     Termination ...............................................120
Section 10.02     Additional Termination Requirements .......................121

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01     Amendment .................................................122
Section 11.02     Recordation of Agreement; Counterparts ....................123
Section 11.03     Limitation on Rights of Certificateholders ................124
Section 11.04     Governing Law; Jurisdiction ...............................124
Section 11.05     Notices ...................................................125
Section 11.06     Severability of Provisions ................................125
Section 11.07     Article and Section References ............................126
Section 11.08     Notice to the Rating Agencies .............................126
Section 11.09     Further Assurances ........................................126
Section 11.10     Benefits of Agreement .....................................127
Section 11.11     Acts of Certificateholders ................................127


                                      -iv-


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                                    EXHIBITS:
                                    --------

Exhibit A-1  Form of Class A-1F Certificates
Exhibit A-2  Form of Class A-2F Certificates
Exhibit A-3  Form of Class A-1A Certificates
Exhibit B    Form of Class B Certificates
Exhibit C-1  Form of Class R Certificates
Exhibit C-2  Form of Class M-1 Certificates
Exhibit C-3  Form of Class M-2 Certificates
Exhibit C-4  Form of Class X Certificates
Exhibit C-5  Form of Class N Certificates
Exhibit D    Mortgage Loan Schedule
Exhibit E    Form of Request for Release
Exhibit F-1  Form of Trustee's Initial Certification
Exhibit F-2  Form of Trustee's Final Certification
Exhibit F-3  Form of Receipt of Mortgage Note
Exhibit G    Mortgage Loan Purchase Agreement
Exhibit H    Form of Lost Note Affidavit
Exhibit I    Form of ERISA Representation
Exhibit J    Form of Investment Letter
Exhibit K    Form of Class R Certificate Transfer Affidavit
Exhibit L    Form of Transferor Certificate
Exhibit M    Reserved
Exhibit N    Depository Agreement
Exhibit O    Form of Servicer Request for Reimbursement
Exhibit P    Monthly Information Provided by Servicer
Exhibit Q    Form of Officer's Certificate with Respect to Prepayments
Exhibit R    Form of Notice of Prepayment Penalty Inconsistency


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            This Pooling and Servicing Agreement is dated as of , 200 (the
"Agreement"), among ASSET BACKED FUNDING CORPORATION, as depositor (the
"Depositor"), _________________________________________, as seller (the
"Seller"), _________________________________________, as servicer (the
"Servicer"), and _________________________________________, as trustee (the
"Trustee").

                              PRELIMINARY STATEMENT

            The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple Classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund created hereunder. The Certificates will consist of nine Classes
of Certificates, designated as (i) the Class A-1F, Class A-2F and Class A-1A
Certificates, (ii) the Class M-1 and Class M-2 Certificates, (iii) the Class B
Certificates, (iv) the Class N Certificates, (v) the Class X Certificates and
(vi) the Class R Certificates.

            As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as four separate real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1," "REMIC
2," "REMIC 3" and "REMIC 4," respectively). The Class T4-A1AIO, Class T4-A1FIO,
Class T4-A2FIO, Class T4-M1IO, Class T4-M2IO, Class T4-BIO, Class T4-4, Class
T4-5, Class T4-6, Class T4-11, Class T4-12 and Class T4-13 Interests) (such
interests, the "REMIC 4 Components") and the Class T4-A1A, Class T4-A1F, Class
T4-A2F, Class T4-M1, Class T4-M2 and Class T4-B Interests represent all of the
"regular interests" in REMIC 4. Each Class of Offered Certificates represents
beneficial ownership of the corresponding REMIC 4 Regular Interest and the right
to receive Rate Payments. In addition, the Class A-1F Certificates and the Class
A-1A Certificates represent the right to receive their respective LIBOR
Carryover Amounts. The Class N and Class X Certificates represent beneficial
ownership of the Class X/N Interest, which represents the REMIC 4 Components
collectively, subject to the obligation to pay Rate Payments and LIBOR Carryover
Amounts. Each of the Class R-1, Class R-2, Class R-3 and Class R-4 Interests
represents the sole Class of "residual interest" in REMIC 1, REMIC 2, REMIC 3
and REMIC 4, respectively, for purposes of the REMIC Provisions. There are six
Classes of uncertificated REMIC 1 Regular Interests (the Class T1-1, Class T1-2,
Class T1-3, Class T1-4, Class T1-5 and Class T1-6 Interests), nine Classes of
uncertificated REMIC 2 Regular Interests (the Class T2-1, Class T2-2, Class
T2-3, Class T2-4, Class T2-5, Class T2-6, Class T2-11, Class T2-12 and Class
T2-13 Interests), and twelve Classes of uncertificated REMIC 3 Regular Interests
(the Class T3-A1A, Class T3-A1F, Class T3-A2F, Class T3-M1, Class T3-M2, Class
T3-B, Class T3-4, Class T3-5, Class T3-6, Class T3-11, Class T3-12 and Class
T3-13 Interests). Each Class of REMIC 1 Regular Interest, REMIC 2 Regular
Interest, REMIC 3 Regular Interest and REMIC 4 Regular Interest is a "REMIC
Regular Interest." The REMIC 1 Regular Interests will be held as assets of REMIC
2, the REMIC 2 Regular Interests will be held as assets of REMIC 3, the REMIC 3
Regular Interests will be held as assets of REMIC 4, and the REMIC 4 Regular
Interests will be held as assets of a grantor trust, which will also hold the
Class N Reserve Fund and the rights of the Offered Certificates to receive their
respective Rate Payments and LIBOR Carryover Amounts. If the Class N and Class X
Certificates are beneficially owned by different Persons, they will be treated
as interests in a partnership that holds the Class X/N Interest for federal
income tax purposes as described in Section 9.01(n). The "latest possible
maturity date" for federal income tax purposes of all interests created hereby
will be the Distribution Date July, 2048.
<PAGE>

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


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                       Original Class
                        Certificate
                        Principal or
                          Notional        Pass-Through        Assumed Final
       Class               Amount             Rate           Maturity Dates
--------------------------------------------------------------------------------
A-1F                 $                        (1)
--------------------------------------------------------------------------------
A-2F                 $                        %(2)
--------------------------------------------------------------------------------
A-1A                 $                        (3)
--------------------------------------------------------------------------------
M-1                  $                        %(4)
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M-2                  $                        %(5)
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B                    $                        %(6)
--------------------------------------------------------------------------------
N                    $         (7)(8)          %
--------------------------------------------------------------------------------
X                    $            (8)          N/A
--------------------------------------------------------------------------------
R                              N/A             N/A               N/A
--------------------------------------------------------------------------------
Total                $            (9)
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(1)   Interest will accrue on the Class A-1F Certificates during each Interest
      Accrual Period at a rate equal to the lesser of: (i) the Class A-1F
      Pass-Through Rate and (ii) the Class A-1F Net Funds Cap for such
      Distribution Date.

(2)   Interest will accrue on the Class A-2F Certificates at a rate equal to the
      lesser of: (i) the Class A-2F Pass-Through Rate and (ii) the Class A-2F
      Net Funds Cap for such Distribution Date.

(3)   Interest will accrue on the Class A-1A Certificates at a rate equal to the
      lesser of: (i) the Class A-1A Pass-Through Rate and (ii) the Class A-1A
      Net Funds Cap for such Distribution Date.

(4)   Interest will accrue on the Class M-1 Certificates at a rate equal to the
      lesser of: (i) the Class M-1 Pass-Through Rate and (ii) the Pool Cap for
      such Distribution Date.

(5)   Interest will accrue on the Class M-2 Certificates at a rate equal to the
      lesser of: (i) the Class M-2 Pass-Through Rate and (ii) the Pool Cap for
      such Distribution Date.

(6)   Interest will accrue on the Class B Certificates at a rate equal to the
      lesser of: (i) the Class B Pass-Through Rate and (ii) the Pool Cap for
      such Distribution Date.

(7)   Notional Amount.

(8)   The Class N and Class X Certificates, collectively, represent the
      beneficial ownership of the Class X/N Interest, which represents the Class
      T4-A1AIO, Class T4-A1FIO, Class T4-A2FIO, Class T4-M1IO, Class T4-M2IO,
      Class T4-BIO, Class T4-4, Class T4-5, Class T4-6, Class T4-11, Class
      T4-12, and Class T4-13 Interests.

(9)   Exclusive of the Class N Notional Amount


                                      -2-
<PAGE>


                                   ARTICLE I

                                   DEFINITIONS

            Section 1.01 Defined Terms.

            Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, interest on
the Class A-2F, Class M-1, Class M-2, Class B and Class N Certificates and on
the REMIC Regular Interests (other than the Class T4-A1F and Class T4-A1A
Interests) will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Interest on the Class A-1F and Class A-1A Certificates and
on the Class T4-A1F and Class T4-A1A Interests will be calculated on the basis
of the actual number of days in the related Interest Accrual Period and a
360-day year.

            Many of the defined terms listed below may apply to both Loan Groups
and are sometimes used in this Agreement to refer to a particular Loan Group by
the adjectival use of the words "Group 1" and "Group 2."

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

            "60+ Day Delinquent Loan": Each Mortgage Loan with respect to which
any portion of a Monthly Payment is, as of the last day of the prior Collection
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for
which the Mortgagor has filed for bankruptcy after the Closing Date.

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

            "Accrued Certificate Interest": With respect to each Distribution
Date and Class of Certificates, an amount equal to the interest accrued at the
applicable rate set forth or described opposite such Class in the table in the
Preliminary Statement during the related Interest Accrual Period on the
Certificate Principal Balance (or Notional Amount) of such Class of
Certificates, reduced by such Class's Interest Percentage of Relief Act Interest
Shortfalls for such Distribution Date.

            "Actuarial Mortgage Loan": Any Mortgage Loan other than a Simple
Interest Mortgage Loan.

            "Adjustment Date": With respect to each Group 2 Mortgage Loan, each
adjustment date, on which the Mortgage Interest Rate of a Group 2 Mortgage Loan
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Group 2 Mortgage Loan is set forth in the
Mortgage Loan Schedule.

            "Advance": As to any Actuarial Mortgage Loan, any advance made by
the Servicer in respect of any Distribution Date pursuant to Section 4.07.

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


                                      -3-


<PAGE>


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

            "Agency Insurance Agreements": Collectively, the FHA Insurance
Contracts and VA Guaranty Agreements.

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

            "Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and regulations applicable thereto,
including with respect to each FHA Loan the FHA Regulations and the related FHA
Insurance Contract and with respect to each VA Loan the VA Regulations and the
related VA Guaranty Agreement.

            "Applied Realized Loss Amount": With respect to each Distribution
Date, the excess, if any, of (a) the aggregate of the Certificate Principal
Balances of the Certificates (after giving effect to all distributions on such
Distribution Date) over (b) the Pool Balance as of the end of the related
Collection Period.

            "Arrearage": With respect to a Delinquent Mortgage Loan, the total
amount of scheduled monthly payments due thereon on or before the Cut-off Date
that were not received prior to the Cut-off Date but for which advances of
principal and interest were made, plus any unreimbursed Servicing Advances as of
the Cut-off Date.

            "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.

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

            "Available Funds": As to any Distribution Date, an amount equal to
the excess of (i) the sum of (a) the aggregate of the Monthly Payments due on
the related Due Date and received by the Trustee one Business Day prior to the
related Distribution Date, (b) Liquidation Proceeds, Insurance Proceeds, HLTV
Account Allocation, Principal Prepayments, Substitution Adjustment Amounts, the
Purchase Price for any repurchased Mortgage Loan, the Termination Price with
respect to the termination of the Trust pursuant to Section 10.01 hereof and
other unscheduled recoveries of principal and interest (excluding prepayment
penalties and amounts received in respect of Arrearages) in respect of the
Mortgage Loans during the related Prepayment Period, (c) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Collection Account for such Distribution Date, (d) any
Compensating Interest for such Distribution Date, and (e) the aggregate of any
Advances made by the Servicer for such Distribution Date over (ii) the sum of
(a) amounts reimbursable or payable to the Servicer pursuant to Section 3.05,
(b) Stayed Funds, (c) the Fixed Retained Yield, (d) the Servicing Fee and (e)
amounts deposited in the Collection Account or the Distribution Account, as the
case may be, in error.


                                      -4-


<PAGE>


            "Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage Loan that is substantially greater than
the preceding monthly payment.

            "Balloon Payment": A payment of the unamortized principal balance of
a Mortgage Loan in a single payment at the maturity of such Mortgage Loan that
is substantially greater than the preceding Monthly Payment.

            "Bankruptcy Code":  Title 11 of the United States Code, as amended.

            "Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A-1F, Class A-2F, Class A-1A, Class M-1, Class M-2 and Class B
Certificates shall be Book-Entry Certificates.

            "Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of Delaware, the State of New York, the
State of Texas or in the city in which the Corporate Trust Office of the Trustee
is located are authorized or obligated by law or executive order to be closed.

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

            "Certificate Custodian": Initially, ___________________________;
thereafter any other Certificate Custodian acceptable to the Depository and
selected by the Trustee.

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

            "Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class N, Class X and Class R Certificates) and any
Distribution Date, will be equal to the Original Class Certificate Principal
Balance reduced by the sum of (i) all amounts actually distributed in respect of
principal of such Class on all prior Distribution Dates and (ii) Applied
Realized Loss Amounts allocated thereto. The Class N, Class X and Class R
Certificates do not have a Certificate Principal Balance.

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

            "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class R
Certificate for any purpose hereof.


                                      -5-
<PAGE>


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

            "Class A-1A Certificate Margin": For each Distribution Date (i) on
or prior to the Optional Termination Date, ______% per annum, and (ii) following
the Optional Termination Date, ______% per annum.

            "Class A-1A LIBOR Carryover Amount": If on any Distribution Date,
the Accrued Certificate Interest for the Class A-1A Certificates is based upon
the Class A-1A Net Funds Cap, the excess of (i) the amount of interest the Class
A-1A Certificates would have been entitled to receive on such Distribution Date
based on the Class A-1A Pass-Through Rate, over (ii) the amount of interest the
Class A-1A Certificates received on such Distribution Date based on such Class
A-1A Net Funds Cap, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the then applicable
Class A-1A Pass-Through Rate).

            "Class A-1A Net Funds Cap": With respect to any Distribution Date,
the product of (i) the average of the Net Mortgage Interest Rates of the Group 2
Mortgage Loans, weighted on the basis of their Principal Balances as of the
first day of the related Collection Period (or, in the case of the first
Distribution Date, the Cut-off Date), each expressed on the basis of an assumed
360-day year and the actual number of days elapsed during the related Interest
Accrual Period, and (ii) the Pool Balance divided by the aggregate Certificate
Principal Balance of the Offered Certificates.

            "Class A-1A Pass-Through Rate": For each Distribution Date, LIBOR as
of the related LIBOR Determination Date, plus the Class A-1A Certificate Margin.

            "Class A-1A REMIC Pass-Through Rate": The least of (a) the Class
A-1A Pass-Through Rate, (b) the Weighted Average Net Mortgage Rate and (c) the
Weighted Average Group 2 Net Mortgage Rate.

            "Class A-1F Certificate Margin": For each Distribution Date (i) on
or prior to the Optional Termination Date, ______% per annum, and (ii) following
the Optional Termination Date, ______% per annum.

            "Class A-1F LIBOR Carryover Amount": If on any Distribution Date,
the Accrued Certificate Interest for the Class A-1F Certificates is based upon
the Class A-1F Net Funds Cap, the excess of (i) the amount of interest the Class
A-1F Certificates would have been entitled to receive on such Distribution Date
based on the Class A-1F Pass-Through Rate, over (ii) the amount of interest the
Class A-1F Certificates received on such Distribution Date based on such Class
A-1F Net Funds Cap, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the then applicable
Class A-1F Pass-Through Rate).

            "Class A-1F Net Funds Cap": With respect to any Distribution Date,
the product of (i) the average of the Net Mortgage Interest Rates of the Group 1
Mortgage Loans, weighted on the basis of their Principal Balances as of the
first day of the related Collection Period (or, in the case of the first
Distribution Date, the Cut-off Date), each expressed on the basis of an assumed
360-day year and the actual number of days elapsed during the related Interest
Accrual Period and (ii) the Pool Balance divided by the aggregate Certificate
Principal Balance of the Offered Certificates.


                                      -6-
<PAGE>


            "Class A-1F Pass-Through Rate": For each Distribution Date, LIBOR as
of the related LIBOR Determination Date, plus the Class A-1F Certificate Margin.

            "Class A-1F REMIC Pass-Through Rate": The least of (a) the Class
A-1F Pass-Through Rate, (b) the Weighted Average Net Mortgage Rate and (c) the
Weighted Average Group 1 Net Mortgage Rate.

            "Class A-2F Net Funds Cap": With respect to any Distribution Date,
the product of (i) the average of the Net Mortgage Interest Rates of the Group 1
Mortgage Loans, weighted on the basis of their Principal Balances as of the
first day of the related Collection Period (or, in the case of the first
Distribution Date, the Cut-off Date), and (ii) the Pool Balance divided by the
aggregate Certificate Principal Balance of the Offered Certificates.

            "Class A-2F Pass-Through Rate": For each Distribution Date (i) on or
prior to the Optional Termination Date, ______% per annum, and (ii) following
the Optional Termination Date, ______% per annum.

            "Class A-2F REMIC Pass-Through Rate": The least of (a) the Class
A-2F Pass-Through Rate, (b) the Weighted Average Net Mortgage Rate and (c) the
Weighted Average Group 1 Net Mortgage Rate.

            "Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof substantially in the form annexed hereto as
Exhibits A-1, A-2 and A-3, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein.

            "Class A Certificateholders": Collectively, the Holders of the Class
A Certificates.

            "Class A Interest Carry Forward Amount": For any Distribution Date,
the sum of the Interest Carry Forward Amounts for the Class A-1F, Class A-2F and
Class A-1A Certificates for such Distribution Date.

            "Class A Principal Distribution Amount": As of any Distribution Date
(a) prior to the Stepdown Date or with respect to which a Trigger Event is in
effect, the lesser of (i) 100% of the Principal Distribution Amount and (ii) the
sum of the Certificate Principal Balances of the Class A-1F, Class A-2F and
Class A-1A Certificates and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of the Certificate
Principal Balances of the Class A-1F, Class A-2F and Class A-1A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) ______% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of (i) ______% and (ii) the Pool
Balance on the Closing Date.


                                      -7-


<PAGE>


            "Class B Applied Realized Loss Amount": As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Applied Realized Loss Amount, if any, on such Distribution
Date) and (y) the Applied Realized Loss Amount as of such Distribution Date.

            "Class B Certificate": Any one of the Certificates with a "B"
designated on the face thereof substantially in the form annexed hereto as
Exhibit B, executed by the Trustee on behalf of the Trust and authenticated and
delivered by the Trustee, representing the right to distributions as set forth
herein and therein.

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

            "Class B Pass-Through Rate": For each Distribution Date, ______%,
per annum.

            "Class B Principal Distribution Amount": As of any Distribution Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect,
the excess of (x) the sum of (i) the sum of the Certificate Principal Balances
of the Class A-1A, Class A-1F and Class A-2F Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), and (iv)
the Certificate Principal Balance of the Class B Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) ______%
and (ii) the Pool Balance as of the last day of the related Collection Period
and (B) the Pool Balance as of the last day of the related Collection Period
minus the product of ______% and the Pool Balance on the Closing Date.

            "Class B Realized Loss Amortization Amount": As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.

            "Class B REMIC Pass-Through Rate": The lesser of the Class B
Pass-Through Rate and the Weighted Average Net Mortgage Rate.

            "Class M-1 Applied Realized Loss Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-1 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class M-2 Applied Realized
Loss Amount and the Class B Applied Realized Loss Amount, in each case as of
such Distribution Date.

            "Class M-1 Pass-Through Rate": For each Distribution Date, ______%
per annum.


                                      -8-


<PAGE>


            "Class M-1 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A-1A, Class A-1F and Class A-2F Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) ______% and (ii) the Pool Balance as of the last day of
the related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of ______% and the Pool Balance on
the Closing Date.

            "Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (v) hereof, in each case
for such Distribution Date.

            "Class M-1 REMIC Pass-Through Rate": The lesser of the Class M-1
Pass-Through Rate and the Weighted Average Net Mortgage Rate.

            "Class M-2 Applied Realized Loss Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-2 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the related Applied Realized Loss
Amount as of such Distribution Date over (ii) the Class B Applied Realized Loss
Amount as of such Distribution Date.

            "Class M-2 Pass-Through Rate": For each Distribution Date, ______%
per annum.

            "Class M-2 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A-1A, Class A-1F and Class A-2F Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (iii) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) ______% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of ______% and the Pool Balance on the Closing Date.

            "Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (viii) hereof, in each
case for such Distribution Date.


                                      -9-


<PAGE>


            "Class M-2 REMIC Pass-Through Rate": The lesser of the Class M-2
Pass-Through Rate and the Weighted Average Net Mortgage Rate.

            "Class N Certificate": Any one of the Certificates with a "N"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-5, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Trustee, representing the right to distributions as set
forth herein and therein.

            "Class N Reserve Fund": The separate account, held in trust, created
and maintained by the Trustee pursuant to Section 4.08 in the name of the
Trustee for the benefit of the Class N Certificateholders and designated
"______________________________________ in trust for registered Holders of 200 -
Trust, C-BASS Mortgage Loan Asset-Backed Certificates, Series 200 - , Class N."

            "Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit C-1
and evidencing the ownership of the Residual Interest. The Class R Certificate
represents the ownership of the Class R-1 Interest, Class R-2 Interest, Class
R-3 Interest and Class R-4 Interest.

            "Class R-1 Interest": The uncertificated residual interest in REMIC

            "Class R-2 Interest": The uncertificated residual interest in REMIC

            "Class R-3 Interest": The uncertificated residual interest in REMIC

            "Class R-4 Interest": The uncertificated residual interest in REMIC

            "Class T1-1 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.

            "Class T1-1 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to ______% of (a) the Pool Balance minus (b) the Remaining Initial
Overcollateralization Amount.

            "Class T1-2 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.

            "Class T1-2 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the excess of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount over (b) the Subsequent
Overcollateralization Amount.

            "Class T1-3 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.


                                      -10-


<PAGE>


            "Class T1-3 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the sum of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount and (b) the Subsequent
Overcollateralization Amount.

            "Class T1-4 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.

            "Class T1-4 Principal Amount": As of any Distribution Date, an
amount equal to (a) the Initial Overcollateralization Amount minus (b) the sum
of (i) the sum of the Class T1-5 Principal Amount and the Class T1-6 Principal
Amount and (ii) any principal payments and Realized Losses and accreted interest
allocated to the Class T1-4 Interest as set forth in Section 4.10(d).

            "Class T1-5 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-5
Principal Amount and bears interest at the Weighted Average Group 1 Net Mortgage
Rate.

            "Class T1-5 Principal Amount": As of any Distribution Date, an
amount equal to the lesser of (a) ______% of the Group 1 Loan Balance and (b)
the product of (i) the Remaining Initial Overcollateralization Amount and a
fraction the numerator of which is the Group 1 Loan Balance and the denominator
of which is the Pool Balance.

            "Class T1-6 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-6
Principal Amount and bears interest at the Weighted Average Group 2 Net Mortgage
Rate.

            "Class T1-6 Principal Amount": As of any Distribution Date, an
amount equal to the lesser of (a) 0.01 percent of the Group 2 Loan Balance and
(b) the product of (i) the Remaining Initial Overcollateralization Amount and a
fraction the numerator of which is the Group 2 Loan Balance and the denominator
of which is the Pool Balance.

            "Class T2-1 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-2 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-3 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.

            "Class T2-4 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.


                                      -11-


<PAGE>


            "Class T2-5 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-5
Principal Amount and bears interest at the Weighted Average Group 1 Net Mortgage
Rate.

            "Class T2-6 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-6
Principal Amount and bears interest at the Weighted Average Group 2 Net Mortgage
Rate.

            "Class T2-11 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-1
Principal Amount and bears interest at (a) the Weighted Average Net Mortgage
Rate minus (b) the REMIC 2 Pass-Through Rate.

            "Class T2-12 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-2
Principal Amount and bears interest at (a) the Weighted Average Net Mortgage
Rate minus (b) the REMIC 2 Pass-Through Rate.

            "Class T2-13 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-3
Principal Amount and bears interest at (a) the Weighted Average Net Mortgage
Rate minus (b) the REMIC 2 Pass-Through Rate.

            "Class T3-A1A Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class A-1A Certificates and bears interest at the
Weighted Average Net Mortgage Rate.

            "Class T3-A1F Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class A-1F Certificates and bears interest at the
Weighted Average Net Mortgage Rate.

            "Class T3-A2F Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class A-2F Certificates and bears interest at the
Weighted Average Net Mortgage Rate.

            "Class T3-B Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class B Certificates and bears interest at the Weighted
Average Net Mortgage Rate.

            "Class T3-M1 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-1 Certificates and bears interest at the
Weighted Average Net Mortgage Rate.

            "Class T3-M2 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-2 Certificates and bears interest at the
Weighted Average Net Mortgage Rate.

            "Class T3-4 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.


                                      -12-


<PAGE>


            "Class T3-5 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Class T1-5
Principal Amount and bears interest at the Weighted Average Group 1 Net Mortgage
Rate.

            "Class T3-6 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Class T1-6
Principal Amount and bears interest at the Weighted Average Group 2 Net Mortgage
Rate.

            "Class T3-11 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-1
Principal Amount and is entitled to all interest distributions on the Class
T2-11 Interest.

            "Class T3-12 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-2
Principal Amount and is entitled to all interest distributions on the Class
T2-12 Interest.

            "Class T3-13 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-3
Principal Amount and is entitled to all interest distributions on the Class
T2-13 Interest.

            "Class T4-A1A Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-1A Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-1A
Certificates and bears interest at the Class A-1A REMIC Pass-Through Rate.

            "Class T4-A1AIO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class A-1A
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Weighted Average Net Mortgage Rate over (ii) the Class A-1A REMIC
Pass-Through Rate.

            "Class T4-A1F Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-1F Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-1F
Certificates and bears interest at the Class A-1F REMIC Pass-Through Rate.

            "Class T4-A1FIO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class A-1F
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Weighted Average Net Mortgage Rate over (ii) the Class A-1F REMIC
Pass-Through Rate.

            "Class T4-A2F Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-2F Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-2F
Certificates and bears interest at the Class A-2F REMIC Pass-Through Rate.


                                      -13-


<PAGE>


            "Class T4-A2FIO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class A-2F
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Weighted Average Net Mortgage Rate over (ii) the Class A-2F REMIC
Pass-Through Rate.

            "Class T4-M1 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-1 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-1
Certificates and bears interest at the Class M-1 REMIC Pass-Through Rate.

            "Class T4-M1IO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class M-1 Certificates
and bears interest at a rate equal to the excess, if any, of (i) the Weighted
Average Net Mortgage Rate over (ii) the Class M-1 REMIC Pass-Through Rate.

            "Class T4-M2 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-2 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-2
Certificates and bears interest at the Class M-2 REMIC Pass-Through Rate.

            "Class T4-M2IO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class M-2 Certificates
and bears interest at a rate equal to the excess, if any, of (i) the Weighted
Average Net Mortgage Rate over (ii) the Class M-2 REMIC Pass-Through Rate.

            "Class T4-B Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class B Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class B
Certificates and bears interest at the Class B REMIC Pass-Through Rate.

            "Class T4-BIO Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Certificate Principal Balance of the Class B Certificates
and bears interest at a rate equal to the excess, if any, of (i) the Weighted
Average Net Mortgage Rate over (ii) the Class B REMIC Pass-Through Rate.

            "Class T4-4 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a
principal balance equal to the Class T1-4 Principal Amount and bears interest at
the Weighted Average Net Mortgage Rate.

            "Class T4-5 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a
principal balance equal to the Class T1-5 Principal Amount and bears interest at
the Weighted Average Group 1 Net Mortgage Rate.


                                      -14-


<PAGE>


            "Class T4-6 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a
principal balance equal to the Class T1-6 Principal Amount and bears interest at
the Weighted Average Group 2 Net Mortgage Rate.

            "Class T4-11 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Class T1-1 Principal Amount and is entitled to all interest
distributions on the Class T3-11 Interest.

            "Class T4-12 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class X/N Interest, that has a notional
balance equal to the Class T1-2 Principal Amount and is entitled to all interest
distributions on the Class T3-12 Interest.

            "Class T4-13 Interest": A regular interest in REMIC 4, which is
represented by the Class X/N Interest, that has a notional balance equal to the
Class T1-3 Principal Amount and is entitled to all interest distributions on the
Class T3-13 Interest.

            "Class T4 P&I Regular Interest": Any of the Class T4-A1A Interest,
Class T4-A1F Interest, Class T4-A2F Interest, Class T4-M1 Interest, Class T4-M2
Interest or Class T4-B Interest.

            "Class X": Any one of the Class X Certificates as designated on the
face thereof substantially in the form annexed hereto as Exhibit C-3, executed
by the Trustee on behalf of the Trust and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein.

            "Class X/N Interest": An uncertificated interest in the Trust held
by the Trustee on behalf of the holders of the Class X and Class N Certificates,
representing the REMIC 4 Components in the aggregate, and which is entitled to
all distributions in respect of the REMIC 4 Components less the amount of any
LIBOR Carryover Amounts pursuant to Section 4.02(b)(xiii) and 4.02(d) or Rate
Payments pursuant to Section 4.10(a).

            "Class X Distributable Amount": With respect to any Distribution
Date, the excess of (i) the aggregate of amounts distributable on the Class X/N
Interest for such Distribution Date, over (ii) the aggregate of amounts
distributable to the Class N Certificates pursuant to Section 4.02(b).

            "Closing Date":  June 15, 2000.

            "Code": The Internal Revenue Code of 1986, as it may be amended from
time to time.

            "Collection Account": The account or accounts created and maintained
by the Servicer pursuant to Section 3.04, which shall be entitled
"_______________________________, as Servicer for
________________________________, as Trustee, in trust for registered Holders of
200 - Trust, C-BASS Mortgage Loan Asset-Backed Certificates, Series 200 - ", and
which must be an Eligible Account.


                                      -15-


<PAGE>


            "Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar month preceding the month in which
such Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.

            "Combined Loan-to-Value Ratio": As of any date and Mortgage Loan,
the fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan plus the principal balance of any related senior
mortgage loan, and the denominator of which is the Value of the related
Mortgaged Property.

            "Compensating Interest":  As defined in Section 3.23 hereof.

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

            "Conventional Mortgage Loan": Any Mortgage Loan that is neither an
FHA Loan nor a VA Loan.

            "Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 450 West 33rd Street, 14th
Floor, New York, New York 10001, Attention: Capital Markets Fiduciary Services,
C-BASS Series 200 - , or at such other address as the Trustee may designate from
time to time by notice to the Certificateholders, the Depositor, the Servicer
and the Seller.

            "Corresponding Classes": With respect to REMIC 3 and REMIC 4, the
following Classes shall be Corresponding Classes:

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

CORRESPONDING REMIC 3 CLASSES            CORRESPONDING REMIC 4 CLASSES
--------------------------------------------------------------------------------

T3-A1A                                   T4-A1A and T4-A1AIO, in the aggregate
--------------------------------------------------------------------------------

T3-A1F                                   T4A-1F and T4-A1FIO, in the aggregate
--------------------------------------------------------------------------------

T3-A2F                                   T4A-2F and T4-A2FIO, in the aggregate
--------------------------------------------------------------------------------

T3-M1                                    T4M-1 and T4-M1IO, in the aggregate
--------------------------------------------------------------------------------

T3-M2                                    T4M-2 and T4-M2IO, in the aggregate
--------------------------------------------------------------------------------

T3-B                                     T4B and T4-B-IO, in the aggregate
--------------------------------------------------------------------------------


                                      -16-


<PAGE>


            "Custodial Agreement": The Custodial Agreement, dated as of      ,
200 , among the Trustee, the Servicer and the Custodian, as the same may be
amended or supplemented pursuant to the terms thereof.

            "Custodian": Bank One Trust Company, N.A., a national banking
association, or any successor custodian appointed pursuant to the terms of the
Custodial Agreement.

            "Cut-off Date":      , 200 .

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

            "Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date after application of
funds received or advanced on or before such date (or as of the applicable date
of substitution with respect to an Eligible Substitute Mortgage Loan).

            "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

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

            "Deferred Interest": With respect to any Mortgage Loan identified on
the Mortgage Loan Schedule as having the possibility of negative amortization,
the current portion of interest not currently paid by the Mortgagor that is
added to the principal balance of such Mortgage Loan.

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

            "Definitive Certificates":  As defined in Section 5.02(c) hereof.

            "Delinquent": Any Mortgage Loan, the Monthly Payment due on a Due
Date with respect to which such monthly payment is not made by the close of
business on the next scheduled Due Date for such Mortgage Loan.

            "Depositor": Asset Backed Funding Corporation, a Delaware
corporation, or any successor in interest.

            "Depository": The initial depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.


                                      -17-


<PAGE>


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

            "Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.

            "Determination Date": With respect to any Distribution Date, the
10th day of the calendar month in which such Distribution Date occurs or, if
such 10th day is not a Business Day, the Business Day immediately preceding such
10th day.

            "Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer on
behalf of the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer on behalf of the Trustee)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.

            "Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any possession of the United
States, any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided by nationally recognized counsel to
the Trustee that the holding of an ownership interest in a Class R Certificate
by such Person may cause the Trust Fund or any Person having an ownership
interest in any Class of Certificates (other than such Person) to incur
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in the Class R Certificate
to such Person. A corporation will not be treated as an instrumentality of the
United States or of any state or political subdivision thereof if all of its
activities are subject to tax and a majority of its board of directors is not
selected by a governmental unit. The term "United States", "state" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.

            "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, _________________________________________, as Trustee, in
trust for the registered Holders of 200 - Trust, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 200 - " and which must be an Eligible Account.


                                      -18-


<PAGE>


            "Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in June 2000.

            "Due Date": With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due, exclusive of any grace
period.

            "Eligible Account": Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "A-1" (or the equivalent) by each of the Rating Agencies at the time any
amounts are held on deposit therein, (ii) an account or accounts the deposits in
which are fully insured by the FDIC (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each
Rating Agency, the Certificateholders will have a claim with respect to the
funds in such account or a perfected first priority security interest against
such collateral (which shall be limited to Permitted Investments) securing such
funds that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.

            "Eligible Substitute Mortgage Loan": A mortgage loan substituted for
a Defective Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Defective Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) have a
Mortgage Interest Rate, with respect to a Group 1 Mortgage Loan, not less than
the Mortgage Interest Rate of the Defective Mortgage Loan and not more than 1%
in excess of the Mortgage Interest Rate of such Defective Mortgage Loan, (iii)
if a Group 2 Mortgage Loan, have a Maximum Loan Rate not less than the Maximum
Loan Rate for the Defective Mortgage Loan, (iv) if a Group 2 Mortgage Loan, have
a Minimum Loan Rate not less than the Minimum Loan Rate of the Defective
Mortgage Loan, (v) if a Group 2 Mortgage Loan, have a Gross Margin equal to or
greater than the Gross Margin of the Defective Mortgage Loan, (vi) if a Group 2
Mortgage Loan, have a next Adjustment Date not more than two months later than
the next Adjustment Date on the Defective Mortgage Loan, except in the case of
any Mortgage Loan which has an Arrearage due to the application of any related
forbearance plan with respect to such Mortgage Loan, an Eligible Substitute
Mortgage Loan must have all Adjustment Dates occurring during the same Interest
Accrual Period during which Adjustment Dates occur with respect to the


                                      -19-


<PAGE>


substituted Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Defective Mortgage Loan,
(viii) be current as of the date of substitution, (ix) have a Combined
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Combined Loan-to-Value Ratio of the Defective Mortgage Loan as of such date, (x)
have a risk grading determined by the Seller at least equal to the risk grading
assigned on the Defective Mortgage Loan, (xi) have been reunderwritten by the
Seller in accordance with the same underwriting criteria and guidelines as the
Defective Mortgage Loan and (xii) conform to each representation and warranty
set forth in Section 2.04 hereof applicable to the Defective Mortgage Loan. In
the event that one or more mortgage loans are substituted for one or more
Defective Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Interest
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Interest Rates, the risk gradings described in clause
(x) hereof shall be satisfied as to each such mortgage loan, the terms described
in clause (vii) hereof shall be determined on the basis of weighted average
remaining term to maturity, the Combined Loan-to-Value Ratios described in
clause (ix) hereof shall be satisfied as to each such mortgage loan and, except
to the extent otherwise provided in this sentence, the representations and
warranties described in clause (xii) hereof must be satisfied as to each
Eligible Substitute Mortgage Loan or in the aggregate, as the case may be.

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

            "ERISA-Restricted Certificates": Any of the Class M-1, Class M-2,
Class B, Class N, Class X and Class R Certificates.

            "Escrow Account": The account or accounts created and maintained
pursuant to Section 3.06.

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

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

            "Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii) the
Servicing Fee Rate.

            "Extended Period": As defined in Section 9.04(b).

            "Extra Principal Distribution Amount": As of any Distribution Date,
the lesser of (x) the Monthly Excess Interest Amount for such Distribution Date
and (y) the Overcollateralization Deficiency for such Distribution Date.

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

            "FHA": The Federal Housing Administration, an agency within HUD.


                                      -20-


<PAGE>


            "FHA Approved Mortgagee": Those institutions which are approved by
FHA to act as servicer and mortgagee of record pursuant to FHA Regulations.

            "FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance of an FHA Loan pursuant to the
National Housing Act, as amended.

            "FHA Loan": A Mortgage Loan which is the subject of an FHA Insurance
Contract as evidenced by a Mortgage Insurance Certificate.

            "FHA Regulations": Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.

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

            "Fidelity Bond": Shall have the meaning assigned thereto in Section
3.12.

            "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller or the Servicer pursuant to or as contemplated by
Section 2.03 or 10.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.

            "First Union":  First Union National Bank, or any successor thereto.

            ["Fitch": Fitch Ratings, or its successor in interest.]

            "Fixed Retained Yield": The fixed percentage of interest on certain
Mortgage Loans, on a loan-by-loan basis, which will not be included in the
Trust.

            "Fixed Retained Yield Rate": The Fixed Retained Yield on a Mortgage
Loan expressed as a per annum rate, as set forth in the Mortgage Loan Schedule.

            "FNMA": Fannie Mae or any successor thereto.

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

            "Grantor Trust": That portion of the Trust exclusive of REMIC 1,
REMIC 2, REMIC 3 and REMIC 4 which holds the REMIC 4 Regular Interests, the
Class X/N Reserve Fund, the right of the Offered Certificates to receive Rate
Payments, the right of the Class A-1A and Class A-1F Certificates to receive
LIBOR Carryover Amounts and the obligation of the Class X/N Interest to pay such
Rate Payments and LIBOR Carryover Amounts.


                                      -21-


<PAGE>


            "Gross Margin": With respect to each Group 2 Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Interest Rate for such Mortgage
Loan.

            "Group 1 Loan Balance": As of any date, the aggregate of the
Principal Balances of all Mortgage Loans in Loan Group 1 as of such date.

            "Group 1 Mortgage Loan":  A Mortgage Loan in Loan Group 1.

            "Group 1 Principal Percentage": With respect to any Distribution
Date and the Class A-1F and Class A-2F Certificates, the percentage equivalent
of a fraction, the numerator of which is the amount of principal collections
(including any principal advanced by the Servicer) allocable to Loan Group 1 for
the related Collection Period or Prepayment Period, as applicable, and the
denominator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to Loan Group 1 and Loan Group 2
for the related Collection Period or Prepayment Period, as applicable.

            "Group 2 Loan Balance": As of any date, the aggregate of the
Principal Balances of all Mortgage Loans in Loan Group 2 as of such date.

            "Group 2 Mortgage Loan":  A Mortgage Loan in Loan Group 2.

            "Group 2 Principal Percentage": With respect to any Distribution
Date and the Class A-1A Certificates, the percentage equivalent of a fraction,
the numerator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to Loan Group 2 for the related
Collection Period or Prepayment Period, as applicable, and the denominator of
which is the amount of principal collections (including any principal advanced
by the Servicer) allocable to Loan Group 1 and Loan Group 2 for the related
Collection Period or Prepayment Period, as applicable.

            "HLTV Account Allocation": For any Distribution Date, with respect
to each HLTV Loan which was liquidated during the related Prepayment Period, the
lesser of (i) the HLTV Initial Allocation and (ii) the HLTV Liquidation
Allocation.

            "HLTV Initial Allocation": For each HLTV Loan, the dollar amount by
which the Cut-off Date Principal Balance of such HLTV Loan exceeded the Value of
the related Mortgaged Property, as of the Cut-off Date, as specified on the HLTV
Loan Schedule or such amount computed in accordance with Section 4.09 hereof.

            "HLTV Liquidation Allocation": For each liquidated HLTV Loan, the
excess, if any, of the related Principal Balance of such HLTV Loan as of the
date of liquidation over the related Net Liquidation Proceeds, as determined by
the Servicer and indicated on the Remittance Report.

            "HLTV Loan": Any Conventional Mortgage Loan with a Combined
Loan-to-Value Ratio in excess of 100%, as of the Cut-off Date and as indicated
on the HLTV Loan Schedule.


                                      -22-


<PAGE>


            "HLTV Loan Schedule": At any date, the list of HLTV Loans included
in the Trust Fund on such date, identifying each HLTV Loan and the related HLTV
Initial Allocation.

            "HLTV Reserve Account":  As defined in Section 4.09 hereof.

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

            "Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Depositor, the Servicer and
their respective Affiliates, (ii) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Servicer or
any Affiliate thereof, and (iii) is not connected with the Depositor or the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor or the Servicer or any Affiliate thereof merely because such Person is
the beneficial owner of 1% or less of any Class of securities issued by the
Depositor or the Servicer or any Affiliate thereof, as the case may be.

            "Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Trustee has received an Opinion of
Counsel, which Opinion of Counsel shall be an expense of the Trust Fund, to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.

            "Index": With respect to each Group 2 Mortgage Loan and with respect
to each related Adjustment Date, the index as specified in the related Mortgage
Note.

            "Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class N, Class X or Class R Certificate, the
amount designated "Initial Certificate Principal Balance" on the face thereof.

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

            "Initial Overcollateralization Amount":  $_______________.


                                      -23-


<PAGE>


            "Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans held for its own account, subject to
the terms and conditions of the related Mortgage Note and Mortgage.

            "Interest Accrual Period": With respect to any Distribution Date and
(i) with respect to the Class A-2F, Class M-1, Class M-2, Class B and Class N
Certificates and any Class of REMIC Regular Interests (other than the Class
T4-A1F and Class T4-A1A Interests), the calendar month immediately preceding the
month in which such Distribution Date occurs, and (ii) with respect to the Class
A-1F and Class A-1A Certificates and the Class T4-A1F and Class T4-A1A
Interests, the period from the preceding Distribution Date to the day prior to
the current Distribution Date (or, in the case of the first Distribution Date,
the period from the Closing Date through , 200 ).

            "Interest Carry Forward Amount": For any Class of Certificates
(other than the Class X and Class R Certificates) and any Distribution Date, the
sum of (a) the excess, if any, of the Accrued Certificate Interest and any
Interest Carry Forward Amount for the prior Distribution Date, over the amount
in respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate (x) with respect to the Class A-2F, Class M-1, Class M-2, Class B and Class
N Certificates, on the basis of a 360-day year consisting of twelve 30-day
months, and (y) with respect to the Class A-1F and Class A-1A Certificates, for
the actual number of days elapsed on the basis of a 360-day year since the prior
Distribution Date.

            "Interest Percentage": With respect to any Class of Certificates and
any Distribution Date, the ratio (expressed as a decimal carried to six places)
of the Accrued Certificate Interest for such Class to the sum of the Accrued
Certificate Interest for all Classes, in each case with respect to such
Distribution Date.

            "Interest Remittance Amount": As of any Determination Date, the sum,
without duplication, of (i) all interest due and collected or advanced with
respect to the related Collection Period on the Mortgage Loans (less the
Servicing Fee and the Fixed Retained Yield, amounts available for reimbursement
of Advances and Servicing Advances pursuant to Section 3.05 and expenses
reimbursable pursuant to Section 6.03), (ii) all Compensating Interest paid by
the Servicer on such Determination Date with respect to the Mortgage Loans and
(iii) the portion of any payment in connection with any substitution, Purchase
Price, Termination Price or Net Liquidation Proceeds relating to interest with
respect to the Mortgage Loans received during the related Prepayment Period.

            "Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Collection Period and not previously recovered.


                                      -24-


<PAGE>


            "LIBOR": With respect to each Interest Accrual Period, the rate
determined by the Trustee on the related LIBOR Determination Date on the basis
of the offered rate for one-month United States dollar deposits, as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:

            (i) If on such LIBOR Determination Date two or more Reference Banks
      provide such offered quotations, LIBOR for the related Interest Accrual
      Period shall be the arithmetic mean of such offered quotations (rounded
      upwards if necessary to the nearest whole multiple of ______%);

            (ii) If on such LIBOR Determination Date fewer than two Reference
      Banks provide such offered quotations, LIBOR for the related Interest
      Accrual Period shall be the arithmetic mean of the rates quoted by one or
      more major banks in New York City, selected by the Trustee after
      consultation with the Servicer, as of 11:00 A.M., New York City time, on
      such date for loans in U.S. Dollars to leading European banks for a period
      of one month in amounts approximately equal to the aggregate Certificate
      Principal Balances of the Class A-1F and Class A-1A Certificates; and

            (iii) If no such quotations can be obtained, LIBOR for the related
      Interest Accrual Period shall be LIBOR for the prior Distribution Date.

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

            "LIBOR Carryover Amount": Either the Class A-1F LIBOR Carryover
Amount or the Class A-1A LIBOR Carryover Amount.

            "LIBOR Determination Date": With respect to the Class A-1F and Class
A-1A Certificates, (i) for the first Distribution Date, the second LIBOR
Business Day preceding the Closing Date and (ii) for each subsequent
Distribution Date, the second LIBOR Business Day prior to the immediately
preceding Distribution Date.

            "Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds and Insurance Proceeds which it
expects to recover with respect to the liquidation of the Mortgage Loan or
disposition of the related REO Property have been recovered.

            "Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.13 or Section 10.01.


                                      -25-


<PAGE>


            "Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Servicer, including payments received under the PMI Policy, in connection
with (i) the taking of all or a part of a Mortgaged Property by exercise of the
power of eminent domain or condemnation or (ii) the liquidation of a defaulted
Mortgage Loan by means of a trustee's sale, foreclosure sale or otherwise.

            "Liquidation Report": The report with respect to a Liquidated
Mortgage Loan in such form and containing such information as is agreed to by
the Servicer and the Trustee.

            "Loan Group": Either Loan Group 1 or Loan Group 2, as the context
requires.

            "Loan Group Balance": Either the Group 1 Loan Balance or the Group 2
Loan Balance, as applicable.

            "Loan Group 1": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Sub-group 1A and Sub-group 1B.

            "Loan Group 2": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group 2.

            "Loan Guaranty Certificate": The certificate evidencing a VA
Guaranty Agreement.

            "Losses":  As defined in Section 9.03.

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

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

            "Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51% Percentage Interest in the Class R
Certificates.

            "Maximum Loan Rate": With respect to each Group 2 Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage
Interest Rate thereunder.

            "Minimum Loan Rate": With respect to each Group 2 Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage
Interest Rate thereunder.


                                      -26-


<PAGE>


            "Monthly Excess Cashflow Amount": The sum of the Monthly Excess
Interest Amount, the Overcollateralization Release Amount and (without
duplication) any portion of the Principal Distribution Amount remaining after
principal distributions on the Offered Certificates.

            "Monthly Excess Interest Amount": With respect to each Distribution
Date, the amount, if any, by which the Interest Remittance Amount for such
Distribution Date exceeds the aggregate amount distributed on such Distribution
Date pursuant to paragraphs (i) through (vi) under Section 4.01.

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

            ["Moody's": Moody's Investors Service, Inc., or its successor in
interest.]

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

            "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

            "Mortgage Insurance Certificate": The certificate evidencing an FHA
Insurance Contract.

            "Mortgage Interest Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each Group 1 Mortgage Loan shall remain constant at the rate set
forth in the Mortgage Loan Schedule as the Mortgage Interest Rate in effect
immediately following the Cut-off Date and (ii) in the case of each Group 2
Mortgage Loan (A) as of any date of determination until the first Adjustment
Date following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Interest Rate in effect immediately following the
Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date, to equal the sum, rounded
to the nearest ______% as provided in the Mortgage Note, of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.


                                      -27-


<PAGE>


            "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule.

            "Mortgage Loan Purchase Agreement": The agreement between the Seller
and the Depositor, dated as of , 200 , regarding the transfer of the Mortgage
Loans by the Seller to or at the direction of the Depositor.

            "Mortgage Loan Schedule": As of any date (i) with respect to the
Mortgage Loans, the list of such Mortgage Loans included in the Trust Fund on
such date, separately identifying the Group 1 Mortgage Loans and the Group 2
Mortgage Loans, attached hereto as Exhibit D. The Mortgage Loan Schedule shall
be prepared by the Seller and shall set forth the following information with
respect to each Mortgage Loan:

            (1) the Seller's Mortgage Loan identifying number;

            (2) the city, state, and zip code of the Mortgaged Property;

            (3) the type of Residential Dwelling constituting the Mortgaged
Property or a designation that the Mortgaged Property is a multi-family
property;

            (4) the occupancy status of the Mortgaged Property at origination;

            (5) the original months to maturity;

            (6) the date of origination;

            (7) the first payment date;

            (8) the stated maturity date;

            (9) the stated remaining months to maturity;

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

            (11) the Principal Balance of each Mortgage Loan as of the Cut-off
Date;

            (12) the Arrearage of the Mortgage Loan as of the Cut-off Date;

            (13) the Mortgage Interest Rate of the Mortgage Loan as of the
Cut-off Date;

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

            (15) the contractual interest paid to date of the Mortgage Loan;

            (16) if the Mortgage Loan is not owner-financed, the Combined
Loan-to-Value Ratio at origination;


                                      -28-


<PAGE>


            (17) a code indicating the loan performance status of the Mortgage
Loan as of the Cut-off Date;

            (18) a code indicating whether the Mortgage Loan is a Simple
Interest Mortgage Loan or an Actuarial Mortgage Loan;

            (19) a code indicating whether the Mortgaged Property is in
bankruptcy or in its forbearance period as of the Cut-off Date;

            (20) a code indicating whether the Mortgage Loan is conventional,
insured by the FHA or guaranteed by the VA;

            (21) a code indicating the Index that is associated with such
Mortgage Loan;

            (22) the Gross Margin;

            (23) the Periodic Rate Cap;

            (24) the Minimum Loan Rate;

            (25) the Maximum Loan Rate;

            (26) a code indicating whether the Mortgage Loan has a prepayment
penalty and the type of prepayment penalty;

            (27) the first Adjustment Date immediately following the Cut-off
Date;

            (28) the rate adjustment frequency;

            (29) the payment adjustment frequency;

            (30) a code indicating whether the Mortgage Loan is owner-financed;

            (31) a code indicating whether the Mortgage Loan is subject to
negative amortization;

            (32) a code indicating whether the Mortgage Loan is a second lien;
and

            (33) the Fixed Retained Yield Rate, if applicable.

            The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with respect to the Mortgage Loans in the
aggregate and for each Loan Group: (1) the number of Mortgage Loans; (2) the
current 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. The Mortgage Loan Schedule shall be amended from
time to time by the Seller in accordance with the provisions of this Agreement.
With respect to any Eligible Substitute Mortgage Loan, Cut-off Date shall refer
to the related Cut-off Date for such Mortgage Loan, determined in accordance
with the definition of Cut-off Date herein.


                                      -29-


<PAGE>


            "Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

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

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

            "Mortgagor": The obligor on a Mortgage Note.

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

            "Net Mortgage Interest Rate": With respect to any Mortgage Loan, the
Mortgage Interest Rate borne by such Mortgage Loan minus the sum of the (i)
Expense Fee Rate and (ii) the Fixed Retained Yield Rate, if any.

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

            "Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan that, in
the good faith business judgment of the Servicer, will not or, in the case of a
proposed Advance or Servicing Advance, would not be ultimately recoverable from
Late Collections on such Mortgage Loan as provided herein.

            "Notional Amount": On any Distribution Date, with respect to the
Class N Certificates, an amount equal to the Original Class N Notional Amount
reduced by the aggregate distributions made to the Class N Certificates pursuant
to Section 4.02(b)(xv)(B).

            "Offered Certificates": The Class A-1A, Class A-1F, Class A-2F,
Class M-1, Class M-2 and Class B Certificates.

            "Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.

            "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer except that
any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.


                                      -30-


<PAGE>


            "Optional Termination Date": The first Distribution Date on which
the Seller may opt to terminate the Mortgage Pool pursuant to Section 10.01.

            "Original Class N Notional Amount": The Notional Amount of the Class
N Certificates on the Closing Date, as set forth opposite such Class in the
Preliminary Statement.

            "Original Class Certificate Principal Balance": With respect to each
Class of Certificates, the Certificate Principal Balance thereof on the Closing
Date, as set forth opposite such Class in the Preliminary Statement, except with
respect to the Class N, Class X and Class R Certificates, which have an Original
Class Certificate Principal Balance of zero.

            "Original Notional Amount":  The Original Class N Notional Amount.

            "Overcollateralization Amount": As of any Distribution Date, the
excess, if any, of (x) the Pool Balance as of the last day of the immediately
preceding Collection Period over (y) the aggregate Certificate Principal
Balances of all Classes of Offered Certificates (after taking into account all
distributions of principal on such Distribution Date).

            "Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of Offered Certificates resulting from the distribution of the Principal
Distribution Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on such Distribution Date.

            "Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date on which a Trigger Event is not in
effect, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the excess, if any, of (i) the Overcollateralization Amount for
such Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on the Offered Certificates on such Distribution
Date, over (ii) the Targeted Overcollateralization Amount for such Distribution
Date.

            "Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.

            "Pass-Through Rate": Any of the Class A-1A Pass-Through Rate, the
Class A-1F Pass-Through Rate, the Class A-2F Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2 Pass-Through Rate and the Class B Pass-Through
Rate. With respect to the Class N Certificates, the Pass-Through Rate is ______%
per annum.

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

            "Percentage Interest": With respect to any Certificate (other than a
Class N, Class X or Class R Certificate), a fraction, expressed as a percentage,
the numerator of which is the Initial Certificate Principal Balance, as the case
may be, represented by such Certificate and the denominator of which is the


                                      -31-


<PAGE>


Original Class Certificate Principal Balance of the related Class. With respect
to a Class N Certificate, the undivided percentage interest obtained by dividing
the Initial Notional Amount evidenced by such Certificate by the Original Class
N Notional Amount of such Class. With respect to a Class X or Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate; provided, however, that
the sum of all such percentages for each such Class totals 100%.

            "Periodic Rate Cap": With respect to each Group 2 Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Interest Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Loan Rate or the Minimum Loan Rate) on such Adjustment Date from the Mortgage
Interest Rate in effect immediately prior to such Adjustment Date.

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

            (i) direct obligations of, or obligations fully guaranteed as to
      timely payment of principal and interest by, the United States or any
      agency or instrumentality thereof, provided such obligations are backed by
      the full faith and credit of the United States;

            (ii) (A) demand and time deposits in, certificates of deposit of,
      bankers' acceptances issued by or federal funds sold by any depository
      institution or trust company (including the Trustee or its agent acting in
      their respective commercial capacities) incorporated under the laws of the
      United States of America or any state thereof and subject to supervision
      and examination by federal and/or state authorities, so long as, at the
      time of such investment or contractual commitment providing for such
      investment, such depository institution or trust company or its ultimate
      parent has a short-term uninsured debt rating in one of the two highest
      available rating categories of [Rating Agency] and the highest available
      rating category of [Rating Agency] and provided that each such investment
      has an original maturity of no more than 365 days and (B) any other demand
      or time deposit or deposit which is fully insured by the FDIC;

            (iii) repurchase obligations with a term not to exceed 30 days with
      respect to any security described in clause (i) above and entered into
      with a depository institution or trust company (acting as principal) rated
      A or higher by [Rating Agency] and [Rating Agency], provided, however,
      that collateral transferred pursuant to such repurchase obligation must be
      of the type described in clause (i) above and must (A) be valued daily at
      current market prices plus accrued interest or (B) pursuant to such
      valuation, be equal, at all times, to 105% of the cash transferred by the
      Trustee in exchange for such collateral and (C) be delivered to the
      Trustee or, if the Trustee is supplying the collateral, an agent for the
      Trustee, in such a manner as to accomplish perfection of a security
      interest in the collateral by possession of certificated securities;


                                      -32-


<PAGE>


            (iv) securities bearing interest or sold at a discount that are
      issued by any corporation incorporated under the laws of the United States
      of America or any State thereof and that are rated by each Rating Agency
      in its highest long-term unsecured rating categories at the time of such
      investment or contractual commitment providing for such investment;

            (v) commercial paper (including both non-interest-bearing discount
      obligations and interest-bearing obligations payable on demand or on a
      specified date not more than 30 days after the date of acquisition
      thereof) that is rated by each Rating Agency in its highest short-term
      unsecured debt rating available at the time of such investment;

            (vi) units of money market funds registered under the Investment
      Company Act of 1940 including funds managed or advised by the Trustee or
      an affiliate thereof having the highest rating category by the applicable
      Rating Agency; and

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

provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.

            "Permitted Transferee": Any transferee of a Residual Certificate
other than a Disqualified Organization or a non-U.S. Person.

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

            "PMI Insurer": Mortgage Guaranty Insurance Corporation, a monoline
private insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.

            "PMI Mortgage Loans": The list of Mortgage Loans insured by the PMI
Insurer attached as Schedule II to the Mortgage Loan Purchase Agreement.

            "PMI Policy": The Primary Mortgage Insurance Policy (No.
42-440-3-2096) with respect to the PMI Mortgage Loans and all endorsements
thereto dated the Closing Date, issued by the PMI Insurer.

            "Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage Loans.


                                      -33-


<PAGE>


            "Pool Cap": With respect to any Distribution Date, the product of
(i) the average of the Net Mortgage Interest Rates of the Mortgage Loans,
weighted on the basis of their Principal Balances as of the first day of the
related Collection Period (or, in the case of the first Distribution Date, the
Cut-off Date), and (ii) the Pool Balance divided by the aggregate Certificate
Principal Balance of the Offered Certificates.

            "Prepayment Assumption": Prepayment Scenario IV as set forth in the
Prospectus Supplement.

            "Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full that was applied by the Servicer to
reduce the outstanding principal balance of such loan on a date preceding the
related Due Date, an amount equal to interest at the applicable Mortgage
Interest Rate (net of the Servicing Fee Rate) on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period.

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

            "Primary Insurance Policy": Each policy of primary guaranty mortgage
insurance issued by a Qualified Insurer, other than the PMI Policy, in effect
with respect to any Mortgage Loan, or any replacement policy therefor obtained
by the Servicer pursuant to Section 3.08.

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

            "Principal Distribution Amount": As to any Distribution Date, the
sum of (i) the Principal Remittance Amount minus, for Distribution Dates
occurring on and after the Stepdown Date and for which a Trigger Event is not in
effect, the Overcollateralization Release Amount, if any, and (ii) the Extra
Principal Distribution Amount, if any.

            "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

            "Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available therefor, the sum (less amounts available
for reimbursement of Advances and Servicing Advances pursuant to Section 3.05
and expenses reimbursable pursuant to Section 6.03) of: (i) each payment of
principal on a Mortgage Loan due during the related Collection Period and


                                      -34-


<PAGE>


received by the Servicer on or prior to the related Determination Date, and any
Advances with respect thereto, (ii) all full and partial Principal Prepayments
received by the Servicer during the related Prepayment Period, (iii) the Net
Liquidation Proceeds allocable to principal actually collected by the Servicer
during the related Prepayment Period, (iv) with respect to Defective Mortgage
Loans repurchased with respect to such Prepayment Period, the portion of the
Purchase Price allocable to principal, (v) any Substitution Adjustment Amounts
received on or prior to the previous Determination Date and not yet distributed
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with Section 10.01 hereof, that portion of the Termination Price in
respect of principal.

            "Private Certificates": Any of the Class X, Class N and Class R
Certificates.

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

            "Prospectus Supplement": That certain Prospectus Supplement dated
_____________ relating to the public offering of the Offered Certificates.

            "Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
Advance by the Servicer, which payment or Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, its fair
market value, determined in good faith by the Servicer, (iii) any unreimbursed
Servicing Advances and Advances and any unpaid Servicing Fees and Special
Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.13, and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Servicer or the Trustee in respect of the
breach or defect giving rise to the purchase obligation. With respect to any
Originator Mortgage Loan to be purchased pursuant to or as contemplated by
Section 2.10, the purchase price as set forth in Section 5 of the Originator
Mortgage Loan Purchase Agreement.

            "Qualified Insurer": Any insurance company acceptable to FNMA or
FHLMC.

            "Rate Payment": With respect to any Distribution Date, the excess,
if any, of Accrued Certificate Interest on a Class of Offered Certificates over
the amount of interest accrued for the same period with respect to the Class T4
P&I Regular Interest with the same alphabetical or numeric Class designation,
together with the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Pass-Through Rate for
such Class of Certificates).


                                      -35-


<PAGE>


            "Rating Agency or Rating Agencies": [Rating Agency] and [Rating
Agency], or their respective successors. If such agencies or their successors
are no longer in existence, "Rating Agencies" shall be such nationally
recognized statistical rating organizations as set forth on the most current
list of such organizations released by the Securities and Exchange Commission
and designated by the Depositor, notice of which designation shall be given to
the Trustee and the Servicer.

            "Realized Loss": With respect to a Liquidated Mortgage Loan, the
amount by which the remaining unpaid principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation Proceeds applied to the principal balance
of the related Mortgage Loan.

            "Realized Loss Amortization Amount": Any of the Class M-1 Realized
Loss Amortization Amount, the Class M-2 Realized Loss Amortization Amount and
the Class B Realized Loss Amortization Amount.

            "Record Date": With respect to all of the Certificates (except for
the Class A-1A and Class A-1F Certificates), the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs
(or the Closing Date, in the case of the first Distribution Date). With respect
to the Class A-1A and Class A-1F Certificates, the Business Day immediately
preceding such Distribution Date; provided, however, that if any Class A-1A or
Class A-1F Certificate becomes a Definitive Certificate, the Record Date for
such Certificate shall be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs.

            "Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor or the Trustee, (iii) whose quotations appear
on the Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee; provided, however, that if
fewer than two of such banks provide a LIBOR rate, then any leading banks
selected by the Trustee which are engaged in transactions in United States
dollar deposits in the international Eurocurrency market.

            "Regular Certificate": Any of the Offered Certificates, the Class N
Certificates and the Class X Certificates.

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

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

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


                                      -36-


<PAGE>


            "Remaining Initial Overcollateralization Amount": As of any
Distribution Date, an amount equal to (a) the Initial Overcollateralization
Amount minus (b) the sum of (i) any Overcollateralization Release Amounts
distributed and (ii) Realized Losses allocated to the Class T1-4, Class T1-5 or
Class T1-6 Interests.

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

            "REMIC 1 Regular Interests": The Class T1-1 Interest, Class T1-2
Interest, Class T1-3 Interest, Class T1-4 Interest, Class T1-5 Interest and
Class T1-6 Interest.

            "REMIC 2 Pass-Through Rate": With respect to any Distribution Date,
a rate obtained by dividing (A) the product of (i) 2 times (ii) the Weighted
Average Net Mortgage Rate times (iii) the Class T1-2 Principal Amount by (B) the
sum of (x) the Class T1-2 Principal Amount and (y) the Class T1-3 Principal
Amount, such principal balances being determined before any reductions of
principal balance or allocation of Realized Losses made on such Distribution
Date.

            "REMIC 2 Regular Interests": The Class T2-1 Interest, Class T2-2
Interest, Class T2-3 Interest, Class T2-4 Interest, Class T2-5 Interest, Class
T2-6 Interest, Class T2-11 Interest, Class T2-12 Interest and Class T2-13
Interest.

            "REMIC 3 Regular Interests": The Class T3-A1A Interest, Class T3-A1F
Interest, Class T3-A2F Interest, Class T3-M1 Interest, Class T3-M2 Interest,
Class T3-B Interest, Class T3-4 Interest, Class T3-5 Interest, Class T3-6
Interest, Class T3-11 Interest, Class T3-12 Interest and Class T3-13 Interest.

            "REMIC 4 Components": The Class T4-4, Class T4-5, Class T4-6, Class
T4-11, Class T4-12, Class T4-13, Class T4-A1AIO, Class T4-A1FIO, Class T4-A2FIO,
Class T4-M1IO, Class T4-M2IO and Class T4-BIO Interests. Each of the REMIC 4
Components represents a regular interest in REMIC 4.

            "REMIC 4 Regular Interests": The Class T4-A1A Interest, Class T4-A1F
Interest, Class T4-A2F Interest, Class T4-M1 Interest, Class T4-M2 Interest and
Class T4-B Interest, the Class T4-4 Interest, Class T4-5 Interest, Class T4-6
Interest, Class T4-11 Interest, Class T4-12 Interest, Class T4-13 Interest,
Class T4-A1AIO, Class T4-A1FIO, Class T4-A2FIO, Class T4-M1IO, Class T4-M2IO and
Class T4-BIO Interest.

            "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the foregoing
may be in effect from time to time.

            "REMIC Regular Interest": As defined in the Preliminary Statement.


                                      -37-


<PAGE>


            "Remittance Report": A report prepared by the Servicer and delivered
to the Trustee pursuant to Section 4.07, containing the information attached
hereto as Exhibit P.

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

            "REO Account": The account or accounts maintained by the Servicer in
respect of an REO Property pursuant to Section 3.13.

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

            "REO Principal Amortization": With respect to any REO Property, for
any calendar month, the aggregate of all amounts received in respect of such REO
Property during such calendar month, whether in the form of rental income, sale
proceeds (including, without limitation, that portion of the Termination Price
paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.13 for unpaid Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and Advances in respect of such REO Property or
the related Mortgage Loan.

            "REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.13.

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

            "Required Reserve Fund Balance": An amount equal to
$_______________.

            "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, (iv) a detached
one-family dwelling in a planned unit development, which is not a co-operative,
or (v) a mobile or manufactured home (as defined in 42 United States Code,
Section 5402(6)).

            "Residual Certificate":  The Class R Certificates.

            "Residual Interest": The sole Class of "residual interests" in each
REMIC within the meaning of Section 860G(a)(2) of the Code.

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


                                      -38-


<PAGE>


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

            "Seller": _________________________________________, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.

            "Senior Certificates": The Class A-1F, Class A-2F and Class A-1A
Certificates.

            "Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balances of the Subordinated Certificates and (ii) the
Overcollateralization Amount, in each case after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period.

            "Senior Specified Enhancement Percentage": On any date of
determination thereof, ______%.

            "Servicer": _________________________________________, a Delaware
limited partnership, or any successor servicer appointed as herein provided, in
its capacity as Servicer hereunder.

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

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

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

            "Servicing Advances": All customary, reasonable and necessary "out
of pocket" costs and expenses incurred by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.

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

            "Servicing Fee Rate": With respect to each Mortgage Loan, 0.50% per
annum.


                                      -39-


<PAGE>


            "Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.

            "Servicing Standard": Shall mean the standards set forth in Section
3.01.

            "Simple Interest Method": The method of allocating a payment to
principal and interest, pursuant to which the portion of such payment that is
allocated to interest is equal to the product of the fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and divided by either
360 or 365, as specified in the related Mortgage Note, and the remainder of such
payment is allocated to principal.

            "Simple Interest Mortgage Loan": Any Mortgage Loan under which the
portion of a payment allocable to interest and the portion of such payment
allocable to principal is determined in accordance with the Simple Interest
Method.

            "Special Servicing Fee": With respect to each Mortgage Loan that is
delinquent 90 or more days, $_______________ per month payable until the earlier
of (i) 18 consecutive months and (ii) the Delinquency status of such Mortgage
Loan has been reduced to less than 90 days.

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

            "Stayed Funds": Any payment required to be made under the terms of
the Certificates and this Agreement but which is not remitted by the Servicer
because the Servicer is the subject of a proceeding under the Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of the Bankruptcy
Code.

            "Stepdown Date": The later to occur of (x) the earlier to occur of
(A) the Distribution Date in June 2003 and (B) the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates is
reduced to zero, and (y) the first Distribution Date on which the Senior
Enhancement Percentage (after taking into account distributions of principal on
such Distribution Date) is greater than or equal to the Senior Specified
Enhancement Percentage.

            "Sub-group":  Either Sub-group 1A or Sub-group 1B

            "Sub-group 1A": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Sub-group 1A.

            "Sub-group 1A Mortgage Loan":  A Mortgage Loan in Sub-group 1A.

            "Sub-group 1B": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Sub-group 1B.

            "Sub-group 1B Mortgage Loan":  A Mortgage Loan in Sub-group 1B.


                                      -40-


<PAGE>


            "Subordinated Certificates": The Class M-1, Class M-2, Class B,
Class N, Class X and Class R Certificates.

            "Subsequent Overcollateralization Amount": As of any Distribution
Date, after the application of principal payments and Applied Realized Loss
Amounts, an amount equal to the excess, if any of (a) the Pool Balance over (b)
the sum of (i) the Certificate Principal Balance of each Class of Offered
Certificates and (ii) the Remaining Initial Overcollateralization Amount.

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

            "Targeted Overcollateralization Amount": As of any Distribution
Date, (x) prior to the Stepdown Date, ______% of the initial Pool Balance and
(y) on and after the Stepdown Date, the lesser of (i) ______% of the initial
Pool Balance and (ii) the greater of (A) ______% of the Pool Balance as of the
last day of the related Collection Period and (B) 0.50% of the initial Pool
Balance.

            "Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.

            "Tax Returns": The federal income tax returns on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust in its capacity as a REMIC under the
REMIC Provisions, together with any and all other information reports or returns
that may be required to be furnished to the Certificateholders of the related
Group or filed with the Internal Revenue Service or any other governmental
taxing authority under any applicable provisions of federal, state or local tax
laws.

            "Telerate Page 3750": The display page currently so designated on
the Bridge Telerate Service (or such other page as may replace the Telerate Page
3750 page on that service for the purpose of displaying London interbank offered
rates of major banks).

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

            "Trigger Event": With respect to any Distribution Date, if (i) the
six-month rolling average of 60+ Day Delinquent Loans equals or exceeds 50% of
the Senior Enhancement Percentage; provided, that if the Certificate Principal
Balance of the Senior Certificates has been reduced to zero, a Trigger Event
will have occurred if the six-month rolling average of 60+ Day Delinquent Loans
equals or exceeds ______% or (ii) the aggregate amount of Realized Losses
incurred since the Cut-off Date through the last day of the related Collection
Period divided by the initial Pool Balance exceeds the applicable percentages
set forth below with respect to such Distribution Date:


                                      -41-


<PAGE>


             DISTRIBUTION DATE OCCURRING IN          PERCENTAGE

             ______ 200  through ______200             ______%
             ______ 200  through ______200             ______%
             ______ 200  through ______200             ______%
             ______ 200  through ______200             ______%

            "Trust":  200  -      Trust, the trust created hereunder.

            "Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to a portion of which four REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such Mortgage Loans (other than any Fixed
Retained Yield) as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto, and together with all collections
thereon and proceeds thereof, (ii) any REO Property, together with all
collections thereon and proceeds thereof, (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby) and (v) the Collection Account, the
Distribution Account and any REO Account and such assets that are deposited
therein from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, the Trust Fund specifically excludes all payments and other
collections of principal and interest representing Arrearage and the HTLV
Reserve Account.

            "Trustee": _________________________________________, a
__________________ corporation, or any successor Trustee appointed as herein
provided.

            "Trustee Fee": With respect to any Distribution Date, the product of
(x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Loans as of the opening of business on the first day of
the related Collection Period, subject to a minimum amount of $_______________
per annum.

            "Trustee Fee Rate": With respect to any Distribution Date, 0.008%
per annum.

            "Underwriters": Banc of America Securities LLC, [Other
Underwriters], as underwriters with respect to the Offered Certificates.

            "United States Person" or "U.S. Person": (i) A citizen or resident
of the United States, (ii) a corporation, partnership or other entity treated as
a corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury regulations
provide otherwise) or (iii) an estate the income of which is includible in gross
income for United States tax purposes, regardless of its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in Treasury regulations, certain
Trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons will also be a U.S. Person.


                                      -42-


<PAGE>


            "Unpaid Realized Loss Amount": For any Class B, Class M-1 and Class
M-2 Certificates and as to any Distribution Date, the excess of (x) the
aggregate Applied Realized Loss Amounts applied respect to such Class for all
prior Distribution Dates over (y) the aggregate Realized Loss Amortization
Amounts with respect to such Class for all prior Distribution Dates.

            "VA":  The United States Department of Veterans Affairs.

            "VA Guaranty Agreements": With respect to a VA Loan, the agreements
evidencing the guaranty of such Mortgage Loan by the VA.

            "VA Loan":  A Mortgage Loan guaranteed by the VA.

            "VA Regulations": Any and all regulations promulgated by the VA
under the Servicemen's Readjustment Act of 1944, as amended.

            "Value": With respect to any Mortgaged Property, the value thereof
as determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan or the sale price, if the appraisal is not available;
except that, with respect to any Mortgage Loan that is a purchase money mortgage
loan, the lesser of (i) the value thereof as determined by an independent
appraisal made at the time of the origination of such Mortgage Loan, if any, and
(ii) the sales price of the related Mortgaged Property.

            "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Offered Certificates shall be 98%, and shall be allocated
among each such Class according to the fraction, expressed as a percentage, the
numerator of which is the aggregate Certificate Principal Balance of all the
Certificates of such Class then outstanding and the denominator of which is the
aggregate Certificate Principal Balance of all the Offered Certificates then
outstanding. The Voting Rights allocated to each such Class of Certificates
shall be allocated among all holders of each such Class in proportion to the
outstanding Certificate Principal Balance of such Certificates; provided,
however, that any Certificate registered in the name of the Servicer, the
Depositor or the Trustee or any of their respective affiliates shall not be
included in the calculation of Voting Rights. The percentage of all the Voting
Rights allocated among the Holders of the Class X Certificate shall be 2%. The
Class N and Class R Certificates shall have no Voting Rights.

            "Weighted Average Group 1 Net Mortgage Rate": The weighted average
(based on Principal Balance as of the first day of the related Collection Period
or, in the case of the first Distribution Date, the Cut-Off Date) of the Net
Mortgage Interest Rates of the Group 1 Mortgage Loans, expressed as an annual
rate and calculated on the basis of twelve months consisting of 30 days each and
a 360-day year.

            "Weighted Average Group 2 Net Mortgage Rate": The weighted average
(based on Principal Balance as of the first day of the related Collection Period
or, in the case of the first Distribution Date, the Cut-Off Date) of the Net
Mortgage Interest Rates of the Group 2 Mortgage Loans, expressed as an annual
rate and calculated on the basis of twelve months consisting of 30 days each and
a 360-day year.


                                      -43-


<PAGE>


            "Weighted Average Net Mortgage Rate": The weighted average (based on
Principal Balance as of the first day of the related Collection Period or, in
the case of the first Distribution Date, the Cut-Off Date) of the Net Mortgage
Interest Rates of the Mortgage Loans, expressed as an annual rate and calculated
on the basis of twelve months consisting of 30 days each and a 360-day year.

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

            Section 1.02 Accounting.

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

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

            Section 2.01 Conveyance of Mortgage Loans.

            The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) each Mortgage Loan (other than the
portion, if any, representing the Fixed Retained Yield) identified on the
Mortgage Loan Schedule, including the related Cut-off Date Principal Balance,
all interest accruing thereon after the Cut-off Date and all collections in
respect of interest and principal due after the Cut-off Date; (ii) property
which secured each such Mortgage Loan and which has been acquired by foreclosure
or deed in lieu of foreclosure; (iii) its interest in any insurance policies in
respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v)
the rights of the Depositor under the Mortgage Loan Purchase Agreement, and (vi)
all other assets included or to be included in the Trust Fund; provided,
however, so long as the Servicer is an FHA Approved Mortgagee, the Commissioner
of HUD shall have no obligation to recognize or deal with any person other than
the Servicer with respect to FHA Insurance. Such assignment includes all
interest and principal due to the Depositor or the Servicer after the Cut-off
Date with respect to the Mortgage Loans.

            In connection with such transfer and assignment, the Seller, on
behalf of the Depositor, does hereby deliver to, and deposit with the Trustee,
or its designated agent (the "Custodian"), the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:

      (i)   the original Mortgage Note, endorsed either (A) in blank or (B) in
            the following form: "Pay to the order of
            _________________________________________, as Trustee under the


                                      -44-


<PAGE>


            Pooling and Servicing Agreement, dated as of , 200 , among
            _________________________________________, Asset Backed Funding
            Corporation, _________________________________________ and
            _________________________________________, C-BASS Mortgage Loan
            Asset-Backed Certificates, Series 200 - , without recourse", or with
            respect to any lost Mortgage Note, an original Lost Note Affidavit,
            together with a copy of the related Mortgage Note;

      (ii)  the original Mortgage with evidence of recording thereon, and the
            original recorded power of attorney, if the Mortgage was executed
            pursuant to a power of attorney, with evidence of recording thereon
            or, if such Mortgage or power of attorney has been submitted for
            recording but has not been returned from the applicable public
            recording office, has been lost or is not otherwise available, a
            copy of such Mortgage or power of attorney, as the case may be,
            certified to be a true and complete copy of the original submitted
            for recording;

      (iii) an original Assignment of Mortgage, in form and substance acceptable
            for recording. The Mortgage shall be assigned either (A) in blank or
            (B) to "_________________________________________, as Trustee under
            the Pooling and Servicing Agreement, dated as of , 200 , among
            _________________________________________, Asset Backed Funding
            Corporation, _________________________________________ and
            _________________________________________, C-BASS Mortgage Loan
            Asset-Backed Certificates, Series 200 - , without recourse";

      (iv)  an original copy of any intervening assignment of Mortgage showing a
            complete chain of assignments;

      (v)   the original or a certified copy of lender's title insurance policy;

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

      (vii) for each FHA Loan, the original Mortgage Insurance Certificate;

      (viii) for each VA Loan, the original Loan Guaranty Certificate;

      (ix)  [Reserved]; and

      (x)   the original, or a certified copy of the, Primary Insurance Policy.

            The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit F-3 hereto.


                                      -45-


<PAGE>


            The Seller shall within 90 days following the Closing Date, with
respect to each Mortgage Loan that is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 place a legend on the original
Mortgage Note indicating the satisfaction of the provisions of such Act and the
regulations issued thereunder, to the effect that the Mortgage Loan is subject
to special truth in lending rules.

            The Servicer shall promptly (and in no event later than thirty days
following the Closing Date) submit or cause to be submitted for recording, at
the Servicer's expense and at no expense to the Trust Fund or the Trustee, in
the appropriate public office for real property records, each Assignment
referred to in Sections 2.01(iii) and (iv) above. In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly prepare or cause to be prepared a substitute Assignment or
cure or cause to be cured such defect, as the case may be, and thereafter cause
each such Assignment to be duly recorded.

            If any of the documents referred to in Section 2.01(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee or the Custodian no
later than the Closing Date, of a copy of each such document certified by the
Seller in the case of (x) above or the applicable public recording office in the
case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Seller,
delivery to the Trustee or the Custodian, promptly upon receipt thereof of
either the original or a copy of such document certified by the applicable
public recording office to be a true and complete copy of the original. The
Seller shall deliver or cause to be delivered to the Trustee or the Custodian
promptly upon receipt thereof any other documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan, including, but not
limited to, any original documents evidencing an assumption or modification of
any Mortgage Loan.

            Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 120 days to cure such defect or 150 days following the Closing Date,
in the case of missing Mortgages or Assignments or deliver such missing document
to the Trustee or the Custodian. If the Seller does not cure such defect or
deliver such missing document within such time period, the Seller shall either
repurchase or substitute for such Mortgage Loan in accordance with Section 2.03.

            The Seller shall cause the Assignments of Mortgage which were
delivered in blank to be completed and shall cause all Assignments referred to
in Section 2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv)
hereof to be recorded; provided, however, the Seller need not cause to be
recorded any Assignment which relates to a Mortgage Loan in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Seller to the Trustee and the Rating Agencies, the recordation of such
assignment is not necessary to protect the Trustee's interest in the related
Mortgage Loan. The Seller shall be required to deliver such assignments for
recording within 30 days of the Closing Date. The Seller shall furnish the
Trustee, or its designated agent, with a copy of each assignment of Mortgage
submitted for recording. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Seller shall promptly have
a substitute Assignment prepared or have such defect cured, as the case may be,
and thereafter cause each such Assignment to be duly recorded. In the event that
any Mortgage Note is endorsed in blank as of the Closing Date, promptly


                                      -46-


<PAGE>


following the Closing Date the Seller shall cause to be completed such
endorsements "Pay to the order of _________________________________________, as
Trustee under the Pooling and Servicing Agreement, dated as of , 200 , among
Credit-Based Asset and Securitization LLC, Asset Backed Funding Corporation,
_________________________________________ and
_________________________________________, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 200 - , without recourse."

            The Depositor herewith delivers to the Trustee an executed copy of
the Mortgage Loan Purchase Agreement.

            Section 2.02 Acceptance by Trustee.

            The Trustee acknowledges the receipt of, subject to the provisions
of Section 2.01 and subject to the review described below and any exceptions
noted on the exception report described in the next paragraph below, the
documents referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.

            The Trustee agrees, for the benefit of the Certificateholders, to
review (or cause the Custodian to review) each Mortgage File within 60 days
after the Closing Date (or, with respect to any document delivered after the
Startup Day, within 60 days of receipt and with respect to any Qualified
Substitute Mortgage, within 60 days after the assignment thereof) and to certify
in substantially the form attached hereto as Exhibit F-1 that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents required to be delivered to it pursuant Section 2.01 of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to items (1), (2), (3), (5), (13)
and (26) (in the case of (26), only as to whether there is a prepayment penalty)
of the Mortgage Loan Schedule accurately reflects information set forth in the
Mortgage File. It is herein acknowledged that, in conducting such review, the
Trustee (or the Custodian, as applicable) is under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they have actually been recorded or that they
are other than what they purport to be on their face.

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


                                      -47-


<PAGE>


            If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
(or the Custodian, as applicable) finds any document or documents constituting a
part of a Mortgage File to be missing or defective in any material respect, at
the conclusion of its review the Trustee shall so notify the Seller, the
Depositor and the Servicer. In addition, upon the discovery by the Seller,
Depositor or the Servicer (or upon receipt by the Trustee of written
notification of such breach) of a breach of any of the representations and
warranties made by the Seller in the related Mortgage Loan Purchase Agreement in
respect of any Mortgage Loan which materially adversely affects such Mortgage
Loan or the interests of the related Certificateholders in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties.

            The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Loans and the
Related Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee a first
priority perfected security interest in all of the Depositor's right, title and
interest in and to the Mortgage Loans and the Related Documents, and that this
Agreement shall constitute a security agreement under applicable law.

            Section 2.03 Repurchase or Substitution of Mortgage Loans by the
                         Seller.

            (a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trustee (or the Custodian, as
applicable) shall promptly notify the Seller and the Servicer of such defect,
missing document or breach and request that the Seller deliver such missing
document or cure such defect or breach within 120 days or 150 days following the
Closing Date, in the case of missing Mortgages or Assignments from the date the
Seller was notified of such missing document, defect or breach, and if the
Seller does not deliver such missing document or cure such defect or breach in
all material respects during such period, the Trustee shall enforce the Seller's
obligation under the Mortgage Loan Purchase Agreement and cause the Seller to
repurchase such Mortgage Loan from the Trust Fund at the Purchase Price on or
prior to the Determination Date following the expiration of such 120 day period
(subject to Section 2.03(e)); provided that, in connection with any such breach
that could not reasonably have been cured within such 120 day or 150 day period,
if the Seller shall have commenced to cure such breach within such 120 day or
150 day period, the Seller shall be permitted to proceed thereafter diligently
and expeditiously to cure the same within the additional period provided under
the Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee,
upon receipt of written certification from the Servicer of such deposit, shall
release to the Seller the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Seller shall furnish to it and as shall be necessary to vest in the Seller
any Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to
be removed from the Trust Fund (in which case it shall become a Defective


                                      -48-


<PAGE>


Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the
Seller respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders.

            (b) A Mortgage Loan that has an Arrearage cannot be substituted for
a Mortgage Loan that does not have an Arrearage.

            (c) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation, warranty
or covenant of the Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all material respects.

            (d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Date. As to
any Defective Mortgage Loan for which the Seller substitutes a Eligible
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee, for such Eligible Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Eligible Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and deliver
to the Servicer, with respect to such Eligible Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit F-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Servicer a certification
substantially in the form of Exhibit F-2 hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
reflect the collections and recoveries in respect of such Defective Mortgage
Loan in the Collection Period preceding the month of substitution and the
Depositor or the Seller, as the case may be, shall thereafter be entitled to
retain all amounts subsequently received in respect of such Defective Mortgage
Loan. The Seller shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Eligible Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and, in the case of a
substitution effected by the Seller, the Mortgage Loan Purchase Agreement,


                                      -49-


<PAGE>


including, in the case of a substitution effected by the Seller all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement and all applicable representations and warranties thereof set forth in
Section 2.04, in each case as of the date of substitution.

            For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage
Interest Rate. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Adjustment Amount, if any, and the Trustee,
upon receipt of the related Eligible Substitute Mortgage Loan or Loans and
certification by the Servicer of such deposit, shall release to the Seller the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Defective Mortgage
Loan released pursuant hereto.

            In addition, the Seller shall obtain at its own expense and deliver
to the Trustee an Opinion of Counsel to the effect that such substitution will
not cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) any REMIC to fail to qualify as a REMIC
at any time that any Certificate is outstanding. If such Opinion of Counsel can
not be delivered, then such substitution may only be effected at such time as
the required Opinion of Counsel can be given.

            (e) Upon discovery by the Seller, the Servicer or the Trustee that
any Mortgage Loan does not constitute a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code, the party discovering such fact shall within
two Business Days give written notice thereof to the other parties. In
connection therewith, the Seller shall repurchase or, subject to the limitations
set forth in Section 2.03(d), substitute one or more Eligible Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of
discovery or receipt of such notice with respect to such affected Mortgage Loan.
In addition, upon discovery that a Mortgage Loan is defective in a manner that
would cause it to be a "defective obligation" within the meaning of Treasury
regulations relating to REMICs, the Seller shall cure the defect or make the
required purchase or substitution no later than 90 days after the discovery of
the defect. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.03(a), if made by the Seller. The Trustee shall
reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.

            Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files pursuant to
Sections 2.01, 2.02 and 2.03 and preparation and delivery of the certifications
in the form of Exhibit F-1 and Exhibit F-2 shall be performed by the Custodian
pursuant to the terms and conditions of the Custodial Agreement. The fees and
expenses of the Custodian shall be paid by the Servicer.


                                      -50-


<PAGE>


            Section 2.04  Representations and Warranties of the Seller with
Respect to the Mortgage Loans.

            The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders that as of the Closing Date or as of such
other date specifically provided herein:

            (a) The representations and warranties made by the Seller pursuant
to Section 3.01 of the Mortgage Loan Purchase Agreement are hereby being made to
the Trustee and are true and correct as of the Closing Date.

            (b) Any written agreement between the Mortgagor in respect of a
Mortgage Loan and the Servicer modifying such Mortgagor's obligation to make
payments under the Mortgage Loan (such modified Mortgage Loan, a "Modified
Mortgage Loan") involved the application of the Seller's underwriting standards
or some assessment of the Mortgagor's ability to repay the Modified Mortgage
Loan.

            With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Depositor, the Seller,
the Servicer or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan or the interest therein of the
Certificateholders then, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.

            Upon discovery by the Depositor, the Seller, the Servicer or the
Trustee of a breach of any of the representations and warranties contained in
this Section that materially and adversely affects the value of any Mortgage
Loan or the interest therein of the Certificateholders, the party discovering
the breach shall give prompt written notice to the others and in no event later
than two Business Days from the date of such discovery. Within ninety days of
its discovery or its receipt of notice of any such missing or materially
defective documentation or any such breach of a representation or warranty, the
Seller shall promptly deliver such missing document or cure such defect or
breach in all material respects, or in the event such defect or breach cannot be
cured, the Seller shall repurchase the affected Mortgage Loan or cause the
removal of such Mortgage Loan from the Trust Fund and substitute for it one or
more Eligible Substitute Mortgage Loans, in either case, in accordance with
Section 2.03.

            It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee and shall inure to the benefit of the Certificateholders
notwithstanding any restrictive or qualified endorsement or assignment. It is
understood and agreed that the obligations of the Seller set forth in Section
2.03(a) to cure, substitute for or repurchase a Mortgage Loan pursuant to the
Mortgage Loan Purchase Agreement constitute the sole remedies available to the
Certificateholders or to the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.04.


                                      -51-


<PAGE>


            Section 2.05 Representations, Warranties and Covenants of the
Servicer.

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

            (i) The Servicer is duly organized, validly existing, and in good
      standing under the laws of the jurisdiction of its formation and has all
      licenses necessary to carry on its business as now being conducted, except
      for such licenses, certificates and permits the absence of which,
      individually or in the aggregate, would not have a material adverse effect
      on the ability of the Servicer to conduct its business as it is presently
      conducted, and is licensed, qualified and in good standing in the states
      where the Mortgaged Property is located if the laws of such state require
      licensing or qualification in order to conduct business of the type
      conducted by the Servicer or to ensure the enforceability or validity of
      each Mortgage Loan; the Servicer has the power and authority to execute
      and deliver this Agreement and to perform in accordance herewith; the
      execution, delivery and performance of this Agreement (including all
      instruments of transfer to be delivered pursuant to this Agreement) by the
      Servicer and the consummation of the transactions contemplated hereby have
      been duly and validly authorized; this Agreement evidences the valid,
      binding and enforceable obligation of the Servicer, subject to applicable
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting the enforcement of creditors' rights generally; and all
      requisite corporate action has been taken by the Servicer to make this
      Agreement valid and binding upon the Servicer in accordance with its
      terms;

            (ii) The consummation of the transactions contemplated by this
      Agreement are in the ordinary course of business of the Servicer and will
      not result in the breach of any term or provision of the certificate of
      formation or the partnership agreement of the Servicer or result in the
      breach of any term or provision of, or conflict with or constitute a
      default under or result in the acceleration of any obligation under, any
      agreement, indenture or loan or credit agreement or other instrument to
      which the Servicer or its property is subject, or result in the violation
      of any law, rule, regulation, order, judgment or decree to which the
      Servicer or its property is subject;

            (iii) The Servicer is an approved seller/servicer of conventional
      mortgage loans for FNMA, and is an FHA Approved Mortgagee in good standing
      to service mortgages, is a VA Approved Lender and has not been suspended
      as a mortgagee or servicer by the FHA or VA and has the facilities,
      procedures and experienced personnel necessary for the sound servicing of
      mortgage loans of the same type as the Mortgage Loans. The Servicer is,
      and shall remain for as long as it is servicing the Mortgage Loans
      hereunder, in good standing as a FHA Approved Mortgagee and a VA Approved
      Lender and to service mortgage loans for HUD, FNMA or FHLMC, and no event
      has occurred, including but not limited to a change in insurance coverage,
      which would make the Servicer unable to comply with HUD, FNMA, FHLMC, FHA
      or VA eligibility requirements or which would require notification to any
      of HUD, FNMA, FHLMC, FHA or VA;


                                      -52-


<PAGE>


            (iv) This Agreement, and all documents and instruments contemplated
      hereby which are executed and delivered by the Servicer, constitute and
      will constitute valid, legal and binding obligations of the Servicer,
      enforceable in accordance with their respective terms, except as the
      enforcement thereof may be limited by applicable bankruptcy laws and
      general principles of equity;

            (v) The Servicer 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;

            (vi) There is no action, suit, proceeding or investigation pending
      or, to its knowledge, threatened against the Servicer that, either
      individually or in the aggregate, may result in any material adverse
      change in the business, operations, financial condition, properties or
      assets of the Servicer, or in any material impairment of the right or
      ability of the Servicer to carry on its business substantially as now
      conducted, or in any material liability on the part of the Servicer, or
      that would draw into question the validity or enforceability of this
      Agreement or of any action taken or to be taken in connection with the
      obligations of the Servicer contemplated herein, or that would be likely
      to impair materially the ability of the Servicer to perform under the
      terms of this Agreement;

            (vii) No consent, approval or order of any court or governmental
      agency or body is required for the execution, delivery and performance by
      the Servicer of or compliance by the Servicer with this Agreement or the
      consummation of the transactions contemplated by this Agreement, except
      for such consents, approvals, authorizations and orders, if any, that have
      been obtained; and

            (viii) Neither this Agreement nor any information, certificate of an
      officer, statement furnished in writing or report delivered to the Trustee
      by the Servicer 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 in order to make the
      statements contained therein, in light of the circumstances under which
      they were made, not misleading.

            It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer, the Seller or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties hereto.

            Section 2.06 Representations and Warranties of the Depositor.

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


                                      -53-


<PAGE>


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

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

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

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

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

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

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


                                      -54-


<PAGE>


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

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

            Section 2.07 Issuance of Certificates and the Uncertificated Regular
Interests.

            The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it (or the Custodian, as bailee and Custodian of the
Trustee) of the Mortgage Files, subject to the provisions of Sections 2.01 and
2.02, together with the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and delivery and in exchange therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class X and Class R Certificates) in minimum dollar
denominations or $25,000 and integral dollar multiples of $1 in excess. The
Class X and Class R Certificates are issuable only in minimum Percentage
Interests of 25%. The Trustee acknowledges the issuance of the uncertificated
REMIC 1 Regular Interests, the uncertificated REMIC 2 Regular Interests, the
uncertificated REMIC 3 Regular Interests, and declares that it hold such regular
interests as assets of REMIC 2, REMIC 3 and REMIC 4, respectively. The Trustee
acknowledges the issuance of the uncertificated Class T4-A1A, Class T4-A1F,
Class T4-A2F, Class T4-M1, Class T4-M2, and Class T4-B Interests and declares
that it hold the same as assets of the Grantor Trust on behalf of the Holders of
the Class A-1A, Class A-1F, Class A2-F, Class M-1, Class M-2 and Class B
Certificates, respectively. The Trustee acknowledges the issuance of the
uncertificated REMIC 4 Components and the Class X/N Interest, and declares that
it holds the same as assets of the Grantor Trust on behalf of the Holders of the
Class N and Class X Certificates. The interests evidenced by the Certificates
constitute the entire beneficial ownership interest in the Trust Fund.


                                      -55-


<PAGE>


            Section 2.08 Representations and Warranties of the Seller.

            The Seller hereby represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders that as of the Closing Date or as of
such date specifically provided herein:

            (i) The Seller is duly organized, validly existing and in good
      standing as a limited liability company under the laws of the State of
      Delaware and has the power and authority to own its assets and to transact
      the business in which it is currently engaged. The Seller is duly
      qualified to do business and is in good standing in each jurisdiction in
      which the character of the business transacted by it or properties owned
      or leased by it requires such qualification and in which the failure to so
      qualify would have a material adverse effect on (a) its business,
      properties, assets or condition (financial or other), (b) the performance
      of its obligations under this Agreement, (c) the value or marketability of
      the Mortgage Loans, or (d) its ability to foreclose on the related
      Mortgaged Properties.

            (ii) The Seller has the power and authority to make, execute,
      deliver and perform this Agreement and to consummate all of the
      transactions contemplated hereunder and has taken all necessary action to
      authorize the execution, delivery and performance of this Agreement. When
      executed and delivered, this Agreement will constitute the Seller's legal,
      valid and binding obligations enforceable in accordance with its terms,
      except as enforcement of such terms may be limited by (1) bankruptcy,
      insolvency, reorganization, receivership, moratorium or similar laws
      affecting the enforcement of creditors' rights generally and by the
      availability of equitable remedies, (2) general equity principals
      (regardless of whether such enforcement is considered in a proceeding in
      equity or at law) or (3) public policy considerations underlying the
      securities laws, to the extent that such policy considerations limit the
      enforceability of the provisions of this Agreement which purport to
      provide indemnification from securities laws liabilities.

            (iii) The Seller holds all necessary licenses, certificates and
      permits from all governmental authorities necessary for conducting its
      business as it is presently conducted, except for such licenses,
      certificates and permits the absence of which, individually or in the
      aggregate, would not have a material adverse effect on the ability of the
      Seller to conduct its business as it is presently conducted. It is not
      required to obtain the consent of any other party or any consent, license,
      approval or authorization from, or registration or declaration with, any
      governmental authority, bureau or agency in connection with the execution,
      delivery, performance, validity or enforceability of this Agreement,
      except for such consents, licenses, approvals or authorizations, or
      registrations or declarations as shall have been obtained or filed, as the
      case may be, prior to the Closing Date.

            (iv) The execution, delivery and performance of this Agreement by
      the Seller will not conflict with or result in a breach of, or constitute
      a default under, any provision of any existing law or regulation or any
      order or decree of any court applicable to the Seller or any of its
      properties or any provision of its Limited Liability Company Agreement, or
      constitute a material breach of, or result in the creation or imposition
      of any lien, charge or encumbrance upon any of its properties pursuant to
      any mortgage, indenture, contract or other agreement to which it is a
      party or by which it may be bound.


                                      -56-


<PAGE>


            (v) No certificate of an officer, written statement or report
      delivered pursuant to the terms hereof by the Seller contains any untrue
      statement of a material fact or omits to state any material fact necessary
      to make the certificate, statement or report not misleading.

            (vi) The transactions contemplated by this Agreement are in the
      ordinary course of the Seller's business.

            (vii) The Seller is not insolvent, nor will the Seller be made
      insolvent by the transfer of the Mortgage Loans to the Depositor, nor is
      the Seller aware of any pending insolvency.

            (viii) The Seller is not in violation of, and the execution and
      delivery of this Agreement by it and its performance and compliance with
      the terms of this Agreement will not constitute a violation with respect
      to any order or decree of any court, or any order or regulation of any
      federal, state, municipal or governmental agency having jurisdiction,
      which violation would materially and adversely affect the Seller's
      condition (financial or otherwise) or operations or any of the Seller's
      properties, or materially and adversely affect the performance of any of
      its duties hereunder.

            (ix) There are no actions or proceedings against, or investigations
      of, the Seller pending or, to its knowledge, threatened, before any court,
      administrative agency or other tribunal (i) that, if determined adversely,
      would prohibit the Seller from entering into this Agreement, (ii) seeking
      to prevent the consummation of any of the transactions contemplated by
      this Agreement or (iii) that, if determined adversely, would prohibit or
      materially and adversely affect the Seller's performance of any of its
      respective obligations under, or the validity or enforceability of, this
      Agreement.

            (x) The Seller did not transfer the Mortgage Loans to the Depositor
      with any intent to hinder, delay or defraud any of its creditors.

            (xi) The Seller acquired title to the Mortgage Loans in good faith,
      without notice of any adverse claims.

            (xii) The transfer, assignment and conveyance of the Mortgage Notes
      and the Mortgages by the Seller to the Depositor are not subject to the
      bulk transfer laws or any similar statutory provisions in effect in any
      applicable jurisdiction.

            Section 2.09 Covenants of the Seller.

            (a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any lien on any
Mortgage Loan, or any interest therein; the Seller will notify the Trustee, as
assignee of the Depositor, of the existence of any lien on any Mortgage Loan
immediately upon discovery thereof, and the Seller will defend the right, title


                                      -57-


<PAGE>


and interest of the Trust, as assignee of the Depositor, in, to and under the
Mortgage Loans, against all claims of third parties claiming through or under
the Seller; provided, however, that nothing in this Section 2.09 shall prevent
or be deemed to prohibit the Seller from suffering to exist upon any of the
Mortgage Loans any liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.

            (b) The Seller hereby covenants that neither it nor any Affiliate of
the Seller will directly solicit any Mortgagor hereunder to refinance the
related Mortgage Loan. For the purposes of the foregoing, neither the Seller nor
any Affiliate of the Seller shall be deemed to directly solicit any Mortgagor if
the Seller responds to a request from a Mortgagor regarding a refinancing or if
the Mortgagor receives marketing materials which are generally disseminated.

            (c) The Seller hereby covenants to either (i) transfer to the
Servicer the Fixed Retained Yield and cause the Servicer to transfer the Fixed
Retained Yield to any successor Servicer or (ii) pay the Servicer or any
successor servicer an amount equal to the premium due under the PMI Policy with
respect to the PMI Mortgage Loans.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

            Section 3.01 Servicer to Act as Servicer.

            The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable and consistent with the terms of this Agreement
including, in the case of FHA Loans and VA Loans, taking all actions that a
mortgagee is permitted or required to take by the FHA or the VA, as the case may
be (the "Servicing Standards").

            Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Certificateholders; provided, however, that the Servicer shall not make future
advances and (unless the Mortgagor is in default with respect to the Mortgage
Loan or such default is, in the judgment of the Servicer, imminent) the Servicer
shall not permit any modification with respect to any Mortgage Loan that would
(i) change the Mortgage Interest Rate, defer or forgive the payment thereof of
any principal or interest payments, reduce the outstanding principal amount
(except for actual payments of principal) or extend the final maturity date with
respect to such Mortgage Loan, (ii) in the case of FHA Loans and VA Loans,
affect the FHA Insurance Contract or VA Guaranty Agreement, as the case may be,


                                      -58-


<PAGE>


with respect to such Mortgage Loan, (iii) affect adversely the status of any
REMIC as a REMIC or (iv) cause any REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
Notwithstanding the foregoing, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would both (x) effect an exchange or
reissuance of such Mortgage Loan under Section 1.860G-2(b) of the Treasury
Regulations and (y) cause any REMIC constituting part of the Trust Fund to fail
to qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions" after the Startup Day under the REMIC
Provisions. Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered to execute and deliver on
behalf of itself, and the Trustee, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Property. The Servicer shall make all required Servicing Advances and
shall service and administer the Mortgage Loans in accordance with Applicable
Regulations, and shall provide to the Mortgagor any reports required to be
provided to them thereby. If reasonably required by the Servicer, the Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.

            In servicing and administering FHA Loans and VA Loans, the Servicer
shall comply strictly with the National Housing Act, the FHA Regulations, the
Servicemen's Readjustment Act and the VA Regulations and administrative
guidelines issued thereunder or pursuant thereto (insofar as the same apply to
any Mortgage Loan) and, to the extent permitted hereunder, promptly discharge
all of the obligations of the mortgagee thereunder and under each Mortgage
including the timely giving of notices, the essence hereof being that the full
benefits of each FHA Insurance Contract and VA Guaranty Agreement inure to the
Trustee, on behalf of the Certificateholders.

            In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures including collection procedures and exercise the same
care that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions, the FHA Insurance Contracts
and the VA Guaranty Agreements, where applicable, and the Certificateholders'
reliance on the Servicer.

            The Servicer shall give prompt notice to the Trustee of any action,
of which the Servicer has actual knowledge, to (i) assert a claim against the
Trust Fund or (ii) assert jurisdiction over the Trust Fund.

            Notwithstanding anything in this Agreement to the contrary, in the
event of a Principal Prepayment in full of a Mortgage Loan, the Servicer may not
waive any prepayment penalty or portion thereof required by the terms of the
related Mortgage Note unless (i) the Servicer determines that such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage Loan, taking into
account the value of such prepayment penalty, or (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law. In
the event of a Principal Prepayment in full with respect to any Mortgage Loan,


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the Servicer shall deliver to the Trustee an Officer's Certificate substantially
in the form of Exhibit Q no later than the third Business Day following the
immediately succeeding Determination Date with a copy to the Class X
Certificateholder. If the Servicer has waived or does not collect all or a
portion of a prepayment penalty relating to a Principal Prepayment in full due
to any action or omission of the Servicer, other than as provided above, the
Servicer shall, within 90 days of the date on which the Principal Prepayment in
full is remitted to the Trustee, deliver to the Trustee the amount of such
prepayment penalty (or such portion thereof as had been waived for deposit) into
the Distribution Account for distribution in accordance with the terms of this
Agreement.

            With respect to each Mortgage Loan which is the subject of a
Principal Prepayment in full, the Trustee shall verify whether such Mortgage
Loan was identified on the Mortgage Loan Schedule as being subject to a
prepayment penalty and, if such Mortgage Loan is so identified, whether the
amount of the prepayment penalty remitted by the Servicer (including any amounts
to be remitted by the Servicer pursuant to the last sentence of the preceding
paragraph), if any, is consistent with the amount of the prepayment penalty set
forth in the Mortgage Loan Schedule. In the event that the Trustee determines
that a prepayment penalty received with respect to a Principal Prepayment in
full is inconsistent with the prepayment penalty set forth in the Mortgage Loan
Schedule for the related Mortgage Loan and such inconsistency results in the
receipt of a reduced prepayment penalty, the Trustee shall provide notice
substantially in the form of Exhibit R to the Seller of such inconsistency.
Within 90 days of receipt of such notice, the Seller shall remit to the Trustee
for deposit in the Distribution Account an amount equal to the difference
between the amount of the prepayment penalties received by the Trustee and the
amount of the prepayment penalties determined in accordance with the description
thereof set forth in the Mortgage Loan Schedule for the related Mortgage Loans.

            The Trustee shall prepare and deliver to the Depositor and the owner
of the Class N and Class X Certificates, on a monthly basis, a statement setting
forth the amounts due and received with respect to prepayment penalties.

            Section 3.02 Collection of Mortgage Loan Payments.

            Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full, the Servicer will diligently collect all
payments due under each Mortgage Loan when the same shall become due and payable
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Insurance Policy and
Applicable Regulations, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Servicer will take special care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in the Mortgage, will become due and payable to that end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.


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<PAGE>


            Section 3.03 Realization Upon Defaulted Mortgage Loans.

            In the event that any payment due under any Conventional Mortgage
Loan is not paid when the same becomes due and payable, or in the event the
Mortgagor fails to perform any other covenant or obligation under the Mortgage
Loan and such failure continues beyond any applicable grace period, the Servicer
shall take such action as it shall deem to be in the best interest of the
Certificateholders. In the event that any payment due under any FHA Loan becomes
delinquent, the Servicer shall take all such actions as are in the best
interests of the Certificateholders and permitted under any applicable FHA loss
mitigation proceedings, including, but not limited to, requesting the FHA to
accept an assignment of such FHA Loan, and, upon the Servicer's determination
that foreclosure is in the best interest of the Certificateholders, commencing
foreclosure proceedings. With respect to each VA Loan, the Servicer shall
diligently seek to mitigate losses by utilizing all remedies available in the VA
Regulations. With respect to any defaulted Mortgage Loan, the Servicer shall
have the right to review the status of the related forbearance plan and, subject
to the second paragraph of Section 3.01, may modify such forbearance plan;
including, extending the Mortgage Loan repayment date for a period of one year
or reducing the Loan Rate up to 50 basis points.

            In connection with a foreclosure or other conversion, the Servicer
shall exercise such rights and powers vested in it hereunder and use the same
degree of care and skill in its exercise as prudent mortgage servicers would
exercise or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the servicing standards set forth in
the FNMA Guide, including, without limitation, advancing funds for the payment
of taxes and insurance premiums with respect to first lien Mortgage Loans.

            Notwithstanding the foregoing provisions of this Section 3.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, the Servicer shall not either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property if, as a result of any such action, the
Trust Fund would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:

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

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


                                      -61-
<PAGE>


            The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.05(ii).

            If the Servicer determines, as described above, that it is in the
best economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Certificateholders. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.05(ii).

            Section 3.04 Collection Account and Distribution Account.

            (a) The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Collection
Accounts. Each Collection Account shall be an Eligible Account.

            The Servicer shall deposit in the Collection Account on a daily
basis within two Business Days of receipt, and retain therein, the following
payments and collections received or made by it after the Cut-off Date with
respect to the Mortgage Loans:


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

            (ii) all payments on account of interest on the Mortgage Loans
      adjusted to the Mortgage Interest Rate less the Servicing Fee Rate and the
      Fixed Retained Yield;

            (iii) all proceeds from a Cash Liquidation;

            (iv) all Insurance Proceeds including amounts required to be
      deposited pursuant to Section 3.10, other than proceeds to be held in the
      Escrow Account and applied to the restoration or repair of the Mortgaged
      Property or released to the Mortgagor in accordance with the Servicer's
      normal servicing procedures, the loan documents or applicable law;

            (v) all Condemnation Proceeds affecting any Mortgaged Property which
      are not released to the Mortgagor in accordance with the Servicer's normal
      servicing procedures, the loan documents or applicable law; and

            (vi) any amounts required to be deposited by the Servicer in
      connection with any REO Property pursuant to Section 3.13.


                                      -62-


<PAGE>


            Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Collection Account pursuant to Section 3.05(v). The foregoing requirements for
deposit from the Collection Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of late payment charges, prepayment charges that are not prepayment
penalties, and assumption fees need not be deposited by the Servicer in the
Collection Account.

            (b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of business
New York time on the Servicer Remittance Date, that portion of the Available
Funds (calculated without regard to the references in the definition thereof to
amounts that may be deposited to the Distribution Account from a different
source as provided herein) then on deposit in the Collection Account. Amounts in
the Distribution Account shall be deemed to be held on behalf of the related
REMICs and the Grantor Trust in accordance with the REMIC distributions set
forth in Section 4.10.

            (c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.25. The Servicer shall give notice to the Trustee of the location
of the Collection Account maintained by it when established and prior to any
change thereof. The Trustee shall give notice to the Servicer and the Depositor
of the location of the Distribution Account when established and prior to any
change thereof.

            (d) In the event the Servicer shall deliver to the Trustee for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trustee withdraw such amount from
the Distribution Account and remit to the Servicer any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit, and the Trustee
shall so deposit, in the Distribution Account in respect of REMIC 1:

            (i) any Advances, as required pursuant to Section 4.07;

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

            (iii) any prepayment penalties and premiums or amounts in connection
      with the waiver of such prepayment penalties or premiums, in each case
      required to be deposited pursuant to Section 3.01;

            (iv) any amounts required to be deposited in the Distribution
      Account pursuant to Sections 2.03, 3.04, 3.15, 3.16, 3.23, 3.28 or 4.07;
      and

            (v) any amounts required to be deposited by the Servicer pursuant to
      Section 3.11 in connection with the deductible clause in any blanket
      hazard insurance policy, such deposit being made from the Servicer's own
      funds, without reimbursement therefor.


                                      -63-


<PAGE>


            (e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall notify the Servicer of such receipt and deposit such funds in
the Distribution Account, subject to withdrawal thereof as permitted hereunder.
In addition, the Trustee shall deposit in the Distribution Account any amounts
required to be deposited pursuant to Section 3.15 in connection with losses
realized on Permitted Investments with respect to funds held in the Distribution
Account.

            Section 3.05 Permitted Withdrawals From the Collection Account.

            The Servicer may, from time to time, withdraw from the Collection
Account for the following purposes:

            (i) to remit to the Trustee for deposit in the Distribution Account
      the amounts required to be so remitted pursuant to Section 3.04(b) or
      permitted to be so remitted pursuant to the first sentence of Section
      3.04(d);

            (ii) to reimburse itself for Advances and Servicing Advances; the
      Servicer's right to reimburse itself pursuant to this subclause (ii) being
      limited to amounts received on the related Mortgage Loan which represent
      payments of (a) principal and/or interest respecting which any such
      Advance was made or (b) Condemnation Proceeds, Insurance Proceeds or
      Liquidation Proceeds respecting which any such Servicing Advance was made;

            (iii) to reimburse itself for unreimbursed Servicing Advances, any
      unpaid Servicing Fees and for unreimbursed Advances to the extent that
      such amounts are deemed to be Nonrecoverable Advances, and to reimburse
      itself for such amounts to the extent that such amounts are nonrecoverable
      from the disposition of REO Property pursuant to Section 3.03 or Section
      3.13 hereof; provided, however, that any portion of Nonrecoverable
      Advances representing Fixed Retained Yield shall be reimbursable only from
      amounts constituting Fixed Retained Yield and not from the assets of the
      Trust Fund;

            (iv) to reimburse itself for any amounts paid pursuant to Section
      3.03 (and not otherwise previously reimbursed);

            (v) to pay to itself as servicing compensation (a) any interest
      earned on funds in the Collection Account (all such interest to be
      withdrawn monthly not later than each Servicer Remittance Date) and (b)
      the Servicing Fee from that portion of any payment or recovery as to
      interest to a particular Mortgage Loan to the extent not retained pursuant
      to Section 3.04(ii);

            (vi) to reimburse itself for any amounts paid pursuant to Section
      6.03 (and not otherwise previously reimbursed); and


                                      -64-


<PAGE>


            (vii) to clear and terminate the Collection Account upon the
      termination of this Agreement.

            The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.

            Section 3.06 Establishment of Escrow Accounts; Deposits in
Escrow Accounts.

            The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. A copy of such letter agreement shall be furnished to the
Trustee upon request. The Escrow Account shall be an Eligible Account.

            The Servicer shall deposit in the Escrow Account or Accounts on a
daily basis within two Business Days of receipt, and retain therein, (i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be set forth in, or in
accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes.

            Section 3.07 Permitted Withdrawals From Escrow Account.

            Withdrawals from the Escrow Account may be made by the Servicer (i)
to effect timely payments of ground rents, taxes, assessments, water rates,
fire, flood and hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, and comparable items, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage Loan
but only from amounts received on the related Mortgage Loan which represent late
payments or Late Collections of Escrow Payments thereunder, (iii) to refund to
the Mortgagor any funds as may be determined to be overages, (iv) for transfer
to the Collection Account in accordance with the terms of this Agreement, (v)
for application to restoration or repair of the Mortgaged Property, (vi) to pay
to the Servicer, or to the Mortgagor to the extent required by the related
Mortgage Loan or Applicable Regulations, any interest paid on the funds
deposited in the Escrow Account, (vii) to clear and terminate the Escrow Account
on the termination of this Agreement, (viii) to transfer to the Collection
Account any insurance proceeds, or (ix) in the case of FHA Loans and VA Loans,
for transfer to the Collection Account, fire and hazard insurance proceeds and


                                      -65-


<PAGE>


Escrow Payments with respect to any Mortgage Loan where the FHA or VA, as the
case may be, has directed application of such funds as a credit against the
proceeds of the FHA Insurance Contract or the VA Guaranty Agreement. As part of
its servicing duties, the Servicer shall pay to the Mortgagor interest on funds
in the Escrow Account, to the extent required by the related Mortgage Loan or
Applicable Regulations, and to the extent that interest earned on funds in the
Escrow Account is insufficient, shall pay such interest from its own funds,
without any reimbursement therefor.

            In the event the Servicer shall deposit in the Escrow Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Escrow Account, any provision herein to the contrary
notwithstanding.

            Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.

            With respect to each first lien Mortgage Loan, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy premiums and
fire, flood and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date and
at a time appropriate for securing maximum discounts allowable, employing for
such purpose deposits of the Mortgagor in the Escrow Account which shall have
been estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage or Applicable Regulations.
To the extent that the Mortgage does not provide for Escrow Payments, the
Servicer shall determine that any such payments are made by the Mortgagor at the
time they first become due. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of the Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make Servicing Advances from
its own funds to effect such payments.

            The Servicer, on behalf of the Trustee, as mortgagee, will maintain
in full force and effect (to the extent a Mortgage Loan has a Primary Insurance
Policy) a Primary Insurance Policy issued by a Qualified Insurer with respect to
each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Combined Loan-to-Value Ratio of the related Mortgage Loan
is reduced to 80% or less. The Servicer will not cancel or refuse to renew any
Primary Insurance Policy in effect on the Closing Date that is required to be
kept in force under this Agreement unless a replacement Primary Insurance Policy
for such cancelled or non-renewed policy is obtained from and maintained with a
Qualified Insurer. The Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 3.14, the Servicer shall promptly notify the
insurer under the related Primary Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under the Primary Insurance Policy. If such Primary
Insurance Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement Primary Insurance Policy as
provided above.


                                      -66-


<PAGE>


            In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself and the Trustee, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 3.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal pursuant to Section 3.05.

            Section 3.09 Transfer of Accounts.

            The Servicer may transfer the Collection Account or the Escrow
Account to a different depository institution from time to time. Upon such
transfer, the Servicer shall deliver to the Trustee and the Depositor, a
certification or letter agreement, as the case may be, as required pursuant to
Sections 3.04 and 3.06.

            Section 3.10 Maintenance of Hazard Insurance.

            The Servicer shall cause to be maintained for each Mortgage Loan
fire and hazard insurance with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount which is at least equal to
the lesser of (i) the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis, (ii) the Principal Balance of the Mortgage Loan, in each case in an
amount not less than such amount as is necessary to prevent the Mortgagor and/or
the Mortgagee from becoming a co-insurer or (iii) the amount required under
applicable HUD/FHA regulations. If the Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards and flood insurance has been made available, the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the Principal Balance of the Mortgage
Loan, (ii) the maximum insurable value of the improvements securing such
Mortgage Loan or (iii) the maximum amount of insurance which is available under
the Flood Disaster Protection Act of 1973, as amended. The Servicer shall also
maintain on the REO Property for the benefit of the Certificateholders, (x) fire
and hazard insurance with extended coverage in an amount which is at least equal
to the replacement cost of the improvements which are a part of such property,
(y) public liability insurance and, (z) to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood insurance in
an amount as provided above. Any amounts collected by the Servicer under any
such policies other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account, subject to withdrawal
pursuant to Section 3.05. It is understood and agreed that no earthquake or
other additional insurance is required to be maintained by the Servicer or the
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,
other than pursuant to such Applicable Regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Servicer and
shall provide for at least thirty days prior written notice of any cancellation,
reduction in the amount of or material change in coverage to the Servicer. The


                                      -67-


<PAGE>


Servicer shall not interfere with the Mortgagor's freedom of choice in selecting
either his insurance carrier or agent, provided, however, that the Servicer
shall not accept any such insurance policies from insurance companies unless
such companies currently reflect a general policy rating of B:VI or better in
Best's Key Rating Guide and are licensed to do business in the state wherein the
property subject to the policy is located.

            Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.

            In the event that the Servicer shall obtain and maintain a blanket
policy issued by an insurer that has a general policy rating of B:VI or better
in Best's Key Rating Guide insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 3.10 and otherwise complies with all
other requirements of Section 3.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 3.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 3.10,
and there shall have been a loss which would have been covered by such policy,
deliver to the Trustee for deposit in the Distribution Account the amount not
otherwise payable under the blanket policy because of such deductible clause,
which amount shall not be reimbursable to the Servicer from the Trust Fund. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Trustee, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
Upon request of the Trustee, the Servicer shall cause to be delivered to the
Trustee a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty days prior written notice to the Trustee.

            Section 3.12 Fidelity Bond, Errors and Omissions Insurance.

            The Servicer shall maintain, at its own expense, a blanket fidelity
bond (the "Fidelity Bond") and an errors and omissions insurance policy, with
broad coverage with financially responsible companies on all officers, employees
or other persons acting in any capacity with regard to the Mortgage Loans to
handle funds, money, documents and papers relating to the Mortgage Loans. The
Fidelity Bond and errors and omissions insurance shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 3.12 requiring the
Fidelity Bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the corresponding amounts required by FNMA in the FNMA MBS Selling and
Servicing Guide or by FHLMC in the FHLMC Servicer's Guide. Upon request of the
Trustee, the Servicer shall cause to be delivered to the Trustee a certified
true copy of the Fidelity Bond and errors and omissions insurance policy and a
statement from the surety and the insurer that such Fidelity Bond and errors and
omissions insurance policy shall in no event be terminated or materially
modified without thirty days' prior written notice to the Trustee.


                                      -68-


<PAGE>


            Section 3.13 Title, Management and Disposition of REO Property.

            (a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee, on behalf of the
Certificateholders, or in the event the Trustee is not authorized or permitted
to hold title to real property in the state where the REO Property is located,
or would be adversely affected under the "doing business" or tax laws of such
state by so holding title, the deed or certificate of sale shall be taken in the
name of such Person or Persons as shall be consistent with an Opinion of Counsel
obtained by the Servicer from an attorney duly licensed to practice law in the
state where the REO Property is located. Any Person or Persons holding such
title other than the Trustee shall acknowledge in writing that such title is
being held as nominee for the benefit of the Trustee.

            (b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such REO Property before the end of
the third calendar year beginning after the year of its acquisition by the Trust
Fund for purposes of Section 860G(a)(8) of the Code or, at the expense of the
Trust Fund, request from the Internal Revenue Service, more than 60 days before
the day on which the above-mentioned grace period would otherwise expire, an
extension of the above-mentioned grace period, unless the Servicer obtains an
Opinion of Counsel, addressed to the Servicer and the Trustee, to the effect
that the holding by the Trust Fund of such REO Property subsequent to such
period will not: (i) result in the imposition of any tax on "prohibited
transactions" as defined in Section 860F of the Code; or (ii) cause any REMIC
constituting any part of the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Servicer shall be entitled to be reimbursed from the
Collection Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.05.

            Subject to compliance with applicable laws and regulations as shall
at any time be in force, and notwithstanding any other provisions of this
Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would: (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code; or (ii) subject any REMIC constituting part of
the Trust Fund to the imposition of any federal income taxes on the income
earned from such REO Property, including any taxes imposed by reason of Sections
860F or 860G(c) of the Code, unless the Servicer has agreed to indemnify and
hold harmless the Trust Fund with respect to the imposition of any such taxes.

            The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Trust Fund solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of


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Section 860G(a)(8) of the Code or result in the receipt by the related REMIC of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions. The Servicer shall cause each
REO Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter. The
Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage Servicing File and
copies thereof shall be forwarded by the Servicer to the Trustee upon request.
The Servicer shall attempt to sell the same (and may temporarily rent the same)
on such terms and conditions as the Servicer deems to be in the best interest of
the Certificateholders and the Trust Fund.

            With respect to each REO Property, the Servicer shall segregate and
hold all funds collected and received in connection with the operation of the
REO Property separate and apart from its own funds or general assets and shall
establish and maintain with respect to all REO Property an REO Account or
Accounts in the form of a time deposit or demand account, unless an Opinion of
Counsel is obtained by the Servicer to the effect that the classification as a
REMIC for federal income tax purposes of the arrangement under which the
Mortgage Loans and the REO Property is held will not be adversely affected by
holding such funds in another manner. Such REO Account shall be established with
the Servicer or with a commercial bank, a mutual savings bank or a savings and
loan association. The creation of any REO Account shall be evidenced by a letter
agreement, in the case of an account held by a depository. In either case, an
original of such certification or letter agreement shall be furnished to the
Trustee upon request.

            The Servicer shall deposit or cause to be deposited, on a daily
basis, within two Business Days of receipt, in each REO Account, all revenues
received with respect to the related REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant to
Section 3.10 hereof and the fees of any managing agent acting on behalf of the
Servicer. The Servicer shall have the right to earn interest, if any, on funds
deposited in such REO Account. On or before each Determination Date, the
Servicer shall withdraw from each REO Account and deposit into the Collection
Account the net receipts from the REO Property on deposit in the REO Account and
retain any interest.

            The Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operation statement
shall be accompanied by such other information as the Trustee shall reasonably
request.

            The Servicer shall use its best efforts to dispose of the REO
Property as promptly as is practically consistent with protecting the
Certificateholders' interests.

            Each REO Disposition shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer deems to be in the best
interest of the Certificateholders. If as of the date title to any REO Property
was acquired by the Servicer there were outstanding unreimbursed Servicing
Advances with respect to the REO Property, the Servicer, upon an REO Disposition
of such REO Property, shall be entitled to reimbursement for any related


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<PAGE>


unreimbursed Servicing Advances from proceeds received in connection with such
REO Disposition. The proceeds from the REO Disposition, net of any payment to
the Servicer as provided above, shall be deposited in the REO Account and shall
be transferred to the Collection Account on the Determination Date in the month
following receipt thereof for distribution on the succeeding Servicer Remittance
Date in accordance with Section 4.01.

            Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).

            Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements.

            When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law. An Opinion of Counsel at
the expense of the Servicer (which expense shall constitute a Servicing Advance)
delivered to the Trustee and the Depositor to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall make reasonable efforts to enter into an assumption and
modification agreement with the Person to whom such property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and, unless prohibited by applicable law or the Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Note. The Mortgage Loan, as assumed, shall conform in
all respects to the requirements, representations and warranties of this
Agreement. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee (or the
Custodian, as the case may be) the original copy of such assumption or
substitution agreement (indicating the Mortgage File to which it relates) which
copy shall be added by the Trustee (or the Custodian, as the case may be) to the
related Mortgage File and which shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the Monthly Payment on the related
Mortgage Loan shall not be changed but shall remain as in effect immediately
prior to the assumption or substitution, the stated maturity or outstanding
principal amount of such Mortgage Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven. Any
fee collected by the Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.


                                      -71-


<PAGE>


            Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.

            Section 3.15 Notification of Adjustments.

            On each Adjustment Date, the Servicer shall make Mortgage Interest
Rate adjustments for each Group 2 Mortgage Rate Loan in compliance with the
requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by each
Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Interest Rate adjustments. The Servicer also shall provide timely notification
to the Trustee of all applicable data and information regarding such Mortgage
Interest Rate adjustments and the Servicer's methods of implementing such
Mortgage Interest Rate adjustments. Upon the discovery by the Servicer or the
Trustee that the Servicer has failed to adjust or has incorrectly adjusted a
Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the related
Mortgage Note and Mortgage, the Servicer shall deliver to the Trustee for
deposit in the Distribution Account from its own funds the amount of any
interest loss caused thereby without reimbursement therefor; provided, however,
the Servicer shall be held harmless with respect to any Mortgage Interest Rate
adjustments made by any servicer prior to the Servicer.

            Section 3.16 Optional and Mandatory Purchases of Mortgage Loans by
Seller.

            The Seller may, at its option, repurchase a Mortgage Loan or REO
Property which becomes 60 or more days delinquent or for which the Servicer has
accepted a deed in lieu of foreclosure. Prior to repurchase pursuant to this
Section 3.16, the Servicer shall be required to continue to make monthly
advances pursuant to Section 4.07. The Seller shall not use any procedure in
selecting Mortgage Loans to be repurchased which is materially adverse to the
interests of the Certificateholders. The Seller shall purchase such (i)
delinquent Mortgage Loan at a price equal to the Principal Balance of the
Mortgage Loan plus accrued interest thereon at the Mortgage Interest Rate from
the date to which interest has last been paid to the Trust Fund to the date of
purchase plus any unreimbursed Servicing Advances and Advances or (ii) REO
Property at its fair market value as determined in good faith by the Servicer.
Any such repurchase of a Mortgage Loan or REO Property pursuant to this Section
3.16 shall be accomplished by delivery to the Trustee for deposit in the
Distribution Account of the amount of the purchase price. The Trustee shall
immediately effectuate the conveyance of such delinquent Mortgage Loan or REO
Property to the Seller to the extent necessary, including the prompt delivery of
all documentation to the Seller.


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<PAGE>


            Section 3.17 Trustee to Cooperate; Release of Files.

            (a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes), the Servicer shall deliver to the
Trustee (or the Custodian as the case may be) two executed copies of a completed
"Request for Release" in the form of Exhibit E. Upon receipt of such Request for
Release of Documents, the Trustee (or the Custodian as the case may be) shall
promptly release the related Mortgage File, in trust to (i) the Servicer, or
(ii) such other party identified in the related Request for Release. Upon any
such payment in full, or the receipt of such notification that such funds have
been placed in escrow, the Servicer shall direct the Trustee in writing to
execute an instrument of satisfaction (or assignment of Mortgage without
recourse) regarding the Mortgaged Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Trustee a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.

            (b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any insurance policy relating
to a Mortgage Loan, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage File is released to an escrow
agent or an employee, agent or attorney of the Trustee), upon written request of
the Servicer and delivery to the Trustee (or the Custodian, as the case may be)
of two executed copies of a "Request for Release" in the form of Exhibit E
signed by a Servicing Officer, release the related Mortgage File to the Servicer
and shall execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Servicer. Such receipt shall obligate the
Servicer to return the Mortgage File to the Trustee (or the Custodian, as the
case may be) when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a Request for
Release evidencing such liquidation, the receipt shall be released by the
Trustee (or the Custodian, as the case may be) to the Servicer.

            (c) Subject to Section 3.01, the Servicer shall have the right to
accept applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of properties
subject to Mortgages and (iv) second mortgage subordination agreements. No
application for approval shall be considered by the Servicer unless: (w) it has
received an Opinion of Counsel, addressed to the Trustee (which opinion shall
not be an expense of the Trustee or the Trust Fund) that such sale, disposition,
substitution, acquisition or contribution will not affect adversely the status
of any REMIC constituting part of the Trust Fund as a REMIC or cause any REMIC
constituting part of the Trust Fund to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions; (x) the


                                      -73-


<PAGE>


provisions of the related Note and Mortgage have been complied with; (y) the
Combined Loan-to-Value Ratio and debt-to-income ratio after any release does not
exceed the maximum Combined Loan-to-Value Ratio and debt-to-income ratio
established in accordance with the underwriting standards of the Mortgage Loans;
and (z) the lien priority of the related Mortgage is not affected. Upon receipt
by the Trustee of a Servicing Officer's certificate setting forth the action
proposed to be taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence have been
satisfied, the Trustee shall execute and deliver to the Servicer the consent or
partial release so requested by the Servicer. A proposed form of consent or
partial release, as the case may be, shall accompany any Servicing Officer's
certificate delivered by the Servicer pursuant to this paragraph.

            Section 3.18 Servicing Compensation.

            As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan (including REO Properties). The Servicer shall be entitled to retain
additional servicing compensation in the form of release fees, bad check
charges, assumption fees, modification or extension fees, late payment charges,
or any other service-related fees, Insurance Proceeds and Liquidation Proceeds
not required to be deposited in the Collection Account and similar items, to the
extent collected from Mortgagors. Additionally, the Servicer shall be entitled
to the Special Servicing Fee, payable in accordance with Section 4.02.

            Section 3.19 Annual Statement as to Compliance.

            (a) The Servicer, at its own expense, will deliver to the Trustee
and the Depositor, not later than 90 days following the end of the fiscal year
of the Servicer which as of the Startup Day ends on the last day of December,
commencing in 2000, a Servicing Officer's certificate stating, as to each signer
thereof, that (i) a review of the activities of the Servicer during such
preceding fiscal year (or such shorter period in the case of the first such
report) and of performance under this Agreement has been made under such
officers' supervision, and (ii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officers and
the nature and status thereof including the steps being taken by the Servicer to
remedy such default.

            (b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

            Section 3.20 Annual Independent Certified Public Accountants'
Reports.

            (a) Not later than 90 days following the end of each fiscal year of
the Servicer commencing in 2000, the Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Trustee and the Depositor a report stating that (i) it has
obtained a letter of representation regarding certain matters from the


                                      -74-


<PAGE>


management of the Servicer which includes an assertion that the Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in either the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America or the Audit Program
for Mortgages serviced by FHLMC, with respect to the servicing of residential
mortgage loans during the most recently completed fiscal year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. Immediately upon
receipt of such report, the Servicer shall furnish a copy of such report to the
Trustee, the Depositor and each Rating Agency. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request at the Servicer's
expense, provided that such statement is delivered by the Servicer to the
Trustee.

            (b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

            (c) The Trustee shall, on behalf of the Trust Fund, prepare, sign
and file with the Securities and Exchange Commission any and all reports,
statements and information respecting the Trust which the Depositor determines
are required to be filed with the Securities and Exchange Commission pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, each
such report, statement and information to be filed on or prior to the required
filing date for such report, statement or information. Upon the request of the
Trustee, each of the Seller, the Servicer and the Depositor shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.

            Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.

            The Servicer shall provide to the Trustee, Certificateholders that
are federally insured savings and loan associations, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.


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<PAGE>


            Section 3.22 Reserved.

            Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest.

            Not later than the close of business on each Servicer Remittance
Date, the Servicer shall deliver to the Trustee for deposit in the Distribution
Account an amount ("Compensating Interest") equal to the lesser of (A) the
aggregate of the Prepayment Interest Shortfalls on the Actuarial Mortgage Loans
for the related Distribution Date resulting from Principal Prepayments on the
Actuarial Mortgage Loans during the related Prepayment Period and (B) 50% of its
aggregate Servicing Fee received in the related Collection Period. The Servicer
shall apply Compensating Interest to offset any Prepayment Interest Shortfalls
on the Actuarial Mortgage Loans. The Servicer shall not have the right to
reimbursement for any amounts remitted to the Trustee in respect of Compensating
Interest. Such amounts so remitted shall be included in the Available Funds and
distributed therewith on the next Distribution Date. The Servicer shall not be
obligated to pay Compensating Interest with respect to Prepayment Interest
Shortfalls on Simple Interest Mortgage Loans or Relief Act Interest Shortfalls.

            Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments.

            In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.

            Section 3.25 Investment of Funds in the Collection Account and
the Distribution Account.

            (a) The Servicer may direct any depository institution maintaining
the Collection Account and the Trustee may direct any depository institution
maintaining the Distribution Account (for purposes of this Section 3.25, each an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon. All such Permitted Investments shall be held to
maturity, unless payable on demand. Any investment of funds in an Investment
Account shall be made in the name of the Trustee or the Servicer, as applicable
(in its capacity as such) or in the name of a nominee of the Trustee. The
Trustee shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account) over each such investment and
the income thereon, and any certificate or other instrument evidencing any such


                                      -76-


<PAGE>


investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall at the direction of the Servicer:

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

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

            (b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer shall
deposit in the Collection Account the amount of any loss incurred in respect of
any such Permitted Investment made with funds in such account immediately upon
realization of such loss. All income and gain realized from the investment of
funds in the Distribution Account shall be for the benefit of the Trustee. The
Trustee shall deposit in the Distribution Account the amount of any loss
incurred on Permitted Investments in the Distribution Account.

            (c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.

            The Trustee shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).

            Section 3.26 Liability of Servicer; Indemnification.

            (a) Subject to clause (b) below and Section 6.03, the Servicer
(except the Trustee if it is required to succeed the Servicer hereunder)
indemnifies and holds the Trustee, the Seller, the Depositor and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Depositor and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the Mortgage Loans in compliance with the
Servicing Standards. The Servicer shall immediately notify the Trustee, the
Depositor and each Certificateholder if a claim is made that may result in such


                                      -77-


<PAGE>


claims, losses, penalties, fines, forfeitures, legal fees or related costs,
judgments, or any other costs, fees and expenses, and the Servicer shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Trustee, the Depositor and/or Certificateholder in
respect of such claim. The provisions of this Section 3.26 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.

            (b) None of the Depositor, the Seller, the Servicer, or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Seller or the Servicer or any such Person against any breach of warranties or
representations made herein, or against any specific liability imposed on the
Servicer for a breach of the Servicing Standard, or against any liability which
would otherwise be imposed by reason of its respective willful misfeasance, bad
faith, fraud or negligence in the performance of its duties or by reasons of
negligent disregard of its respective obligations or duties hereunder.

            The Depositor, the Servicer, the Seller and any director, officer,
employee or agent of the Depositor, the Seller or the Servicer, may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any appropriate Person with respect to any matters arising
hereunder. The Depositor, the Servicer, the Seller, and any director, officer,
employee or agent of the Depositor, the Seller or the Servicer shall be
indemnified and held harmless by the Trust Fund against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense incurred in
connection with any legal action incurred by reason of its respective
misfeasance, bad faith, fraud or negligence, a breach of a representation or
warranty hereunder or (in the case of the Servicer) a breach of the Servicing
Standard in the performance of its respective duties or by reason of negligent
disregard of its respective obligations or duties hereunder. Neither the
Depositor, the Seller nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and in its opinion does not expose it to
any expense or liability; provided, however, that the Depositor, the Seller or
the Servicer may in its discretion undertake any action related to its
obligations hereunder which it may deem necessary or desirable with respect to
this Agreement and the rights and duties of the parties hereto and the interests
of the Certificateholders hereunder.

            Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties.

            On or before the last day of February of each year beginning in
2001, the Servicer shall file the reports of foreclosure and abandonment of any
Mortgaged Property required by Section 6050J of the Code with the Internal
Revenue Service and provide an Officer's Certificate certifying its compliance
with this Section 3.27 to the Trustee. The reports from the Servicer shall be in
form and substance sufficient to meet the reporting requirements imposed by such
Section 6050J.


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<PAGE>


            Section 3.28 Claims Under the PMI Policy.

            The Servicer shall, on behalf of the Trustee, prepare and file in a
timely basis with the PMI Insurer, with a copy to the Trustee, all claims which
may be made under the PMI Policy with respect to PMI Mortgage Loans. Consistent
with its rights and obligations hereunder, the Servicer shall take all actions
required under the PMI Policy as a condition to the payment of any such claim.
Any amount received from the PMI Insurer with respect to any such PMI Mortgage
Loan shall be deposited by the Servicer, not later than two Business Days
following receipt thereof, into the Distribution Account for distribution on the
related Distribution Date as part of Liquidation Proceeds for the related Loan
Group.

            The Servicer hereby covenants that it shall pay the PMI Insurer all
premiums due under the PMI Policy with respect to the PMI Mortgage Loans.

                                   ARTICLE IV

                                  FLOW OF FUNDS

            Section 4.01 Interest Distributions.

            On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Interest Remittance Amount and apply it in the
following order of priority (based upon the Mortgage Loan information provided
to it in the Remittance Report, upon which the Trustee may conclusively rely),
and the calculations required to be made by the Trustee, to the extent
available:

            (i) to the Trustee, the Trustee Fee for such Distribution Date;

            (ii) concurrently, to the Class A-1F, Class A-2F and Class A-1A
      Certificates, pro rata, the applicable Accrued Certificate Interest for
      such Distribution Date;

            (iii) concurrently, to the Class A-1A, Class A-2F and Class A-1A
      Certificates, pro rata, the applicable Interest Carry Forward Amount for
      the Class A-1F, Class A-2F and Class A-1A Certificates, respectively;

            (iv) to the Class M-1 Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date;

            (v) to the Class M-2 Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date;

            (vi) to the Class B Certificates, the Accrued Certificate Interest
      thereon for such Distribution Date; and

            (vii) the amount, if any, of the Interest Remittance Amount
      remaining after application with respect to the priorities set forth above
      will be applied as described under Section 4.02(b) hereof.


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<PAGE>


            Section 4.02 Distributions of Principal and Monthly Excess Cashflow
Amounts.

            (a) On each Distribution Date, the Trustee shall make the following
distributions in the following order of priority (based upon the Mortgage Loan
information provided to it in the Remittance Report), and the calculations
required to be made by the Trustee, to the extent of the Principal Distribution
Amount:

            (i) before the Stepdown Date or with respect to which a Trigger
      Event is in effect,

                  (A) concurrently, as follows:

                        (1) sequentially to the Holders of the Class A-1F and
                  Class A-2F Certificates, in that order, the Group 1 Principal
                  Percentage of the Principal Distribution Amount for such
                  Distribution Date, until the Certificate Principal Balance of
                  each such Class has been reduced to zero and then to the Class
                  A-1A Certificates, until the Certificate Principal Balance of
                  such Class has been reduced to zero; and

                        (2) to the Holders of the Class A-1A Certificates, the
                  Group 2 Principal Percentage of the Principal Distribution
                  Amount for such Distribution Date, until the Certificate
                  Principal Balance of such Class has been reduced to zero and
                  then sequentially to the Class A-1F and Class A-2F
                  Certificates, in that order, until the Certificate Principal
                  Balance of each such Class has been reduced to zero;

                  (B) to the Holders of the Class M-1 Certificates, 100% of the
            remaining Principal Distribution Amount for such Distribution Date,
            until the Certificate Principal Balance of the Class M-1
            Certificates has been reduced to zero;

                  (C) to the Holders of the Class M-2 Certificates, 100% of the
            remaining Principal Distribution Amount, until the Certificate
            Principal Balance of the Class M-2 Certificates has been reduced to
            zero;

                  (D) to the Holders of the Class B Certificates, 100% of the
            remaining Principal Distribution Amount, until the Certificate
            Principal Balance of the Class B Certificates has been reduced to
            zero; and

                  (E) any amount of the Principal Distribution Amount remaining
            after making all of the distributions in clauses (A), (B), (C) and
            (D) shall be applied as set forth in Section 4.02(b).

            (ii) on or after the Stepdown Date and as long as a Trigger Event is
      not in effect:


                                      -80-


<PAGE>


                  (A) the lesser of (x) the Principal Distribution Amount and
            (y) the Class A Principal Distribution Amount, concurrently as
            follows:

                  (1) the Group 1 Principal Percentage of the lesser of (x) the
                  Principal Distribution Amount and (y) Class A Principal
                  Distribution Amount will be distributed sequentially, to the
                  Class A -1F and Class A-2F Certificates, in that order, until
                  the Certificate Principal Balance of each such Class has been
                  reduced to zero and then to the Class A-1A Certificates, until
                  the Certificate Principal Balance of such Class has been
                  reduced to zero; and

                  (2) the Group 2 Principal Percentage of the lesser of (x) the
                  Principal Distribution Amount and (y) Class A Principal
                  Distribution Amount will be distributed to the Class A-1A
                  Certificates, until the Certificate Principal Balance of such
                  Class has been reduced to zero and then sequentially to the
                  Class A-1F and Class A-2F Certificates, in that order, until
                  the Certificate Principal Balance of each such Class has been
                  reduced to zero;

                  (B) the lesser of (x) the excess of (i) the Principal
            Distribution Amount over (ii) the amount distributed to the Class A
            Certificates in clause (A) above and (y) the Class M-1 Principal
            Distribution Amount will be distributed to the Class M-1
            Certificates, until the Certificate Principal Balance thereof has
            been reduced to zero;

                  (C) the lesser of (x) the excess of (i) the Principal
            Distribution Amount over (ii) the sum of the amount distributed to
            the Class A Certificates in clause (A) above and the amount
            distributed to the Class M-1 Certificates in clause (B) above and
            (y) the Class M-2 Principal Distribution Amount will be distributed
            to the Class M-2 Certificates, until the Certificate Principal
            Balance thereof has been reduced to zero;

                  (D) the lesser of (x) the excess of (i) the Principal
            Distribution Amount over (ii) the sum of the amount distributed to
            the Class A Certificates pursuant to clause (A) above, the amount
            distributed to the Class M-1 Certificates pursuant to clause (B)
            above and the amount distributed to the Class M-2 Certificates
            pursuant to clause (C) above and (y) the Class B Principal
            Distribution Amount will be distributed to the Class B Certificates,
            until the Certificate Principal Balance thereof has been reduced to
            zero; and

                  (E) any amount of the Principal Distribution Amount remaining
            after making all of the distributions in clauses (A), (B), (C) and
            (D) above shall be applied as set forth in Section 4.02(b).

            (b) On each Distribution Date, any Monthly Excess Cashflow Amount
shall be distributed, to the extent available, in the following order of
priority on such Distribution Date:


                                      -81-


<PAGE>



            (i) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date, pro rata, among the Class A-1F, Class A-2F and
      Class A-1A Certificates;

            (ii) to pay the remaining Interest Carry Forward Amounts for the
      Classes of Class A Certificates, if any, pro rata, among the Class A-1F,
      Class A-2F and the Class A-1A Certificates;

            (iii) to pay the Extra Principal Distribution Amount for such
      Distribution Date in accordance with Section 4.02(a);

            (iv) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date for the Class M-1 Certificates;

            (v) to pay the remaining Class M-1 Interest Carry Forward Amount, if
      any;

            (vi) to pay the Class M-1 Realized Loss Amortization Amount for such
      Distribution Date;

            (vii) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date for the Class M-2 Certificates;

            (viii) to pay the remaining Class M-2 Interest Carry Forward Amount,
      if any;

            (ix) to pay the Class M-2 Realized Loss Amortization Amount for such
      Distribution Date;

            (x) to pay any remaining unpaid Accrued Certificate Interest for
      such Distribution Date for the Class B Certificates;

            (xi) to pay the remaining Class B Interest Carry Forward Amount, if
      any;

            (xii) to pay the Class B Realized Loss Amortization Amount for such
      Distribution Date;

            (xiii) concurrently, to the Class A-1F and Class A-1A Certificates,
      pro rata, the aggregate amount of any Class A-1F LIBOR Carryover Amount
      and Class A-1A LIBOR Carryover Amount, respectively;

            (xiv) to pay the Special Servicing Fees for such Distribution Date
      and any accrued and unpaid Special Servicing Fees which remain unpaid from
      any previous Distribution Date;

            (xv) to fund the Class N Reserve Fund pursuant to Section 4.08;

            (xvi) to pay the Class N Certificates, (A) the Accrued Certificate
      Interest for the Class N Certificates, (B) the unpaid Interest Carry
      Forward Amount for the Class N Certificates and (C) any remaining Monthly
      Excess Cashflow Amount to reduce the Class N Notional Amount, until the
      Class N Notional Amount has been reduced to zero; and


                                      -82-


<PAGE>


            (xvii) to the Class X Certificates, the Class X Distributable Amount
      for such Distribution Date.

            On each Distribution Date, there shall be distributed to the Holders
of the Class R Certificates in respect of the Class R-1 Interest, any remaining
amount in the Distribution Account on such date after the application pursuant
to Sections 4.01, 4.02(a), 4.02(b)(i)-(xvii) and 4.02(c).

            (c) On each Distribution Date, all prepayment premiums and penalties
(including amounts deposited by the Seller in lieu thereof pursuant to Section
3.01) shall be allocated to the Class N Certificates for so long as the Notional
Amount of the Class N Certificates is greater than zero pursuant to Section
4.02(b)(xvi) above), and to the Class X Certificates after the Class N Notional
Amount has been reduced to zero.

            (d) Any amounts distributed to the Offered Certificates in respect
of interest pursuant to Sections 4.01(a)(ii)-(vi) which constitute Rate Payments
shall first be deemed distributed by REMIC 4 to the Class X/N Interest as a
distribution in respect of the REMIC 4 Components, and then distributed to the
Offered Certificates from the Grantor Trust as payments on notional principal
contracts in the nature of cap contracts.

            (e) Any amounts distributed to the Class A-1F or Class A-1A
Certificates in respect of LIBOR Carryover Amounts pursuant to Section
4.02(b)(xiii) shall first be deemed distributed by REMIC 4 to the Class X/N
Interest as a distribution of Monthly Excess Cashflow Amount, and then
distributed to the Class A-1F or Class A-1A Certificates, as the case may be,
from the Grantor Trust as payments on notional principal contracts in the nature
of cap contracts.

            (f) Any amounts distributed to the Class N Certificates pursuant to
Section 4.02(b)(xv), to the Class N Reserve Fund pursuant to Section
4.02(b)(xvi) and to the Class X Certificates pursuant to Section 4.02(b)(xvii)
shall be considered distributed to the Class X/N Interest in respect of the
REMIC 4 Components and then to the Class N and Class X Certificates pursuant to
Section 9.01(n).

            Section 4.03 Allocation of Losses.

            Realized Losses shall be allocated first against the Remaining
Initial Overcollateralization Amount and second to the Subsequent
Overcollateralization Amount, until the Overcollateralization Amount has been
reduced to zero. If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Certificate Principal
Balance of the Offered Certificates exceeds the Pool Balance as of the end of
the related Collection Period, such excess will be allocated against the Class
B, Class M-2, Class M-1 and the Senior Certificates, in that order and until the
respective Certificate Principal Balances thereof are reduced to zero. Any
allocation to the Senior Certificates shall be further allocated among the Class
A-1A, Class A-1F and Class A-2F Certificates, pro rata, on the basis of their
respective Certificate Principal Balances.


                                      -83-


<PAGE>


            Section 4.04 Method of Distribution.

            The Trustee shall make distributions in respect of a Distribution
Date to each Certificateholder of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates the aggregate initial Certificate
Principal Balance of which is in excess of $5,000,000, or by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Trustee may
deduct a reasonable wire transfer fee from any payment made by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.

            Section 4.05 Distributions on Book-Entry Certificates.

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

            Section 4.06 Statements.

            (a) On each Distribution Date, based, as applicable, on the Mortgage
Loan information contained in the Remittance Report, the Trustee shall prepare
and post on its website at www.chase.com/sfa, a statement as to the
distributions made on such Distribution Date:

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

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

            (iii) the Overcollateralization Amount, the Overcollateralization
      Release Amount, the Overcollateralization Deficiency and the
      Overcollateralization Target Amount as of such Distribution Date and the
      Monthly Excess Interest Amount and Monthly Excess Cashflow Amount for such
      Distribution Date;


                                      -84-


<PAGE>


            (iv) the aggregate amount of servicing compensation received by the
      Servicer during the related Collection Period and accrued and unpaid
      Special Servicing Fees;

            (v) the aggregate amount of Advances for the related Collection
      Period;

            (vi) the Pool Balance and the Loan Group Balance for each Loan Group
      at the close of business at the end of the related Collection Period;

            (vii) separately stated for each Loan Group and each Sub-group, the
      number, weighted average remaining term to maturity and weighted average
      Mortgage Interest Rate of the Mortgage Loans as of the related Due Date;

            (viii)separately stated for each Loan Group and each Sub-group, the
      number and aggregate unpaid principal balance of Mortgage Loans (a) 30 to
      59 days past due on a contractual basis, (b) 60 to 89 days past due on a
      contractual basis, (c) 90 or more days past due on a contractual basis,
      (d) as to which foreclosure proceedings have been commenced and (e) in
      bankruptcy as of the close of business on the last day of the calendar
      month preceding such Distribution Date;

            (ix) separately stated for each Loan Group and each Sub-group, with
      respect to any Mortgage Loan that became an REO Property during the
      preceding calendar month, the loan number of such Mortgage Loan, the
      unpaid principal balance and the Principal Balance of such Mortgage Loan
      as of the date it became an REO Property;

            (x) separately stated for each Loan Group and each Sub-group, the
      book value of any REO Property as of the close of business on the last
      Business Day of the calendar month preceding the Distribution Date, and,
      cumulatively, the total number and cumulative principal balance of all REO
      Properties as of the close of business of the last day of the preceding
      Collection Period;

            (xi) separately stated for each Loan Group and each Sub-group, the
      aggregate amount of Principal Prepayments made during the related
      Prepayment Period;

            (xii) the aggregate amount of prepayment penalties collected or
      deposits by the Seller in lieu thereof pursuant to Section 3.01 during the
      related Collection Period and the amounts thereof allocable to the Class N
      Certificates and the Class X Certificates;

            (xiii) separately stated for each Loan Group and each Sub-group, the
      aggregate amount of Realized Losses incurred during the related Collection
      Period and the cumulative amount of Realized Losses;

            (xiv) the Certificate Principal Balance, or Notional Amount, as
      applicable, of each Class of Certificates, after giving effect to the
      distributions, and allocations of Realized Losses or Applied Realized Loss
      Amounts, as applicable, made on such Distribution Date, separately
      identifying any reduction thereof due to allocations of Realized Losses or
      Applied Realized Loss Amounts;


                                      -85-


<PAGE>


            (xv) the Accrued Certificate Interest in respect of each Class of
      Offered Certificates for such Distribution Date, separately identifying
      the portions thereof attributable to Rate Payments, and the respective
      portions thereof, if any, remaining unpaid following the distributions
      made in respect of such Certificates on such Distribution Date;

            (xvi) the aggregate amount of any Prepayment Interest Shortfalls for
      such Distribution Date, to the extent not covered by payments by the
      Servicer pursuant to Section 3.23;

            (xvii) [Reserved];

            (xviii) [Reserved];

            (xix) the amount of the Trustee Fee paid;

            (xx) the LIBOR Carryover Amounts for the Class A-1F and Class A-1A
      Certificates distributed on such Distribution Date and the amounts
      remaining after giving effect to distributions thereof on such
      Distribution Date;

            (xxi) any Overcollateralization Deficiency after giving effect to
      the distribution of principal on such Distribution Date;

            (xxii) whether a Trigger Event has occurred and is continuing, and
      the cumulative Realized Losses, as a percentage of the original Pool
      Balance;

            (xxiii) the Available Funds;

            (xxiv) the rate at which interest accrues for each Class of
      Certificates for such Distribution Date;

            (xxv) the Liquidation Report for such Distribution Date;

            (xxvi) the amount of any transfers from the HLTV Reserve Account and
      the amount remaining on deposit in the HLTV Reserve Account (with respect
      to each Loan Group) after giving effect to any such transfers;

            (xxvii) the aggregate Principal Balance of Mortgage Loans purchased
      by the Servicer or Seller during the related Collection Period and
      indicating the Section of this Agreement requiring or allowing the
      purchase of each such Mortgage Loan; and

            (xxviii) the aggregate Principal Balance of the Mortgage Loans
      repurchased by the Seller during the related Collection Period in
      connection with Section 3.16.

            The Trustee may fully rely upon and shall have no liability with
respect to information with respect to the Mortgage Loans provided by the
Servicer.


                                      -86-


<PAGE>


            In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar amount
as of the Cut-off Date.

            (b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder of a Regular Certificate, if requested
in writing by such Person, such information as is reasonably necessary to
provide to such Person a statement containing the information set forth in
subclauses (i), (ii), (xv) and (xx) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.

            (c) On each Distribution Date, the Trustee shall forward to the
Class R Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Class R
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.

            Section 4.07 Remittance Reports; Advances.

            (a) On the second Business Day following each Determination Date but
in no event less than four Business Days prior to the related Distribution Date,
the Servicer shall deliver to the Trustee by telecopy (or by such other means as
the Servicer and the Trustee may agree from time to time) a Remittance Report
with respect to the related Distribution Date. On the same date, the Servicer
shall forward to the Trustee by overnight mail a computer readable magnetic tape
or diskette or in such other medium as may be agreed between the Servicer and
the Trustee containing the information set forth in such Remittance Report with
respect to the related Distribution Date. Not later than the close of business
New York time on the Servicer Remittance Date, the Servicer shall deliver or
cause to be delivered to the Trustee in addition to the information provided on
the Remittance Report, such other information reasonably available to it with
respect to the Mortgage Loans as the Trustee may reasonably request or order in
order for the Trustee to perform the calculations necessary to make the
distributions contemplated by Section 4.01, 4.02 and 4.03 and to prepare the
statements to Certificateholders contemplated by Section 4.06. The Trustee shall
not be responsible to recompute, recalculate or verify any information provided
to it by the Servicer.

            (b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.07(d), the aggregate amount
of Monthly Payments (net of the related Servicing Fee and the Fixed Retained
Yield), due during the related Collection Period in respect of the Actuarial
Mortgage Loans, which Monthly Payments were delinquent on a contractual basis as
of the close of business on the related Determination Date. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would


                                      -87-


<PAGE>


have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan. The Servicer shall not
be obligated to make any Advance with respect to Simple Interest Mortgage Loans
or REO Properties.

            On or before the close of business New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans for the
related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case it will cause to be made an appropriate entry in the records of
the Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.07, used by the Servicer in discharge of any such
Advance) or (iii) in the form of any combination of (i) and (ii) aggregating the
total amount of Advances to be made by the Servicer with respect to the Mortgage
Loans. Any amounts held for future distribution and so used shall be
appropriately reflected in the Servicer's records and replaced by the Servicer
by deposit in the Collection Account on or before any future Servicer Remittance
Date to the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Servicer Remittance
Date) shall be less than the total amount that would be distributed to the
Classes of Certificateholders pursuant to Section 4.01 and 4.02 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will provide notice to the Servicer by
telecopy by the close of business on any Servicer Remittance Date in the event
that the amount remitted by the Servicer to the Trustee on such date is less
than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.

            (c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of such time as the Trust acquires title to the related Mortgaged
Property or such Mortgage Loan is paid in full by the Mortgagor or disposed of
by the Trust, or until the recovery of all Liquidation Proceeds thereon.

            (d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee.

            Section 4.08 Class N Reserve Fund.

            (a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class N Certificates,
the Class N Reserve Fund. The Class N Reserve Fund shall be an Eligible Account,
and funds on deposit therein shall be held separate and apart from, and shall
not be commingled with, any other moneys, including, without limitation, other
moneys of the Trustee held pursuant to this Agreement The Class N Reserve Fund
shall be funded up to the Required Reserve Fund Balance in accordance with the
priorities set forth in Section 4.02(b). In the event that the Required Reserve
Fund Balance has not been reached after the distributions made in ____ 200_, the


                                      -88-


<PAGE>


Seller shall deliver to the Trustee the difference between the Required Reserve
Fund Balance and the amount deposited in the Class N Reserve Fund. The Seller
shall have no continuing obligation to fund the Class N Reserve Fund once the
Required Reserve Fund Balance has been reached. The Trustee shall distribute the
Class N Reserve Fund only to the holders of the Class N Certificates and only on
a Distribution Date to the extent that there is insufficient cash in the
Distribution Account to make the distribution pursuant to Section 4.02(b)(xv)(A)
for such Distribution Date.

            (b) Funds in the Class N Reserve Fund may be invested in Permitted
Investments by the Trustee at the direction of the Holder of the Class X
Certificates with the greatest Percentage Interest. Any earnings on such amounts
shall be distributed to the Holders of the Class X Certificates and any losses
shall be chargeable first to amounts held in the Class N Reserve Fund and second
to Holders of the Class X Certificates. The Class N Reserve Fund is not an asset
of any of the REMICs, but rather is an "outside reserve fund" within the meaning
of the REMIC Provisions that is beneficially owned by the beneficial owner of
the Class X and Class N Certificates (when the Class X and Class N Certificates
are beneficially owned by one Person) or by the partnership comprised of the
Class X and Class N Certificates (when the Class X and Class N Certificates are
beneficially owned by two or more Persons). The Holders of the Class X
Certificates shall direct the Trustee, in writing, as to the investment of
amounts on deposit therein. In the absence of written direction from the Holders
of the Class X Certificates, funds on deposit to the Class N Reserve Fund shall
be invested in the Chase Vista Money Market Fund. Upon termination of the Trust
Fund or if the Class N Notional Amount has been reduced to zero, any amounts
remaining in the Class N Reserve Fund shall be distributed to the Holders of the
Class X Certificates.

            Section 4.09 HLTV Reserve Account.

            (a) The Trustee, on behalf of the Certificateholders, shall
establish and maintain an "HLTV Reserve Account" held in trust by the Trustee in
its name. The HLTV Reserve Account shall be an Eligible Account, and funds on
deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee held pursuant to this Agreement. The HLTV Reserve Account will
not be an asset of the Trust Fund or any REMIC and shall be an "outside reserve
fund" within the meaning of the REMIC Provisions that is beneficially owned by
the Seller for federal income tax purposes. Holders of the Certificates will be
entitled to receive payments from the HLTV Reserve Account to the extent of
amounts on deposit therein in an amount equal to any required HLTV Account
Allocation.

            (b) On the Closing Date, an amount equal to the aggregate of the
HLTV Initial Allocations for each HLTV Loan will be deposited to the HLTV
Reserve Account by the Seller. Thereafter, upon the liquidation of each HLTV
Loan, an amount equal to the related HLTV Account Allocation will be transferred
on each Distribution Date to the Distribution Account as a portion of Available
Funds for the related Loan Group.

            (c) On each Distribution Date, (i) with respect to any HLTV Loan
which was liquidated during the related Prepayment Period, (A) the related HLTV
Account Allocation shall be transferred to the Distribution Account as a portion
of Available Funds for the related Loan Group and (B) the excess, if any, of the


                                      -89-


<PAGE>


related HLTV Initial Allocation over such HLTV Account Allocation shall be
released to the Seller, (ii) with respect to any HLTV Loan which was paid in
full by the related mortgagor during the related Prepayment Period, any related
HLTV Initial Allocation shall be released to the Seller, (iii) with respect to
any HLTV Loan for which the related Mortgaged Property was re-appraised (by an
independent appraiser) at a higher value than the Value as of the Closing Date
during the related Prepayment Period, (A) the HLTV Initial Allocation shall be
recomputed for such HLTV Loan, where the Value shall be based on such new
appraisal and the Principal Balance of such HLTV Loan shall be as of the date of
such re-appraisal and (B) the excess of the original HLTV Initial Allocation
over the recomputed HLTV Initial Allocation shall be remitted to the Seller and
(iv) with respect to any HLTV Loan which amortized during the related Prepayment
Period to have a Combined Loan-to-Value Ratio of 100% or less, any related HLTV
Initial Allocation shall be released to the Seller.

            (d) Funds in the HLTV Reserve Account may be invested in Permitted
Investments by the Trustee at the direction of the Seller. On each Distribution
Date, any earnings on such amounts shall be distributed to the Seller and any
losses shall be reimbursed by the Seller. The Seller, which shall be taxable
thereon, shall direct the Trustee, in writing, as to the investment of amounts
on deposit therein. In the absence of such written direction, all funds in the
HLTV Reserve Account shall be invested by the Trustee in
_________________________________________ Vista Money Market Fund. Upon
termination of the Trust Fund, any amounts remaining in the HLTV Reserve Account
shall be distributed to the Seller.

            Section 4.10 REMIC Distributions.

            (a) REMIC 4. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on each Class of REMIC 4 Regular
Interests (other than the REMIC 4 Components) shall be identical to the timing,
amounts and allocations on the corresponding Classes of Certificates (other than
the Class R, Class X and Class N Certificates), except that the Pass-Through
Rate of any Class T4 P&I Regular Interest shall not exceed the pass-through rate
as set forth in the definition thereof, and any amount paid in respect of a
Class of Offered Certificates as a LIBOR Carryover Amount or Rate Payment,
whether with respect to the Distribution Date on which such amount is paid or a
prior Distribution Date, shall be treated as a distribution by REMIC 4 to the
Class X/N Interest, then as paid by the Class X/N Interest to the applicable
Class of Offered Certificates as a payment from the Grantor Trust outside of the
REMICs. Interest (and in the case of the Class T4-4, Class T4-5 and Class T4-6
Interests, principal) shall be deemed distributed to each Class of REMIC 4
Components as follows: (i) the Class T4-4, Class T4-5, Class T4-6, Class T4-11,
Class T4-12 and Class T4-13 Interests shall be entitled to all distributions on
the Class T3-4, Class T3-5, Class T3-6, Class T3-11, Class T3-12 and Class T3-13
Interests, respectively; and (ii) the Class T4-A1AIO, Class T4-A1FIO, Class
T4-A2FIO, Class T4-M1IO, Class T5-M2-IO and Class T4-BIO Interests shall be
entitled to a specified portion of interest payments consisting of the excess of
interest distributable on each of the Class T3-A1A, Class T3-A1F, Class T3-A2F,
Class T3-M1, Class T3-M2 and Class T3-B Interests over interest distributable on
the Class T4-A1A Class T4-A1F, Class T4-A2F, Class T4-M1, Class T4-M2 and Class
T4-B Interests, respectively. Any shortfalls of interest, including any Realized
Losses allocated to reduce the Subsequent Overcollateralization Amount, shall be


                                      -90-


<PAGE>


borne, first, by the REMIC 4 Components, pro rata based on interest accrued,
before being allocated to the Class T4 P&I Regular Interests. Realized Losses
allocated to the Class T4-4, Class T4-5 and Class T4-6 Interests shall equal
Realized Losses allocated to the Class T3-4, Class T3-5 and Class T3-6 Interests
pursuant to Section 4.10(b). The Class X/N Interest shall be deemed to receive
the aggregate of the amounts distributable in respect of the REMIC 4 Components,
notwithstanding that a portion of such amount is applied to pay any LIBOR
Carryover Amount or Rate Payment. Amounts deemed distributed in respect of the
Class T4 P&I Regular Interests and to the REMIC 4 Components (in respect of the
Class X/N Interest) shall be treated as held by the Grantor Trust for
distribution in accordance with Sections 4.01 and 4.02. Any portion of the
Available Funds remaining in REMIC 4 on a Distribution Date shall be distributed
to the Class R Certificates in respect of the Class R-4 Interest.

            (b) REMIC 3. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on the Classes of REMIC 3 Regular
Interests identified as Corresponding Classes shall be identical to the timing,
amounts and allocations in respect of Corresponding Classes of REMIC 4 Regular
Interests pursuant to Section 4.10(a). The Class T3-4, Class T3-5 and Class T3-6
Interests shall be entitled to all distributions on the Class T2-4, Class T2-5
and Class T2-6 Interests, respectively. Interest shortfalls will reduce interest
payable, first, on the Class T3-4, , Class T3-5 and Class T3-6 Interests, to the
same extent that interest shortfalls are allocable to the Class T2-4, Class T2-5
and Class T2-6 Interests, respectively; second, on the Class T3-11, Class T3-12
and Class T3-13 Interests, pro rata; third, on the Class T3-B, Class T3-M2 and
Class T3-M1 Interests, in that order; and fourth, on the Class T3-A1A, Class
T3-A1F and Class T3-A2F Interests, pro rata; provided, that the portion of the
interest payable on the Class T3-B, Class T3-M2, Class T3-M1, Class T3-A1A,
Class T3-A1F and Class T3-A2F Interests attributable to the Class T4-BIO, Class
T4-M2IO, Class T4-M1IO, Class T4-A1AIO, Class T4-A1FIO, Class T4-A-2FIO
Interests shall bear interest shortfalls pro rata and prior to the allocation of
any remaining shortfalls to such Interests. Amounts of principal and interest
distributed in respect of, and Realized Losses allocated to, the Class T3-4,
Class T3-5 and Class T3-6 Interests shall equal the allocations made to the
Class T2-4, Class T2-5 and Class T2-6 Interests, respectively, reduced by any
allocation of interest shortfalls to the Class T3-4, Class T3-5 and Class T3-6
Interests pursuant to the preceding sentence. Amounts in the Distribution
Account deemed distributed in respect of the REMIC 3 Regular Interests shall be
treated as held by REMIC 4 for distribution in accordance with Sections 4.10(a).
Any portion of Available Funds remaining in REMIC 3 on a Distribution Date shall
be distributed to the Class R Certificates in respect of the Class R-3 Interest.

            (c) REMIC 2. On each Distribution Date, the timing and amounts of
principal distributions and allocations of Realized Losses on each Class of
REMIC 2 Regular Interests shall be identical to the timing, amounts and
allocations in respect of the corresponding Classes of REMIC 1 Regular Interests
pursuant to Section 4.10(d). For these purposes, the Class T2-1 and Class T2-11
Interests correspond to the Class T1-1 Interest, the Class T2-2 and Class T2-12
Interests correspond to the Class T1-2 Interest, the Class T2-3 and Class T2-13
Interests correspond to the Class T1-3 Interest, and the Class T2-4, Class T2-5
and Class T2-6 Interests correspond to the Class T1-4, Class T1-5 and Class T1-6
Interests, respectively. Interest will accrue on each of the Class T2-1, Class
T2-2 and Class T2-3 Interests at the REMIC 2 Pass-Through Rate. Interest will
accrue on each of the Class T2-11, Class T2-12 and Class T2-13 Interests at the


                                      -91-


<PAGE>


excess, if any, of the Weighted Average Net Mortgage Rate over the REMIC 2
Pass-Through Rate. Interest will accrue on the Class T2-4, Class T2-5 and Class
T2-6 Interests at the Weighted Average Net Mortgage Rate. Any shortfalls of
interest will be allocated, first, to the Class T2-4, Class T2-5 and Class T2-6
Interests to the extent that interest shortfalls are allocated to the Class
T1-4, Class T1-5 and Class T1-6 Interests; second, pro rata, to the Class T2-11,
Class T2-12 and Class T2-13 Interests; and third, pro rata, to the Class T2-1,
Class T2-2 and Class T2-3 Interests. Amounts in the Distribution Account deemed
distributed in respect of the REMIC 2 Regular Interests shall be treated as held
by REMIC 3 for distribution in accordance with Section 4.10(b). Any portion of
Available Funds remaining in REMIC 2 on a Distribution Date shall be distributed
to the Class R Certificates in respect of the Class R-2 Interest.

            (d) REMIC 1. On each Distribution Date, the REMIC 1 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 (other
than to the Class R Certificates in respect of the Class R-4 Interest) from
amounts on deposit in the Distribution Account. Such amounts with respect to
interest shall accrue at the Weighted Average Net Mortgage Rate on each REMIC 1
Regular Interest. Any shortfalls of interest will be allocated, first, to the
Class T1-4, Class T1-5 and Class T1-6 Interests, pro rata based on interest
accrued and, second, to the Class T1-1, Class T1-2 and Class T1-3 Interests, pro
rata based on interest accrued. Amounts in reduction of principal balance of the
REMIC 1 Regular Interests shall be allocated to the Class T1-1, Class T1-2 and
Class T1-3 Interests in the aggregate in an amount equal to the Principal
Remittance Amount less the lesser of Overcollateralization Release Amount and
the Remaining Initial Overcollateralization Amount. Such aggregate amount shall
be allocated so that the principal balance of the Class T1-1, Class T1-2 and
Class T1-3 Interests equal the amounts specified in the definitions thereof in
Article I. The portion of the Principal Remittance Amount equal to the lesser of
the Overcollateralization Release Amount and the Remaining Initial
Overcollateralization Amount shall be allocated, first, to reduce the principal
balances of the Class T1-5 and T1-6 Interests until the principal balances of
such Classes are reduced to 0.01 percent of the Group 1 Loan Balance and Group 2
Loan Balance, respectively; second, to reduce the principal balance of the Class
T1-4 Interest, until it is reduced to zero; and third, to reduce the principal
balances of the Class T1-5 and T1-6 Interests, pro rata, until the principal
balances of such Classes are reduced to zero. Realized Losses shall be allocated
first to the Class T1-4, Class T1-5 and Class T1-6 Interests in the same manner
as principal is allocated to the Class T1-4, Class T1-5 and Class T1-6 Interests
in the preceding sentence, until such Classes are reduced to zero, and then pro
rata to the Class T1-1, Class T1-2 and Class T1-3 Interests. Such amounts with
respect to principal and any Realized Losses with respect to principal shall
reduce the principal balances of the REMIC 1 Regular Interests so that, in the
aggregate, such balances correspond to the Pool Balance of the Mortgage Loans as
of the last day of the related Due Period. To the extent that allocations of
principal or Realized Losses have not reduced the Class T1-5 or Class T1-6
Interests to an amount that is 0.01 percent of the Group 1 Loan Balance or Group
2 Loan Balance, respectively, the principal balances of Class T1-5 and Class
T1-6 Interests will be reduced to 0.01 percent of the Group 1 Loan Balance or
Group 2 Loan Balance, respectively, from amounts otherwise distributable as
interest in respect of the Class T1-4 Interest, and the principal balance of the
Class T1-4 Interest will be increased by the amount of any interest not
distributable thereon pursuant to this sentence. Amounts in the Distribution
Account deemed distributed in respect of the REMIC 1 Regular Interests shall be
treated as held by REMIC 2 for distribution in accordance with Section 4.10(c).
Any amounts remaining in REMIC 1 on a Distribution Date shall be distributed to
the Class R Certificates in respect of the Class R-1 Interest.


                                      -92-


<PAGE>


            (e) All prepayment premiums and penalties (including amounts
deposited by the Seller in lieu thereof pursuant to Section 3.01) shall be
distributed from REMIC 1 to REMIC 2 in respect of the Class T1-4 Interest, from
REMIC 2 to REMIC 3 in respect of the Class T2-4 Interest, from REMIC 3 to REMIC
4 in respect of the Class T3-4 Interest, and from REMIC 4 to the Class X/N
Interest in respect of the Class T4-4 Interest.

            (f) Notwithstanding anything to the contrary contained herein, the
above distributions in this Section 4.10 (other than on the Certificates) are
deemed distributions, and distributions of funds from the Distribution Account
shall be made only in accordance with Sections 4.01 and 4.02 hereof.

                                   ARTICLE V

                                THE CERTIFICATES

            Section 5.01 The Certificates.

            Each of the Class A-1F, Class A-2F, Class A-1A, Class M-1, Class
M-2, Class B, Class N, Class X, and Class R Certificates shall be substantially
in the forms annexed hereto as exhibits, and shall, on original issue, be
executed, authenticated and delivered by the Trustee to or upon the receipt of a
Written Order to Authenticate from the Depositor concurrently with the sale and
assignment to the Trustee of the Trust Fund. Each Class of the Offered
Certificates shall be initially evidenced by one or more Certificates
representing a Percentage Interest with a minimum dollar denomination of $25,000
and integral dollar multiples of $1 in excess thereof. The Class N, Class X and
Class R Certificates are issuable only in minimum Percentage Interests of 25%.

            The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Offered Certificates
shall be Book-Entry Certificates. The Class N, Class X and Class R Certificates
shall not be Book-Entry Certificates but shall be issued in fully registered
certificate form.


                                      -93-


<PAGE>


            Section 5.02 Registration of Transfer and Exchange of
Certificates.

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

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

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

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


                                      -94-


<PAGE>


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

            (c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Book-Entry Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Seller's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and authenticate the Definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Trustee, the
Certificate Registrar, the Servicer, any Paying Agent and the Depositor shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.

            (d) Except with respect to the initial transfer of the Private
Certificates by the Depositor, no transfer, sale, pledge or other disposition of
any Private Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, (i) unless such
transfer is made in reliance upon Rule 144A (as evidenced by the investment
letter delivered to the Trustee, in substantially the form attached hereto as
Exhibit J) under the 1933 Act, the Trustee and the Depositor shall require a
written Opinion of Counsel (which may be in-house counsel) acceptable to and in
form and substance reasonably satisfactory to the Trustee and the Depositor that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the 1933 Act or is being made pursuant to
the 1933 Act, which Opinion of Counsel shall not be an expense of the Trustee or
the Depositor or (ii) the Trustee shall require the transferor to execute a
transferor certificate (in substantially the form attached hereto as Exhibit L)
and the transferee to execute an investment letter (in substantially the form


                                      -95-


<PAGE>


attached hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

            No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Depositor, (such requirement is satisfied only by the Trustee's
receipt of a representation letter from the transferee substantially in the form
of Exhibit I hereto, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) (except in the case of a Class R, Class X or Class
N Certificate) if the purchaser is an insurance company, a representation that
the purchaser is an insurance company which is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60 or (iii) (except in the case of a Class R,
Class X or Class N Certificate) in the case of any such ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel satisfactory
to the Trustee which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust, addressed to the Trustee, to the effect that the purchase
or holding of such ERISA-Restricted Certificate will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in this Agreement or to
any liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
acceptance by a Certificate Owner of the beneficial interest in any such Class
of ERISA-Restricted Certificates, unless the Trustee shall have received from
the transferee an alternative representation acceptable in form and substance to
the Depositor. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery to
the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.

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


                                      -96-


<PAGE>


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

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

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

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

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

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

            (v) If any Person other than a Permitted Transferee acquires any
      Ownership Interest in a Class R Certificate in violation of the
      restrictions in this Section, then the Trustee shall have the right but
      not the obligation, without notice to the Holder of such Class R
      Certificate or any other Person having an Ownership Interest therein, to
      notify the Depositor to arrange for the sale of such Class R Certificate.
      The proceeds of such sale, net of commissions (which may include
      commissions payable to the Depositor or its affiliates in connection with
      such sale), expenses and taxes due, if any, will be remitted by the
      Trustee to the previous Holder of such Class R Certificate that is a


                                      -97-


<PAGE>


      Permitted Transferee, except that in the event that the Trustee determines
      that the Holder of such Class R Certificate may be liable for any amount
      due under this Section or any other provisions of this Agreement, the
      Trustee may withhold a corresponding amount from such remittance as
      security for such claim. The terms and conditions of any sale under this
      clause (v) shall be determined in the sole discretion of the Trustee and
      it shall not be liable to any Person having an Ownership Interest in a
      Class R Certificate as a result of its exercise of such discretion.

            (vi) If any Person other than a Permitted Transferee acquires any
      Ownership Interest in a Class R Certificate in violation of the
      restrictions in this Section, then the Trustee will provide to the
      Internal Revenue Service, and to the persons specified in Sections
      860E(e)(3) and (6) of the Code, information needed to compute the tax
      imposed under Section 860E(e)(5) of the Code on transfers of residual
      interests to disqualified organizations. The Trustee shall be entitled to
      reasonable compensation for providing such information from the person to
      whom it is provided.

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

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

            All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.

            Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.

            If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and the Certificate Registrar) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.


                                      -98-


<PAGE>


            Section 5.04 Persons Deemed Owners.

            The Servicer, the Depositor, the Trustee, the Certificate Registrar,
any Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and 4.02 and for all other purposes whatsoever, and none of the Servicer, the
Trust, the Trustee nor any agent of any of them shall be affected by notice to
the contrary.

            Section 5.05 Appointment of Paying Agent.

            (a) The Paying Agent shall make distributions to Certificateholders
from the Distribution Account pursuant to Section 4.01 and 4.02 and shall report
the amounts of such distributions to the Trustee. The duties of the Paying Agent
may include the obligation (i) to withdraw funds from the Collection Account
pursuant to Section 3.05 and for the purpose of making the distributions
referred to above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies.

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

                                   ARTICLE VI

                   THE SELLER, THE SERVICER AND THE DEPOSITOR

            Section 6.01 Liability of the Seller, the Servicer and the
Depositor.

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

            Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Servicer or the Depositor.

            Any entity into which the Seller, the Servicer or the Depositor may
be merged or consolidated, or any entity resulting from any merger, conversion
or consolidation to which the Seller, the Servicer or the Depositor shall be a


                                      -99-


<PAGE>


party, or any corporation succeeding to the business of the Seller, the Servicer
or the Depositor, shall be the successor of the Seller, the Servicer or the
Depositor, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor
Servicer shall satisfy all the requirements of Section 7.02 with respect to the
qualifications of a successor Servicer.

            Section 6.03 Limitation on Liability of the Servicer and Others.

            Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Trust or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties of the Servicer or by reason of its reckless disregard
of its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Liquidation Proceeds (in excess of related liquidation expenses) realized with
respect to the related Mortgage Loan. The Servicer and any director or officer
or employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Servicer may undertake any such action
which it may deem necessary or desirable in respect of this Agreement, and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust and the Servicer shall be entitled to be
reimbursed therefor only pursuant to Section 3.04. The Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Servicer solely
in its capacity as Servicer hereunder and in no other capacities.

            Section 6.04 Servicer Not to Resign.

            Subject to the provisions of Section 7.01 and Section 6.02, the
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by the Servicer or


                                     -100-


<PAGE>


its subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Servicer has proposed a
successor servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; and (b) each Rating Agency
shall have delivered a letter to the Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the reduction or withdrawal of
the then current rating of the Regular Certificates or the ratings that are in
effect; provided, however, that no such resignation by the Servicer shall become
effective until such successor servicer or, in the case of (i) above, the
Trustee shall have assumed the Servicer's responsibilities and obligations
hereunder or the Trustee shall have designated a successor servicer in
accordance with Section 7.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 7.01
and 7.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee.

            Section 6.05 Delegation of Duties.

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

            The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to First Union, for the benefit of
certain lenders, and (ii) provided that no Servicer Event of Termination exists,
agree that upon delivery to the Trustee by First Union of a letter signed by the
Servicer whereunder the Servicer shall resign as Servicer under this Agreement,
the Trustee shall appoint First Union or its designee as successor Servicer,
provided that at the time of such appointment, First Union or such designee
meets the requirements of a successor Servicer pursuant to Section 7.02(a) and
agrees to be subject to the terms of this Agreement. If, pursuant to any
provision hereof, the duties of the Servicer are transferred to a successor, the
entire amount of the Servicing Fee and other compensation payable to the
Servicer pursuant hereto shall thereafter be payable to such successor.


                                     -101-


<PAGE>


                                  ARTICLE VII

                                     DEFAULT

            Section 7.01 Servicer Events of Termination.

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

            (i) (A) The failure by the Servicer to make any Advance; or (B) any
      other failure by the Servicer to deposit in the Collection Account or
      Distribution Account any deposit required to be made under the terms of
      this Agreement which continues unremedied for a period of one Business Day
      after the date upon which written notice of such failure shall have been
      given to the Servicer by the Trustee or by any Holder of a Regular
      Certificate evidencing at least 25% of the Voting Rights; or

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

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

            (iv) The Servicer shall voluntarily go into liquidation, consent to
      the appointment of a conservator or receiver or liquidator or similar
      person in any insolvency, readjustment of debt, marshalling of assets and
      liabilities or similar proceedings of or relating to the Servicer or of or
      relating to all or substantially all of its property; or a decree or order
      of a court or agency or supervisory authority having jurisdiction in the
      premises for the appointment of a conservator, receiver, liquidator or
      similar person in any insolvency, readjustment of debt, marshalling of
      assets and liabilities or similar proceedings, or for the winding-up or
      liquidation of its affairs, shall have been entered against the Servicer
      and such decree or order shall have remained in force undischarged,
      unbonded or unstayed for a period of 60 days; or the Servicer shall admit
      in writing its inability to pay its debts generally as they become due,
      file a petition to take advantage of any applicable insolvency or
      reorganization statute, make an assignment for the benefit of its
      creditors or voluntarily suspend payment of its obligations; or


                                     -102-


<PAGE>


            (v) The aggregate amount of cumulative Realized Losses incurred
      since the Cut-off Date through the last day of the related Collection
      Period divided by the initial Pool Balance exceeds the applicable
      percentages set forth below with respect to such Distribution Date:

              Distribution Date Occurring In       Percentage
      --------------------------------------------------------------------
              ______ 200  through ______ 200         ______%
              ______ 200  through ______ 200         ______%
              ______ 200  through ______ 200         ______%
              ______ 200  and thereafter             ______%

            (b) Then, and in each and every such case, so long as a Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance is not
made by 2:00 P.M., New York time, on the Business Day immediately following the
Servicer Remittance Date, the Trustee may terminate all of the rights and
obligations of the Servicer under this Agreement and the Trustee, or a successor
servicer appointed in accordance with Section 7.02, shall immediately make such
Advance and assume, pursuant to Section 7.02, the duties of a successor Servicer
and (y) in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee
shall, at the direction of the Holders of each Class of Regular Certificates
evidencing Percentage Interests aggregating not less than 51%, by notice then
given in writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer (and by the Trustee if such notice is given by the
Holders) of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and Related Documents or otherwise. The
Servicer agrees to cooperate with the Trustee (or the applicable successor
Servicer) in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the delivery to the Trustee
of all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement within ten Business Days subsequent to
such notice, the transfer within one Business Day subsequent to such notice to
the Trustee (or the applicable successor Servicer) for the administration by it
of all cash amounts that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, the Distribution Account, any REO
Account or any Escrow Account or that have been deposited by the Servicer in
such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the servicing to the successor Servicer and amending this Agreement
to reflect such succession as Servicer pursuant to this Section shall be paid by
the predecessor Servicer (or if the predecessor Servicer is the Trustee, the
initial Servicer) upon presentation of reasonable documentation of such costs
and expenses.


                                     -103-


<PAGE>


            Section 7.02 Trustee to Act; Appointment of Successor.

            (a) Within 90 days of the time the Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, the Trustee (or such other successor Servicer as is
approved in accordance with this Agreement) shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof arising on and after its succession.
As compensation therefor, the Trustee (or such other successor Servicer) shall
be entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor Servicer or (ii) if
the Trustee is legally unable so to act, the Trustee shall appoint or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer
having a net worth of not less than $50,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates or the ratings that are
in effect by the Rating Agencies as evidenced by a letter to such effect from
the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.18 (or such other compensation as the Trustee and such successor shall
agree, not to exceed the Servicing Fee). The successor servicer shall be
entitled to withdraw from the Collection Account all costs and expenses
associated with the transfer of the servicing to the successor servicer. The
appointment of a successor servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer to pay any deductible under an insurance policy pursuant
to Section 3.12 or to indemnify the Trustee pursuant to Section 3.26, nor shall
any successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.

            In the event of a Servicer Event of Termination, notwithstanding
anything to the contrary above, the Trustee and the Depositor hereby agree that
upon delivery to the Trustee by First Union of a letter signed by the Servicer
within ten Business Days of when notification of such event shall have been
provided to the Trustee, whereunder the Servicer shall resign as Servicer under
this Agreement, the Trustee shall appoint First Union or its designee as
successor Servicer (provided that at the time of such appointment First Union or
such designee meets the requirements of a successor Servicer set forth above)
and First Union agrees to be subject to the terms of this Agreement.

            (b) Any successor, including the Trustee, to the Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.


                                     -104-


<PAGE>


            Section 7.03 Waiver of Defaults.

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

            Section 7.04 Notification to Certificateholders.

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

            (b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Rating Agencies promptly after any such
occurrence.

            Section 7.05 Survivability of Servicer Liabilities.

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

                                  ARTICLE VIII

                                   THE TRUSTEE

            Section 8.01 Duties of Trustee.

            The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination has
occurred (which has not been cured) of which a Responsible Officer has actual
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.


                                     -105-


<PAGE>


            The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Seller or the Depositor hereunder. If any such
instrument is found not to conform in any material respect to the requirements
of this Agreement, the Trustee shall notify the Certificateholders of such
instrument in the event that the Trustee, after so requesting, does not receive
a satisfactorily corrected instrument.

            No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:

            (i) prior to the occurrence of a Servicer Event of Termination, and
      after the curing of all such Servicer Events of Termination which may have
      occurred, the duties and obligations of the Trustee shall be determined
      solely by the express provisions of this Agreement, the Trustee shall not
      be liable except for the performance of such duties and obligations as are
      specifically set forth in this Agreement, no implied covenants or
      obligations shall be read into this Agreement against the Trustee and, in
      the absence of bad faith on the part of the Trustee, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon any certificates or opinions
      furnished to the Trustee and conforming to the requirements of this
      Agreement;

            (ii) the Trustee shall not be personally liable for an error of
      judgment made in good faith by a Responsible Officer of the Trustee,
      unless it shall be proved that the Trustee was negligent in ascertaining
      or investigating the facts related thereto;

            (iii) the Trustee shall not be personally liable with respect to any
      action taken, suffered or omitted to be taken by it in good faith in
      accordance with the direction of the Majority Certificateholders relating
      to the time, method and place of conducting any proceeding for any remedy
      available to the Trustee, or exercising or omitting to exercise any trust
      or power conferred upon the Trustee, under this Agreement; and

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


                                     -106-


<PAGE>


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

            The Trustee shall have no duty (A) to see any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Fund other than
from funds available in the Distribution Account.

            Section 8.02 Certain Matters Affecting the Trustee.

            (a) Except as otherwise provided in Section 8.01:

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

            (ii) the Trustee may consult with counsel and any advice or Opinion
      of Counsel shall be full and complete authorization and protection in
      respect of any action taken or suffered or omitted by it hereunder in good
      faith and in accordance with such advice or Opinion of Counsel;

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

            (iv) the Trustee shall not be personally liable for any action
      taken, suffered or omitted by it in good faith and believed by it to be
      authorized or within the discretion or rights or powers conferred upon it
      by this Agreement;


                                     -107-


<PAGE>


            (v) prior to the occurrence of a Servicer Event of Termination and
      after the curing of all Servicer Events of Termination which may have
      occurred, the Trustee shall not be bound to make any investigation into
      the facts or matters stated in any resolution, certificate, statement,
      instrument, opinion, report, notice, request, consent, order, approval,
      bond or other paper or documents, unless requested in writing to do so by
      the Majority Certificateholder; provided, however, that if the payment
      within a reasonable time to the Trustee of the costs, expenses or
      liabilities likely to be incurred by it in the making of such
      investigation is, in the opinion of the Trustee, not reasonably assured to
      the Trustee by the security afforded to it by the terms of this Agreement,
      the Trustee may require reasonable indemnity against such cost, expense or
      liability as a condition to such proceeding. The reasonable expense of
      every such examination shall be paid by the Servicer or, if paid by the
      Trustee, shall be reimbursed by the Servicer upon demand. Nothing in this
      clause (v) shall derogate from the obligation of the Servicer to observe
      any applicable law prohibiting disclosure of information regarding the
      Mortgagors;

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

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

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

            Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.

            The recitals contained herein and in the Certificates (other than
the authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 7.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness


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of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); the compliance by the Depositor, the Seller or the Servicer with any
warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any non-compliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), taken in the name
of the Trustee; the failure of the Servicer to act or perform any duties
required of it as agent of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Servicer (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 7.02); provided, however, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement. The Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder.

            Section 8.04 Trustee May Own Certificates.

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

            Section 8.05 Seller to Pay Trustee Fees and Expenses.

            Prior to disbursing the Available Funds, the Trustee shall withdraw
from the Distribution Account on each Distribution Date and pay to itself the
Trustee Fee and, to the extent funds therein are at any time insufficient for
such purpose, the Seller shall pay such fees as reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Seller will pay or reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith or which is the responsibility of Certificateholders
or the Trustee hereunder. Notwithstanding any other provision of this Agreement,
including Section 2.03(a) and Section 2.04, to the contrary, the Seller
covenants and agrees to indemnify the Trustee and its officers, directors,
employees and agents from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses incurred in connection with any legal
action relating to this Agreement, the Certificates or incurred in connection
with the administration of the Trust, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence of the
Trustee in the performance of its duties hereunder or by reason of the Trustee's
reckless disregard of obligations and duties hereunder. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Trustee be


                                     -109-


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liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action. The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified, to the extent not paid by the Seller pursuant to
this Section, by the Trust Fund and held harmless against any loss, liability or
expense (not including expenses, disbursements and advances incurred or made by
the Trustee, in the ordinary course of the Trustee's performance in accordance
with the provisions of this Agreement) incurred by the Trustee or such party
arising out of or in connection with the acceptance or administration of its
duties under this Agreement, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance by
the Trustee of its duties under this Agreement or by reason of the reckless
disregard of the Trustee's obligations and duties under this Agreement. This
section shall survive termination of this Agreement or the resignation or
removal of any Trustee hereunder.

            Section 8.06 Eligibility Requirements for Trustee.

            The Trustee hereunder shall at all times be a Department of Housing
and Urban Development and Federal Housing Administration approved mortgagee, an
entity duly organized and validly existing under the laws of the United States
of America or any state thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and a minimum long-term debt rating of BBB by [Rating Agency] and
[Rating Agency], and subject to supervision or examination by federal or state
authority. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.06, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The principal
office of the Trustee (other than the initial Trustee) shall be in a state with
respect to which an Opinion of Counsel has been delivered to such Trustee at the
time such Trustee is appointed Trustee to the effect that the Trust will not be
a taxable entity under the laws of such state. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.06, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.

            Section 8.07 Resignation or Removal of Trustee.

            The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Servicer
and each Rating Agency. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

            If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a


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receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee. If the Depositor or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor Trustee.

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

            Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.

            Section 8.08 Successor Trustee.

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

            No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

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

            Section 8.09 Merger or Consolidation of Trustee.

            Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.


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            Section 8.10 Appointment of Co-Trustee or Separate Trustee.

            Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicer Event of Termination shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor Trustee under Section 8.06, and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required under
Section 8.08. The Servicer shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.

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

            (i) all rights, powers, duties and obligations conferred or imposed
      upon the Trustee shall be conferred or imposed upon and exercised or
      performed by the Trustee and such separate trustee or co-trustee jointly
      (it being understood that such separate trustee or co-trustee is not
      authorized to act separately without the Trustee joining in such act),
      except to the extent that under any law of any jurisdiction in which any
      particular act or acts are to be performed (whether as Trustee hereunder
      or as successor to the Servicer hereunder), the Trustee shall be
      incompetent or unqualified to perform such act or acts, in which event
      such rights, powers, duties and obligations (including the holding of
      title to the Trust or any portion thereof in any such jurisdiction) shall
      be exercised and performed singly by such separate trustee or co-trustee,
      but solely at the direction of the Trustee;

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

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

            Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified


                                     -112-


<PAGE>


in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Rating Agencies and the Servicer.

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

            Section 8.11 Limitation of Liability.

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

            Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.

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

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


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            Section 8.13 Suits for Enforcement.

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

            Section 8.14 Waiver of Bond Requirement.

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

            Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement.

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

            Section 8.16 Compliance with National Housing Act of 1934.

            In performing its duties hereunder with respect to FHA Loans, the
Trustee shall comply with all requirements of the National Housing Act of 1934,
as amended.

                                   ARTICLE IX

                     REMIC AND GRANTOR TRUST ADMINISTRATION

            Section 9.01 REMIC Administration.

            (a) The Trustee shall make or cause to be made REMIC elections for
each of REMIC 1, REMIC 2, REMIC 3 and REMIC 4 as set forth in the Preliminary
Statement on Forms 1066 or other appropriate federal tax or information return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.

            (b) The Closing Date is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 860G(a)(9) of the Code.

            (c) The Servicer shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or


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routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Servicer in fulfilling its duties hereunder. The Servicer
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account.

            (d) The Trustee shall prepare or cause to be prepared, sign and file
or cause to be filed, each REMIC's federal and state tax and information returns
as such REMIC's direct representative. The expenses of preparing and filing such
returns shall be borne by the Trustee.

            (e) The Holder of the Class R Certificates holding the largest
Percentage Interest shall be the "tax matters person" as defined in the REMIC
Provisions (the "Tax Matters Person") with respect to each REMIC, and the
Trustee is irrevocably designated as and shall act as attorney-in-fact and agent
for such Tax Matters Person for each REMIC. The Trustee, as agent for the Tax
Matters Person, shall perform, on behalf of each REMIC, all reporting and other
tax compliance duties that are the responsibility of such REMIC under the Code,
the REMIC Provisions, or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
if required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the Treasury
or other governmental authority such information as is necessary for the
application of any tax relating to the transfer of a Residual Certificate to any
disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.

            (f) The Trustee, the Servicer, and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Servicer, nor the Holder of any Residual Certificate shall take
any action or cause any REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of such REMIC as a
REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Servicer have received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such status or result in the imposition of such a tax. In
addition, prior to taking any action with respect to any REMIC or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Servicer, or their respective
designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to such REMIC, and no such Person
shall take any such action or cause such REMIC to take any such action as to
which the Trustee or the Servicer has advised it in writing that an Adverse
REMIC Event could occur.

            (g) Each Holder of a Residual Certificate shall pay when due its pro
rata share of any and all taxes imposed on any REMIC by federal or state
governmental authorities. To the extent that such REMIC taxes are not paid by
Residual Certificateholders, the Trustee shall pay any remaining REMIC taxes out


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of current or future amounts otherwise distributable to the Holder of the
Residual Certificate in each REMIC or, if no such amounts are available, out of
other amounts held in the Collection Account, and shall reduce amounts otherwise
payable to Holders of the REMIC Regular Interests or the Certificates, as the
case may be.


            (h) The Trustee, shall, for federal income tax purposes, maintain or
cause to be maintained books and records with respect to each REMIC on a
calendar year and on an accrual basis.

            (i) No additional contributions of assets shall be made to any
REMIC, except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Loans.

            (j) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.

            (k) On or before April 15 of each calendar year beginning in 2001,
the Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Servicer's compliance with the provisions of this
Section 9.01.

            (l) The Trustee shall treat the rights of the Offered Certificates
to receive Rate Payments as a right in interest rate cap contracts written by
the Class X and Class N Certificateholders, as beneficial owners of the Class
X/N Interest, in favor of the Holders of the Offered Certificates, and the
Trustee shall account for such as property held separate and apart from the
regular interests it holds in REMIC 1, REMIC 2, REMIC 3 and REMIC 4. This
provision is intended to satisfy the requirements of Treasury Regulations
Section 1.860G-2(i) for the treatment of property rights coupled with regular
interests to be separately respected and shall be interpreted consistent with
such regulation. On each Distribution Date, to the extent the Offered
Certificates receive interest (excluding LIBOR Carryover Amounts) in excess of
the Class A-1A REMIC Pass-Through Rate, Class A-1F REMIC Pass-Through Rate,
Class A-2F REMIC Pass-Through Rate, Class M-1 REMIC Pass-Through Rate, Class M-2
REMIC Pass-Through Rate and Class B REMIC Pass-Through Rate, as applicable, such
interest will be treated as distributed to the Class X/N Interest in respect of
interest on the REMIC 4 Components, pro rata, and then paid to the respective
Class of Offered Certificates pursuant to the related interest rate cap
agreement.

            (m) The Trustee shall treat the rights of the Class A-1F and Class
A-1A Certificateholders to receive payments in respect of LIBOR Carryover
Amounts as a right in interest rate cap contracts written by the Class X and
Class N Certificateholders, as beneficial owners of the Class X/N Interest, in
favor of the Class A-1F Certificateholders and the Class A-1A
Certificateholders, and the Trustee shall account for such as property held
separate and apart from the regular interests it holds in REMIC 1, REMIC 2,
REMIC 3 and REMIC 4. This provision is intended to satisfy the requirements of
Treasury Regulation Section 1.860G-2(i) for the treatment of property rights
coupled with regular interests to be separately respected and shall be
interpreted consistent with such regulation. On each Distribution Date, to the
extent the Class A-1F Certificates and the Class A-1A Certificates receive
interest in excess of the Class A-1F Net Funds Cap and the Class A-1A Net Funds
Cap, respectively, such interest will be treated as distributed to the Class X/N
Interest in respect of interest on the REMIC 4 Components, pro rata, and then
paid to the Class A-1F Certificates and the Class A-1A Certificates,
respectively, pursuant to the related interest rate cap agreement.


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<PAGE>


            (n) In the event that the beneficial ownership of the Class N
Certificates and the Class X Certificates is held by a single Person for federal
income tax purposes, such Person shall be treated as the beneficial owner of the
Class X/N Interest and the REMIC 4 Components represented thereby and the Class
N Reserve Fund. In the event that beneficial ownership of the Class N and the
Class X Certificates is held by two or more Persons for tax purposes, the
Trustee shall treat the Class N Certificateholders and the Class X
Certificateholders as partners in a partnership that owns the Class X/N Interest
and the Class N Reserve Fund for federal income tax purposes and shall not treat
the Class N and Class X Certificates as an interest in any REMIC created
hereunder. By acquiring the Class N Certificates and the Class X Certificates,
the respective Holders will agree to treat the Class N Certificates and the
Class X Certificates in the manner described in the preceding sentence for
federal income tax purposes in the event that the beneficial ownership of the
Class N Certificates and the Class X Certificates is separated. In such event,
(i) a separate capital account shall be established and maintained for each
Holder of a Class N or Class X Certificate in accordance with Treasury
Regulations Section 1.704-1(b)(2)(iv), which shall be credited with income or
gain and debited by any expenses or losses and distributions allocable to such
Certificates, (ii) the Class N Certificates shall be allocated income in an
amount equal to interest at the Pass-Through Rate thereon and any original issue
discount that would be reportable thereon if the Class N Certificate were a debt
instrument issued on the date ownership of the Class N and Class X Certificates
is separated, with a principal balance equal to its Notional Amount, (iii) the
Class X and Class N Certificates shall be allocated income with respect to all
prepayment premiums in accordance with the allocation of such amounts pursuant
to Section 4.02(c), to the extent not allocated pursuant to Section 9.01(n)(ii)
above, (iv) the Class X and Class N Certificates shall be allocated accruals
(under any reasonable method) of any "cap premiums" deemed received on the date
ownership of the Class X and Class N Certificates is separated in respect of the
obligation of the Class X/N Interest to pay Rate Payments and LIBOR Carryover
Amounts, and shall be allocated expense in respect of any actual payment of such
Rate Payments or LIBOR Carryover Amounts based on which one of such Classes
economically bears such expense, (v) the Class X Certificates shall be allocated
all remaining income and any expenses and Realized Losses with respect to the
Class X/N Interest and any income or loss with respect to the Class N Reserve
Fund, until the capital account of the Class X Certificates is reduced to zero,
and any remaining expenses or losses shall be allocated to the Class N
Certificates, (vi) neither the Class N Certificates nor the Class X Certificates
shall be responsible for restoring any deficit to its capital account, (vii)
upon termination of the Trust Fund pursuant to Article X, all amounts available
for distribution to Holders of the Class N and Class X Certificates shall be
distributed in accordance with their positive capital account balances, first to
the Class N Certificates until their Notional Amount and any accrued but unpaid
interest thereon are reduced to zero, and then to the Class X Certificates,
(allocating any remaining Class N Reserve Fund to the Class X Certificates) and
(viii) the Trustee shall maintain books and records with respect to the
partnership on a calendar year basis (unless a different taxable year shall be
required by the Code) and shall prepare or cause to be prepared, and cause the
Holder of the largest Percentage Interest of the Class X Certificates to sign
and file or cause to be filed all federal and state tax and information returns
for the partnership, and shall furnish or cause to be furnished Schedule K-1's
to the Holders of the Class N and Class X Certificates at the time required by
the Code. Unless otherwise directed by a majority of the Percentage Interests of
the Class X and Class N Certificates, the Trustee shall not make an election
under Section 954 of the Code. The Holder of the largest Percentage Interest of


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<PAGE>


the Class X Certificates, by acceptance of its Class X Certificate, agrees to
act as "tax matters partner" (within the meaning of Section 6231(a)(7) of the
Code and to sign and timely file all federal and state partnership tax and
information returns prepared by the Trustee pursuant to this Section 9.01(n).

            Section 9.02 Prohibited Transactions and Activities.

            Neither the Seller, the Depositor, the Servicer nor the Trustee
shall sell, dispose of, or substitute for any of the Mortgage Loans, except in a
disposition pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the
bankruptcy of the Trust Fund, (iii) the termination of any REMIC pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II of this
Agreement or (v) a repurchase of Mortgage Loans pursuant to Article II of this
Agreement, nor acquire any assets for any REMIC, nor sell or dispose of any
investments in the Distribution Account for gain, nor accept any contributions
to any REMIC after the Closing Date, unless it has received an Opinion of
Counsel (at the expense of the party causing such sale, disposition, or
substitution) that such disposition, acquisition, substitution, or acceptance
will not (a) affect adversely the status of such REMIC as a REMIC or of the
interests therein other than the Residual Certificates as the regular interests
therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this Agreement)
or (d) cause such REMIC to be subject to a tax on prohibited transactions or
prohibited contributions pursuant to the REMIC Provisions.

            Section 9.03 Indemnification with Respect to Certain Taxes and Loss
of REMIC Status.

            In the event that any REMIC formed hereunder fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Holder of the
related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Servicer shall not be liable for any such Losses attributable
to the action or inaction of the Trustee, the Depositor or the Holder of such
Residual Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which the
Servicer has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Residual Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Servicer have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Servicer of its duties
and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest
on the Certificates).


                                     -118-


<PAGE>


            Section 9.04 REO Property.

            (a) Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding any other provision of this
Agreement, the Servicer, acting on behalf of the Trustee hereunder, shall not
rent, lease, or otherwise earn income on behalf of any REMIC with respect to any
REO Property which might cause such REO Property to fail to qualify as
"foreclosure" property within the meaning of section 860G(a)(8) of the Code or
result in the receipt by any REMIC of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
the Servicer has advised, or has caused the applicable Servicer to advise, the
Trustee in writing to the effect that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC as a REMIC and any income
generated for such REMIC by the REO Property would not result in the imposition
of a tax upon such REMIC.

            (b) The Servicer shall make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property for
a longer period without adversely affecting its REMIC status or causing the
imposition of a Federal or state tax upon any REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to attempt to sell
the REO Property for its fair market value as determined in good faith by the
Servicer for such longer period as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer is
unable to sell the REO Property within 33 months after its acquisition by the
Trust Fund or if the Servicer has received such an extension, and the Servicer
is unable to sell the REO Property within the period ending three months before
the close of the Extended Period, the Servicer shall, before the end of the
applicable period, (i) purchase such REO Property at a price equal to the REO
Property's fair market value as determined in good faith by the Servicer or (ii)
auction the REO Property to the highest bidder (which may be the Servicer) in an
auction reasonably designed to produce a fair price prior to the expiration of
the applicable period.

            Section 9.05 Grantor Trust Administration.

            The parties intend that the portions of the Trust Fund consisting of
the REMIC 4 Regular Interests, the Class X/N Reserve Fund, the right of the
Offered Certificates to receive Rate Payments, the right of the Class A-1A and
Class A-1F Certificates to receive LIBOR Carryover Amounts and the obligation of
the Class X/N Interest to pay such Rate Payments and LIBOR Carryover Amounts
shall be treated as a "grantor trust" under the Code, and the provisions hereof
shall be interpreted consistently with this intention. In furtherance of such
intention, the Trustee shall furnish or cause to be furnished (i) to the Holders
of the Offered Certificates and (ii) to the Holder of the Class X and Class N
Certificates (if there is a single beneficial owner thereof) or to itself on
behalf of the partnership comprised of the Holders of the Class X and Class N
Certificates (if there are two or more beneficial owners thereof), and shall
file or cause to be filed with the Internal Revenue Service together with Form
1041 or such other form as may be applicable, their allocable shares of income
with respect to the property held by the Grantor Trust, at the time or times and
in the manner required by the Code.


                                     -119-


<PAGE>


                                   ARTICLE X

                                   TERMINATION

            Section 10.01 Termination.

            (a) The respective obligations and responsibilities of the Seller,
the Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Servicer to send certain
notices as hereinafter set forth) shall terminate upon notice to the Trustee
upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balance of each Class of Certificates has been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust,
and (iii) the optional purchase by the Seller of the Mortgage Loans in both Loan
Groups as described below. Notwithstanding the foregoing, in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof.

            The Seller may, at its option, terminate the Mortgage Loans in the
Trust Fund and retire the Offered Certificates on the next succeeding
Distribution Date upon which the aggregate current Pool Balance is less than 10%
of the aggregate Pool Balance of the Mortgage Loans as of the Cut-off Date by
purchasing all of the outstanding (i) Mortgage Loans in the Trust Fund at a
price equal to the sum of the outstanding Principal Balance of the Mortgage
Loans and except to the extent previously advanced by the Servicer, accrued and
unpaid interest thereon at the weighted average of the Mortgage Interest Rates
through the end of the Collection Period preceding the final Distribution Date
plus unreimbursed Servicing Advances, Advances and any unpaid Servicing Fees and
Special Servicing Fees allocable to such Mortgage Loans and (ii) REO Properties
in the Trust Fund at a price equal to their fair market value as determined in
good faith by the Servicer (the "Termination Price").

            In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account all amounts then on deposit in the Collection Account (less
amounts permitted to be withdrawn by the Servicer pursuant to Section 3.07),
which deposit shall be deemed to have occurred immediately following such
purchase.

            Any such purchase shall be accomplished by delivery to the Trustee
for deposit into the Distribution Account as part of Available Funds on the
Determination Date before such Distribution Date of the Termination Price.

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


                                     -120-


<PAGE>


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

            (c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Sections 4.01 and 4.02 for
such Distribution Date.

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

            Section 10.02 Additional Termination Requirements.

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

            (i) The Trustee shall designate a date within 90 days prior to the
      final Distribution Date as the date of adoption of plans of complete
      liquidation of each of REMIC 1, REMIC 2, REMIC 3 and REMIC 4 and shall
      specify such date in the final federal income tax return of each REMIC;


                                     -121-


<PAGE>


            (ii) After the date of adoption of such plans of complete
      liquidation and at or prior to the final Distribution Date, the Trustee
      shall sell all of the assets of the Trust to the Seller for cash; and

            (iii) At the time of the making of the final payment on the
      Certificates, the Trustee shall distribute or credit, or cause to be
      distributed or credited in the following order of priority (A) to the
      Holders of each of the Class A-1A, Class A-1F, Class A-2F, Class M-1,
      Class M-2 and Class B Certificates, the related Certificate Principal
      Balance, as applicable, plus one month's interest thereon at the
      applicable Pass-Through Rate, (B) to the Class N and Class X Certificates
      in respect of the Class X/N Interest, the amount of any remaining Monthly
      Excess Cash Flow Amounts not previously distributed thereon, (C) to the
      remaining REMIC Regular Interests the amounts allocable thereto pursuant
      to Section 4.10 and (D) to the Class R Certificateholders, all cash on
      hand after such payment (other than cash retained to meet claims) and the
      Trust shall terminate at such time.

            (b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

            Section 11.01 Amendment.

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

            In addition, this Agreement may be amended from time to time by
Seller, the Depositor, the Servicer and the Trustee, with the consent of the
Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the


                                     -122-


<PAGE>


Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding. Upon approval
of an amendment, a copy of such amendment shall be sent to the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel (at the expense of the
Person seeking such amendment) stating that the execution of such amendment is
authorized or permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.

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

            Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Servicer and each Rating Agency.

            It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment; instead it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

            The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this 11.01 Section that affects its rights, duties and
immunities under this Agreement or otherwise.

            Section 11.02 Recordation of Agreement; Counterparts.

            To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.


                                     -123-


<PAGE>


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

            Section 11.03 Limitation on Rights of Certificateholders.

            The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.

            Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

            No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding. It is understood
and intended, and expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

            Section 11.04 Governing Law; Jurisdiction.

            This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United


                                     -124-


<PAGE>


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

            Section 11.05 Notices.

            All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by first class mail, postage prepaid, or by express delivery service, to (a) in
the case of the Seller, _________________________________________, 335 Madison
Avenue, 19th Floor, New York, New York, Attention: Director - Mortgage Finance
(telecopy number (212) 850-7760), or such other address or telecopy number as
may hereafter be furnished to the Depositor and the Trustee in writing by the
Seller, (b) in the case of the Trustee,
_________________________________________, 450 West 33rd Street, 14th Floor, New
York, New York 10001, Attention: Capital Markets Fiduciary Services, C-BASS
Mortgage Loan Asset-Backed Certificates, Series 200 - , or such other address as
may hereafter be furnished to the Depositor, the Seller and the Servicer in
writing by the Trustee, (c) in the case of the Depositor, Asset Backed Funding
Corporation, 100 North Tryon Street, 11th Floor, Charlotte, N.C. 28255
Attention: C-BASS Mortgage Loan Asset-Backed Certificates, Series 200 - , or
such other address as may be furnished to the Seller, the Servicer and the
Trustee in writing by the Depositor, and (d) in the case of the Servicer,
_________________________________________, 5373 W. Alabama, Suite 600, Houston,
Texas 77056, Attention: _____________________, or such other address as may be
furnished to the Seller, the Depositor and the Trustee in writing by the
Servicer. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Notice of any Servicer Event of
Termination shall be given by telecopy and by certified mail. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.

            Section 11.06 Severability of Provisions.

            If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.


                                     -125-


<PAGE>


            Section 11.07 Article and Section References.

            All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

            Section 11.08 Notice to the Rating Agencies.

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

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

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

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

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

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

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

            (vii) In addition, the Servicer shall promptly furnish to each
      Rating Agency copies of the following:

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

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

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

            Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to [Rating
Agency] ___________________________, Attention: ________________; and [Rating
Agency] ___________________________, Attention: ________________.

            Section 11.09 Further Assurances.

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


                                     -126-


<PAGE>


            Section 11.10 Benefits of Agreement.

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

            Section 11.11 Acts of Certificateholders.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee, Seller and the
Servicer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust, if made in the manner provided in this Section 11.11.

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

            (c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.


                                     -127-


<PAGE>


            IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.

                                       ASSET BACKED FUNDING
                                         CORPORATION, as Depositor



                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:

                                       ______________________________, as Seller



                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:

                                       ____________________________, as Servicer



                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:



                                       _____________________________, as Trustee



                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:


<PAGE>


STATE OF                )
                        ) ss.:
COUNTY OF               )


            On the __th day of ___________, 2002 before me, a notary public in
and for said State, personally appeared Robert Perret known to me to be a Senior
Vice President of Asset Backed Funding Corporation, a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                  Notary Public


<PAGE>


STATE OF                )
                        ) ss.:
COUNTY OF               )


            On the __th day of ___________, 2002 before me, a notary public in
and for said State, personally appeared ______________ known to me to be a
_______________________ of _________________________________________, a limited
liability company that executed the within instrument, and also known to me to
be the person who executed it on behalf of said limited liability company, and
acknowledged to me that such limited liability company executed the within
instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                  Notary Public


<PAGE>







STATE OF                )
                        ) ss.:
COUNTY OF               )


            On the __th day of ___________, 2002 before me, a notary public in
and for said State, personally appeared _________________, known to me to be
______________________ of _________________________________________, a New York
banking corporation that executed the within instrument, and also known to me to
be the person who executed it on behalf of said association, and acknowledged to
me that such corporation executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                  Notary Public


<PAGE>


STATE OF                )
                        ) ss.:
COUNTY OF               )


            On the __th day of ___________, 2002 before me, a notary public in
and for said State, personally appeared _______________, known to me to be a of
_________________________________________, a _______________ limited
partnership, that executed the within instrument, and also known to me to be the
person who executed it on behalf of said limited partnership, and acknowledged
to me that such limited partnership executed the within instrument.

            IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                  Notary Public

<PAGE>
                                   EXHIBIT A-1

                      [FORM OF THE CLASS A-1A CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 200 - , CLASS A-1A

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

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

Series 200  -    , Class A-1A            Original  Class  Certificate  Principal
                                         Balance of the Class A-1A  Certificates
Pass-Through Rate:                       as of the Closing Date:  $

Date of Pooling and Servicing Agreement  Denomination: $
and Cut-off Date:           , 200
                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.                                      Closing Date:           , 200

CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
      BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Original Class Certificate Principal Balance of the Class A-1A
Certificates) in that certain beneficial ownership interest evidenced by all the
Class A-1A Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Funding Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
A-1A Certificates on such Distribution Date pursuant to the Agreement provided,
however, that if any Class A-1A Certificate becomes a Definitive Certificate (as
defined herein), the Record Date for such Certificate will be the last Business
Day of the month immediately preceding the month in which the related
Distribution Date occurs.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-1A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            The Class A-1A Pass-Through Rate on each Distribution Date will be a
rate per annum equal to the sum of one month LIBOR plus the Class A-1A
Certificate Margin. Interest will accrue on the Class A-1A Certificates during
each Interest Accrual Period at a rate equal to the lesser of (i) the Class A-1A
Pass-Through Rate and (ii) the Class A-1A Net Funds Cap for such Distribution
Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class A-1A Certificates.

            The Class A-1A Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>



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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class A-1A Certificates referred to in the
within-mentioned Agreement.



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>

                                   EXHIBIT A-2

                        [FORM OF CLASS A-1F CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 200 - , CLASS A-1F

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

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

Series 200  -    , Class A-1F            Original Class Certificate Principal
                                         Balance of the Class A-1F Certificates
Pass-Through Rate:                       as of the Closing Date:  $

Date of Pooling and Servicing Agreement  Denomination: $
and Cut-off Date:           , 200
                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.                                      Closing Date:           , 200

CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

            This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Original Class Certificate Principal Balance of the Class A-1F
Certificates) in that certain beneficial ownership interest evidenced by all the
Class A-1F Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Funding Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
A-1F Certificates on such Distribution Date pursuant to the Agreement, provided,
however, that if any Class A-1F Certificate becomes a Definitive Certificate (as
defined herein), the Record Date for such Certificate will be the last Business
Day of the month immediately preceding the month in which the related
Distribution Date occurs.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-1F Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            The Class A-1F Pass-Through Rate on each Distribution Date will be a
rate per annum equal to the sum of one month LIBOR plus the Class A-1F
Certificate Margin. Interest will accrue on the Class A-1F Certificates during
each Interest Accrual Period at a rate equal to the lesser of (i) the Class A-1F
Pass-Through Rate and (ii) the Class A-1F Net Funds Cap for such Distribution
Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class A-1F Certificates.

            The Class A-1F Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>



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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class A-1F Certificates referred to in the
within-mentioned Agreement.



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>

                                   EXHIBIT A-3

                        [FORM OF CLASS A-2F CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 200 - , CLASS A-2F

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

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

Series 200  -    , Class A-2F            Original Class Certificate Principal
                                         Balance of the Class A-2F Certificates
Pass-Through Rate:  8.300%               as of the Closing Date:  $

Date of Pooling and Servicing Agreement  Denomination: $
and Cut-off Date:           , 200
                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.                                      Closing Date:           , 200

CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

            This certifies that ___________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Original Class Certificate Principal Balance of the Class A-2F
Certificates) in that certain beneficial ownership interest evidenced by all the
Class A-2F Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Funding Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class A-2F Certificates on such Distribution Date pursuant to
the Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-2F Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            The Class A-2F Pass-Through Rate on each Distribution Date will be
the per annum rate specified above, plus on each Distribution Date following the
Optional Termination Date, 0.50% per annum. Interest will accrue on the Class
A-2F Certificates during each Interest Accrual Period at a rate equal to the
lesser of (i) the Class A-2F Pass-Through Rate and (ii) the applicable Class
A-2F Net Funds Cap for such Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class A-2F Certificates.

            The Class A-2F Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>



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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class A-2F Certificates referred to in the
within-mentioned Agreement.



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>

                                    EXHIBIT B

                          [FORM OF CLASS B CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                             SERIES 200 - , CLASS B

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

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
      AGREEMENT REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE POOLING AND SERVICING
      AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR
      TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER
      STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
      OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
      INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
      INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL
      PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE
      OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO
      CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT, THAT
      THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN "INSURANCE
      COMPANY GENERAL ACCOUNT." EACH PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY
      INTEREST THEREIN SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED
      BY THE REPRESENTATION LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS
      SUCH PERSON SHALL HAVE PROVIDED SUCH REPRESENTATION LETTER REFERRED TO IN
      THE PRECEDING SENTENCE TO THE TRUSTEE. THE POOLING AND SERVICING AGREEMENT
      PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
      TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
      PURPORTED TRANSFEREE.

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

Series 200  -    , Class B               Original Class Certificate Principal
                                         Balance of the Class B Certificates as
Pass-Through Rate:                       of the Closing Date:
                                         $
Date of Pooling and Servicing Agreement
and Cut-off Date:          , 200         Denomination: $

                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.
                                         Closing Date:           , 200
CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

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

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class B Certificates on such Distribution Date pursuant to the
Agreement.

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

            The Class B Pass-Through Rate on the Class B Certificates on each
Distribution Date will be the per annum rate specified above. Interest will
accrue on the Class B Certificates during each Interest Accrual Period at a rate
equal to the lesser of (i) the Class B Pass-Through Rate and (ii) the Pool Cap
for such Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class B Certificates.

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

            This certificate is subordinated in right of payment to the Class A,
Class M-1 and Class M-2 Certificates as described in the Pooling and Servicing
Agreement referred to herein.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>




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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>
                                   EXHIBIT C-1

                          [FORM OF CLASS R CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                             SERIES 200 - , CLASS R

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

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
      "RESIDUAL INTEREST" IN FOUR SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
      CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
      860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

      THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
      RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
      ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
      COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

      ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY
      BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT TO THE
      CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH TRANSFEREE IS NOT (A) THE
      UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
      GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
      INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN
      A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM
      THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
      SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
      ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
      PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING
      HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT
      OF A DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO
      IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE
      SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
      CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
      THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
      THIS CLASS R CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
      DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO
      LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
      A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
      TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A
      CLASS R CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO
      HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
      SECTION 5.02(D) OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
      ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM
      ACQUIRING BENEFICIAL OWNERSHIP OF THIS CLASS R CERTIFICATE.

Series 200  -    , Class R               Servicer:

Date of Pooling and Servicing Agreement  Trustee:
and Cut-off Date:           , 200
                                         Closing Date:           , 200
First Distribution Date:        , 200

No.

Percentage Interest:  100%


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
      BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that _______________________ is the registered owner
of a Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by all the Class R Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class R Certificates on such Distribution Date pursuant to the
Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class R Certificates the
aggregate Percentage Interest of which is in excess of a 66% Percentage Interest
of the Class R Certificates, or by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing the
Percentage Interest specified on the face hereof.

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

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

            No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee and the Certificate Registrar shall require, in
order to assure compliance with such laws, either (i) that the Certificateholder
desiring to effect the transfer and such Certificateholder's prospective
transferee each execute a representation letter in the form described by the
Agreement certifying to the Trustee and the Certificate Registrar the facts
surrounding the transfer, or (ii) that the Trustee and the Certificate Registrar
shall require an Opinion of Counsel satisfactory to them that such transfer may
be made without such registration or qualification, which Opinion of Counsel
shall not be an expense of the Depositor, the Trustee or the Certificate
Registrar, in their respective capacities as such. None of the Depositor, the
Certificate Registrar nor the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Registrar and any Servicer against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

            No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan, unless the
prospective transferee provides the Trustee with an opinion of counsel which
establish to the satisfaction of the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code. In the absence of
its having received the opinion of counsel contemplated by the preceding
sentence, the Trustee shall require the prospective transferee of any
Certificate to certify that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing such Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using funds in its general or separate accounts that may constitute
"plan assets").

            The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement and to any amendment of the Agreement deemed necessary by counsel
of the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
to cease to qualify as four separate REMICs or cause the imposition of a tax
upon the Trust.

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>





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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

Dated:           , 200


                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory




<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>
                                   EXHIBIT C-2

                         [FORM OF CLASS M-1 CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 200 - , CLASS M-1

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

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
      CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
      TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE POOLING AND SERVICING
      AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR
      TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER
      STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
      OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
      INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
      INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL
      PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE
      OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO
      CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT, THAT
      THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN "INSURANCE
      COMPANY GENERAL ACCOUNT." EACH PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY
      INTEREST THEREIN SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED
      BY THE REPRESENTATION LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS
      SUCH PERSON SHALL HAVE PROVIDED SUCH REPRESENTATION LETTER REFERRED TO IN
      THE PRECEDING SENTENCE TO THE TRUSTEE. THE POOLING AND SERVICING AGREEMENT
      PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
      TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
      PURPORTED TRANSFEREE.

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

Series 200  -    , Class M-1             Original Class Certificate Principal
                                         Balance of the Class M-1 Certificates
Pass-Through Rate:                       as of the Closing Date:  $

Date of Pooling and Servicing Agreement  Denomination: $
and Cut-off Date:          , 200
                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.                                      Closing Date:          , 200

CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

            This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Original Class Certificate Principal Balance of the Class M-1
Certificates) in that certain beneficial ownership interest evidenced by all the
Class M-1 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Funding Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class M-1 Certificates on such Distribution Date pursuant to
the Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            The Class M-1 Pass-Through Rate on the Class M-1 Certificates on
each Distribution Date will be the per annum rate specified above. Interest will
accrue on the Class M-1 Certificates during each Interest Accrual Period at a
rate equal to the lesser of (i) the Class M-1 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class M-1 Certificates.

            The Class M-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

            This certificate is subordinated in right of payment to the Class A
Certificates as described in the Pooling and Servicing Agreement referred to
herein.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>




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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>
                                   EXHIBIT C-3

                         [FORM OF CLASS M-2 CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 200 - , CLASS M-2

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

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
      CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
      REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE POOLING AND SERVICING
      AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR
      TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER
      STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
      OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
      INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
      INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL
      PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE
      OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO
      CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT, THAT
      THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN "INSURANCE
      COMPANY GENERAL ACCOUNT." EACH PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY
      INTEREST THEREIN SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED
      BY THE REPRESENTATION LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS
      SUCH PERSON SHALL HAVE PROVIDED SUCH REPRESENTATION LETTER REFERRED TO IN
      THE PRECEDING SENTENCE TO THE TRUSTEE. THE POOLING AND SERVICING AGREEMENT
      PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
      TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
      PURPORTED TRANSFEREE.

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

Series 200  -    , Class M-2             Original Class Certificate Principal
                                         Balance of the Class M-2 Certificates
Pass-Through Rate:                       as of the Closing Date:  $

Date of Pooling and Servicing Agreement  Denomination: $
and Cut-off Date:          , 200
                                         Servicer:
First Distribution Date:          , 200
                                         Trustee:

No.                                      Closing Date:           , 200

CUSIP:

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


<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

            This certifies that ___________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Original Class Certificate Principal Balance of the Class M-2
Certificates) in that certain beneficial ownership interest evidenced by all the
Class M-2 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Funding Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class M-2 Certificates on such Distribution Date pursuant to
the Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

            The Class M-2 Pass-Through Rate on the Class M-2 Certificates on
each Distribution Date will be the per annum rate specified above. Interest will
accrue on the Class M-2 Certificates during each Interest Accrual Period at a
rate equal to the lesser of (i) the Class M-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class M-2 Certificates.

            The Class M-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

            This certificate is subordinated in right of payment to the Class A
and Class M-1 Certificates as described in the Pooling and Servicing Agreement
referred to herein.

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>




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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

            This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.



                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory


Date of authentication:           , 200


<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>
                                   EXHIBIT C-4

                         [FORM OF CLASS X CERTIFICATES]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                             SERIES 200 - , CLASS X

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
      OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
      MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
      SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
      (THE "CODE") AND IN CERTAIN OTHER PROPERTY.

      THIS CLASS X CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS X CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS X CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
      RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
      ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
      COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.


Series 200  -    , Class X               Servicer:

Date of Pooling and Servicing Agreement  Trustee:
and Cut-off Date:           , 200
                                         Closing Date:           , 200
First Distribution Date:         , 200

No.

Percentage Interest:  100%



<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

            THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.

            This certifies that __________________________________ is the
registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class X Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Asset Backed Funding Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class X Certificates on such Distribution Date pursuant to the
Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class X Certificates the
aggregate initial Certificate Principal Balance of which is in excess of a 66%
Percentage Interest of the Class X Certificates, or by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Trustee may
deduct a reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing the
Percentage Interest specified on the face hereof.

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

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

            No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee and the Certificate Registrar shall require, in
order to assure compliance with such laws, either (i) that the Certificateholder
desiring to effect the transfer and such Certificateholder's prospective
transferee each execute a representation letter in the form described by the
Agreement certifying to the Trustee and the Certificate Registrar the facts
surrounding the transfer, or (ii) that the Trustee and the Certificate Registrar
shall require an Opinion of Counsel satisfactory to them that such transfer may
be made without such registration or qualification, which Opinion of Counsel
shall not be an expense of the Depositor, the Trustee or the Certificate
Registrar, in their respective capacities as such. None of the Depositor, the
Certificate Registrar nor the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Registrar and the Servicer against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

            Except as otherwise set forth in the next succeeding paragraph, no
transfer of a Certificate or any interest therein may be made to employee
benefit plans and certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan, unless the
prospective transferee provides the Trustee with an opinion of counsel which
establish to the satisfaction of the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code. In the absence of
its having received the opinion of counsel contemplated by the preceding
sentence, the Trustee shall require the prospective transferee of any
Certificate to certify that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing such Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using funds in its general or separate accounts that may constitute
"plan assets").

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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




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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

Dated:                   , 200

                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory

<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.


<PAGE>
                                   EXHIBIT C-5

                          [FORM OF CLASS N CERTIFICATE]

                     MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                             SERIES 200 - , CLASS N

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
      OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
      MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
      SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
      (THE "CODE") AND IN CERTAIN OTHER PROPERTY.

      THIS CLASS N CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS N CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

      THIS CLASS N CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
      SERVICING AGREEMENT REFERRED TO HEREIN.

      NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
      RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
      ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
      COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

Series 200  -    , Class N               Original Class N Notional Amount as of
                                         the Closing Date:
Date of Pooling and Servicing Agreement
and Cut-off Date:           , 200        Denomination: $________ (Notional
                                         Amount)
First Distribution Date:        , 200
                                         Servicer:

No.                                      Trustee:

                                         Closing Date:           , 200



<PAGE>



                        ASSET BACKED FUNDING CERTIFICATE

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                        ASSET BACKED FUNDING CORPORATION

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
      BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
      AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

            This certifies that __________________________________ is the
registered owner of a Percentage Interest (obtained by dividing the denomination
of this Certificate by the Original Class N Notional Amount) in that certain
beneficial ownership interest evidenced by all the Class N Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Asset Backed Funding Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

            Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class N Certificates on such Distribution Date pursuant to the
Agreement.

            All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class N Certificates the
aggregate initial Certificate Principal Balance of which is in excess of a 66%
Percentage Interest of the Class N Certificates, or by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Trustee may
deduct a reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

            This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset-Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing the
Percentage Interest specified on the face hereof.

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

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

            As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.

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

            No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Trustee and the Certificate Registrar shall require, in
order to assure compliance with such laws, either (i) that the Certificateholder
desiring to effect the transfer and such Certificateholder's prospective
transferee each execute a representation letter in the form described by the
Agreement certifying to the Trustee and the Certificate Registrar the facts
surrounding the transfer, or (ii) that the Trustee and the Certificate Registrar
shall require an Opinion of Counsel satisfactory to them that such transfer may
be made without such registration or qualification, which Opinion of Counsel
shall not be an expense of the Depositor, the Trustee or the Certificate
Registrar, in their respective capacities as such. None of the Depositor, the
Certificate Registrar nor the Trustee is obligated to register or qualify the
Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Registrar and the Servicer against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

            Except as otherwise set forth in the next succeeding paragraph, no
transfer of a Certificate or any interest therein may be made to employee
benefit plans and certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan, unless the
prospective transferee provides the Trustee with an opinion of counsel which
establish to the satisfaction of the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code. In the absence of
its having received the opinion of counsel contemplated by the preceding
sentence, the Trustee shall require the prospective transferee of any
Certificate to certify that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing such Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using funds in its general or separate accounts that may constitute
"plan assets").

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

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

            The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

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

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


<PAGE>




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

Dated:           , 200


                                       ________________________, as Trustee



                                       By:_________________________________
                                          Authorized Officer





                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

Dated:           , 200

                                       ________________________, as Certificate
                                         Registrar

                                       By:____________________________________
                                          Authorized Signatory




<PAGE>



                                  ABBREVIATIONS

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

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

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



                                   ASSIGNMENT
                                   ----------

            FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto  ______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

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

________________________________________________________________________________

Dated:



                                        ________________________________________
                                        Signature by or on behalf of assignor



                                        ________________________________________
                                        Signature Guaranteed


<PAGE>




                            DISTRIBUTION INSTRUCTIONS

            The assignee should include the following for purposes of
distribution:

            Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ________________________________________, as its
agent.

<PAGE>
                                    EXHIBIT D

                             MORTGAGE LOAN SCHEDULE


<PAGE>
                                    EXHIBIT E

                    FORM OF REQUEST FOR RELEASE OF DOCUMENTS


To:   __________________________
      __________________________
      __________________________
      __________________________
      Attn:  Capital Markets Fiduciary Services,
      Asset Backed Funding Corporation Series 200  -


      Re:   Pooling and Servicing Agreement dated as of , 200 among Asset Backed
            Funding Corporation, as depositor, _________________________________
            ________, as seller, _________________________________________, as
            servicer, and ______________________________________, as trustee.
            --------------------------------------------------------------------

            All capitalized terms used herein shall have the means ascribed to
them in the Pooling and Servicing Agreement (the "Agreement") referenced above.

            In connection with the administration of the Mortgage Loans held by
you as Trustee pursuant to the Agreement, we request the release, and hereby
acknowledge receipt, of the Trustee's Mortgage File for the Mortgage Loan
described below, for the reason indicated.

Mortgage Loan Number:
--------------------

Mortgagor Name, Address & Zip Code:
----------------------------------

Reason for Requesting Documents (check one):
--------------------------------------------

_____ 1.    Mortgage Paid in Full

_____ 2.    Foreclosure

_____ 3.    Substitution

_____ 4.    Other Liquidation (Repurchases, etc.)
<PAGE>

_____ 5.    Nonliquidation    Reason: __________________

                              By: ______________________
                                  (authorized signer)

                              Issuer: __________________

                              Address: _________________

                              __________________________

                              Date: ____________________

Custodian
---------

Bank One Trust Company, NA

            Please acknowledge the execution of the above request by your
signature and date below:


_______________________________     ________________________________
      Signature                     Date

Documents returned to Custodian:


_______________________________     ________________________________
      Custodian                     Date


<PAGE>
                                   EXHIBIT F-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                                        Date

Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255


       Re:  Pooling and Servicing Agreement (the "Pooling and Servicing
            Agreement"), dated as of        , 200  among Asset Backed Funding
            Corporation, as depositor, _____________________________________,
            as seller, ______________________________, as servicer, _________
            _________________________, as trustee with respect to Mortgage
            Loan Asset-Backed Certificates, Series 200 - .
            -----------------------------------------------------------------

Ladies and Gentlemen:

            In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that it received
confirmation from the Custodian that the Custodian has received the documents
listed in Section 2.01 of the Pooling and Servicing Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Schedule A, to the Pooling and
Servicing Agreement, subject to any exceptions noted on Schedule I hereto.

            Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Pooling and
Servicing Agreement. This Certificate is subject in all respects to the terms of
Section 2.02 of the Pooling and Servicing Agreement and the Pooling and
Servicing Agreement sections cross-referenced therein.



                                       ----------------------------------
                                          as Trustee

                                       By:
                                          -------------------------------
                                          Name:
                                          Title:


<PAGE>

                                   EXHIBIT F-2

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                                          [Date]


Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255


       Re:  Pooling and Servicing Agreement (the "Pooling and Servicing
            Agreement"), dated as of        , 200  among Asset Backed Funding
            Corporation, as depositor, _____________________________________,
            as seller, ______________________________, as servicer, _________
            _________________________, as trustee with respect to Mortgage
            Loan Asset-Backed Certificates, Series 200 - .
            -----------------------------------------------------------------


Ladies and Gentlemen:

            In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or listed on Schedule I hereto) it received confirmation from the
Custodian that the Custodian has received the applicable documents listed in
Section 2.01 of the Pooling and Servicing Agreement.

            The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed on
Schedule I hereto, it has reviewed the documents listed above and has determined
that each such document appears to be complete and, based on an examination of
such documents, the information set forth in the Mortgage Loan Schedule is
correct.

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.

                                       ------------------------------------,
                                          as Trustee

                                       By:
                                          ----------------------------------
                                          Name:
                                          Title:


<PAGE>

                                   EXHIBIT F-3

                        FORM OF RECEIPT OF MORTGAGE NOTE


Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255

      Re:   Mortgage Loan Asset-Backed Funding Certificates,
            Series 200  -
            ------------------------------------------------


Ladies and Gentlemen:

            Pursuant to Section 2.01 of the Pooling and Servicing Agreement,
dated as of , 200 , among Asset Backed Funding Corporation, as depositor,
_________________________________________, as seller, _________________________,
as servicer, and _____________________________, as trustee (the "Trustee"), we
hereby acknowledge the receipt of the original Mortgage Note (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.


                                       -----------------------------------,
                                          as Trustee

                                       By:
                                          ---------------------------------
                                          Name:
                                          Title:


<PAGE>

                                    EXHIBIT G

                        MORTGAGE LOAN PURCHASE AGREEMENT

                                  [SEE ITEM #5]


<PAGE>
                                    EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

            Personally appeared before me the undersigned authority to
administer oaths, ______________________ who first being duly sworn deposes and
says: Deponent is ______________________ of ______________________________,
successor by merger to _________________________________________ ("Seller") and
who has personal knowledge of the facts set out in this affidavit.

            On ___________________, _________________________ did execute and
deliver a promissory note in the principal amount of $__________.

            That said note has been misplaced or lost through causes unknown and
is presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.

            Seller executes this Affidavit for the purpose of inducing _________
________________________, as Trustee on behalf of Mortgage Loan Asset-Backed
Certificates, Series 200 - , to accept the transfer of the above described loan
from Seller.

            Seller agrees to indemnify and hold harmless ________________, Asset
Backed Funding Corporation, Banc of America Securities LLC, ____________________
_________________________ and ___________________________________ for any losses
incurred by such parties resulting from the above described promissory note has
been lost or misplaced.


                                        By:___________________________________
                                           ___________________________________




STATE OF                )
                        )  SS:
COUNTY OF               )


            On this ____ day of _______ 20__, before me, a Notary Public, in and
for said County and State, appeared ________________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.

            Witness my hand and Notarial Seal this ____ day of _______ 20__.
_________________________________________
_________________________________________

My commission expires ___________________.
<PAGE>
                                    EXHIBIT I

                          FORM OF ERISA REPRESENTATION


Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255

      Re:   Mortgage Loan Asset-Backed Funding Certificates,
            Series 200  -
            ------------------------------------------------


Ladies and Gentlemen:

            1. The undersigned is the ______________________ of (the
"Transferee") a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.

            2. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Asset Backed Funding
Corporation, as depositor (the "Depositor"), _________________________________,
as seller, ________________________, as servicer and ________________________,
as Trustee (the "Trustee"), no transfer of the ERISA-Restricted Certificates
shall be permitted to be made to any person unless the Depositor and Trustee
have received a certificate from such transferee in the form hereof.

            3. [With respect to the Class M-1, Class M-2 and Class B
Certificates only] The Transferee either (x) (1) is not an employee benefit plan
subject to Section 406 or Section 407 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), the Trustee of any such plan or a person
acting on behalf of any such plan nor a person using the assets of any such plan
or (2) if the Transferee is an insurance company, such Transferee is purchasing
such Certificates with funds contained in an "Insurance Company General Account"
(as such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory
to the Trustee and the Depositor, and upon which the Trustee and the Depositor
shall be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Transferee will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee or the
Depositor to any obligation in addition to those undertaken by such entities in
the Pooling and Servicing Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Depositor.

            3. [With respect to the Class X and Class N Certificates only] The
Transferee either (x) is not an employee benefit plan subject to Section 406 or
Section 407 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Trustee of any such plan or a person acting on behalf of any such
plan nor a person using the assets of any such plan or (y) shall deliver to the
Trustee and the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee and
the Depositor shall be entitled to rely, to the effect that the purchase or
holding of such Certificate by the Transferee will not result in the assets of
the Trust Fund being deemed to be plan assets and subject to the prohibited
transaction provisions of ERISA or the Code and will not subject the Trustee or
the Depositor to any obligation in addition to those undertaken by such entities
in the Pooling and Servicing Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Depositor.

            Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement.


<PAGE>



            IN WITNESS WHEREOF, the Transferee has executed this certificate.

                                       --------------------------------------
                                       [Transferee]


                                       By:
                                          -----------------------------------
                                          Name:
                                          Title:


<PAGE>

                                    EXHIBIT J

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                                                          [DATE]

Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255

________________________________
________________________________
________________________________
________________________________


      Re:   Mortgage Loan Asset-Backed Certificates, Series 200  -
            ----------------------------------------------------------


Ladies and Gentlemen:

            In connection with our acquisition of the               Mortgage
Loan Asset-Backed Certificates, Series 200 -     (the "Certificates"), we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                       Very truly yours,


                                       [NAME OF TRANSFEREE]


                                       By:
                                          -----------------------------------
                                          Authorized Officer


<PAGE>



                       FORM OF RULE 144A INVESTMENT LETTER
                                     [DATE]


Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255

________________________________
________________________________
________________________________
________________________________


      Re:   Mortgage Loan Asset-Backed Certificates, Series 200  -
            ----------------------------------------------------------


Ladies and Gentlemen:

            In connection with our acquisition of the              Mortgage Loan
Asset-Backed Certificates, Series 200 -           (the "Certificates"), we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

                                       Very truly yours,


                                       [NAME OF TRANSFEREE]


                                       By:
                                          -----------------------------------
                                          Authorized Officer


<PAGE>

                                                            ANNEX 1 TO EXHIBIT J
                                                            --------------------


            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]


            The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

            i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

            ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________[1] in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

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

[1]  Buyer must own and/or invest on a discretionary basis at least $__________
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $__________ in securities.


            ___ Corporation, etc. The Buyer is a corporation (other than a bank,
            savings and loan association or similar institution), Massachusetts
            or similar business trust, partnership, or charitable organization
            described in Section 501(c)(3) of the Internal Revenue Code of 1986,
            as amended.

            ___ Bank. The Buyer (a) is a national bank or banking institution
            organized under the laws of any State, territory or the District of
            Columbia, the business of which is substantially confined to banking
            and is supervised by the State or territorial banking commission or
            similar official or is a foreign bank or equivalent institution, and
            (b) has an audited net worth of at least $25,000,000 as demonstrated
            in its latest annual financial statements, a copy of which is
            attached hereto.

            ___ Savings and Loan. The Buyer (a) is a savings and loan
            association, building and loan association, cooperative bank,
            homestead association or similar institution, which is supervised
            and examined by a State or Federal authority having supervision over
            any such institutions or is a foreign savings and loan association
            or equivalent institution and (b) has an audited net worth of at
            least $25,000,000 as demonstrated in its latest annual financial
            statements, a copy of which is attached hereto.

            ___   Broker-dealer.  The Buyer is a dealer registered pursuant to
            Section 15 of the Securities Exchange Act of 1934.

            ___ Insurance Company. The Buyer is an insurance company whose
            primary and predominant business activity is the writing of
            insurance or the reinsuring of risks underwritten by insurance
            companies and which is subject to supervision by the insurance
            commissioner or a similar official or agency of a State, territory
            or the District of Columbia.

            ___ State or Local Plan. The Buyer is a plan established and
            maintained by a State, its political subdivisions, or any agency or
            instrumentality of the State or its political subdivisions, for the
            benefit of its employees.

            ___ ERISA Plan. The Buyer is an employee benefit plan within the
            meaning of Title I of the Employee Retirement Income Security Act of
            1974.

            ___   Investment Advisor.  The Buyer is an investment advisor
            registered under the Investment Advisors Act of 1940.

            ___ Small Business Investment Company. Buyer is a small business
            investment company licensed by the U.S. Small Business
            Administration under Section 301(c) or (d) of the Small Business
            Investment Act of 1958.

            ___   Business Development Company.  Buyer is a business development
            company as defined in Section  202(a)(22) of the Investment Advisors
            Act of 1940.

            iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.

            iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

            v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

            vi. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.


                                       ---------------------------------------
                                       Print Name of Buyer

                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:


                                       Date:
                                            ----------------------------------


<PAGE>

                                                            ANNEX 2 TO EXHIBIT J
                                                            --------------------


          QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
          --------------------------------------------------------

           [For Transferees That are Registered Investment Companies]


            The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

            1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

            2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

            ___ The Buyer owned $______ in securities (other than the excluded
            securities referred to below) as of the end of the Buyer's most
            recent fiscal year (such amount being calculated in accordance with
            Rule 144A).

            ___ The Buyer is part of a Family of Investment Companies which
            owned in the aggregate $_____ in securities (other than the excluded
            securities referred to below) as of the end of the Buyer's most
            recent fiscal year (such amount being calculated in accordance with
            Rule 144A).

            3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

            4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

            5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

            6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.

                                        --------------------------------------
                                        Print Name of Buyer or Adviser

                                        By:
                                           -----------------------------------
                                           Name:
                                           Title:


                                        IF AN ADVISER:



                                        --------------------------------------
                                        Print Name of Buyer

                                        Date:
                                             ---------------------------------



<PAGE>
1
                                    EXHIBIT K

                 FORM OF CLASS R CERTIFICATE TRANSFER AFFIDAVIT

              MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 200 -



STATE OF                )
                        ) ss.:
COUNTY OF               )


            The undersigned, being first duly sworn, deposes and says as
follows:

            1. The undersigned is an officer of ______________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling and Servicing Agreement, (the "Agreement"),
relating to the above-referenced Certificates, among Asset Backed Funding
Corporation, as depositor, _________________________________________, as seller,
________________________, as servicer, and ________________________, as Trustee
(the "Trustee"). Capitalized terms used, but not defined herein shall have the
meanings ascribed to such terms in the Agreement. The Transferee has authorized
the undersigned to make this affidavit on behalf of the Transferee.

            2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

            3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.

            4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

            5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

            6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth in this Exhibit K to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.

            7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.

            8.  The Transferee's taxpayer identification number is __________.

            9.  The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

            10.  The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.

            11.  The Transferee is not an employee benefit plan that is subject
to ERISA or a plan that is subject to Section 4975 of the Code, nor are we
acting on behalf of such a plan.


<PAGE>



            IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of , 20 .

                                       [NAME OF TRANSFEREE]


                                       By:
                                          -------------------------------------
                                          Name:
                                          Title:

[Corporate Seal]

ATTEST:




[Assistant] Secretary


            Personally appeared before me the above-named _____________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.

            Subscribed and sworn before me this _____ day of ____________, 20  .




                                        --------------------------------------
                                        NOTARY PUBLIC

                                        My Commission expires the _____ day
                                        of ____________, 20__.


<PAGE>

                                    EXHIBIT L

                         FORM OF TRANSFEROR CERTIFICATE

                                                                          [DATE]

Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, N.C. 28255

        Re:   Mortgage Loan Asset-Backed Certificates, Series 200  -
              ----------------------------------------------------------

Ladies and Gentlemen:

            In connection with our disposition of the           Mortgage Loan
Asset-Backed Certificates, Series 200 -       (the "Certificates"), we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.

                                       Very truly yours,


                                       [_____________________]


                                       By: ______________________________


<PAGE>


                                    EXHIBIT M

                                   [RESERVED]


<PAGE>
                                    EXHIBIT N

                              DEPOSITORY AGREEMENT


<PAGE>

                                    EXHIBIT O

                   FORM OF SERVICER REQUEST FOR REIMBURSEMENT


<PAGE>

                                    EXHIBIT P

                    MONTHLY INFORMATION DELIVERED BY SERVICER

1.    With respect to the Mortgage Pool and each Loan Group, the number and
      Principal Balances of all Mortgage Loans which were the subject of
      Principal Prepayments during the related Due Period.

2.    With respect to the Mortgage Pool and each Loan Group, the amount of all
      curtailments which were received during the related Due Period.

3.    With respect to the Mortgage Pool and each Loan Group, the aggregate
      amount of principal portion of all Monthly Payments received during the
      related Due Period.

4.    With respect to the Mortgage Pool and each Loan Group, the amount of
      interest received on the Mortgage Loans during the related Due Period.

5.    With respect to the Mortgage Pool and each Loan Group, the aggregate
      amount of the Advances made and recovered with respect to such
      Distribution Date.

6.    With respect to the Mortgage Pool and each Loan Group, the delinquency and
      foreclosure information and the amount of Mortgage Loan Losses during the
      related Due Period.

7.    With respect to the Mortgage Pool and each Loan Group, the weighted
      average maturity, the weighted average Mortgage Interest Rate and the
      weighted average Net Mortgage Interest Rate as of the last day of the Due
      Period preceding of the related Accrual Period.

8.    The Servicing Fees paid and Servicing Fees accrued during the related Due
      Period.

9.    The amount of all payments or reimbursements to the Servicer paid or to be
      paid since the prior Distribution Date (or in the case of the first
      Distribution Date, since the Closing Date).

10.   The Pool Balance and aggregate Principal Balance for each Loan Group.

11.   The PMI Fees paid and PMI Fees accrued during the related Due Period..

12.   With respect to the Mortgage Pool and each Loan Group, the number of
      Mortgage Loans outstanding at the beginning and at the end of the related
      Due Period.

13.   The aggregate interest accrued on the Mortgage Loans at their respective
      Mortgage Interest Rates for the related Due Period.

14.   The amount deposited in the Collection Account which may not be withdrawn
      therefrom pursuant to an Order of a United States Bankruptcy Court of
      competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
      Bankruptcy Code.

15.   The aggregate Realized Losses since the Cut-off Date as of the end of the
      related Due Period.

16.   The LIBOR Carryover Amount for the Class A-1A and Class A-1F Certificates,
      if any, with respect to such Distribution Date.

17.   The Overcollateralized Amount, the Targeted Overcollateralization Amount
      and any Overcollateralization Deficiency, in each case after giving effect
      to distributions on such Distribution Date.
<PAGE>
                                    EXHIBIT Q


                              Officer's Certificate
          C-BASS Mortgage Loan Asset-Backed Certificates, Series 200 -

[Date]
Via Facsimile

_______________________________, Trustee
450 W. 33rd Street, 14th Floor
New York, NY  10001

      Pre-Payments

Dear Sir or Madam:

            __________________ hereby certifies that he/she is an officer of the
Servicer, holding the office set forth beneath his/her name and hereby further
certifies as follows:

            With respect to the Mortgage Loans, as the term is defined in the
Pooling and Servicing Agreement, set forth in the attached schedule:

            (1) A Principal Prepayment in full was received during the related
Collection Period;

            (2) Any prepayment penalty due under the terms of the Mortgage Note
with respect to such Principal Prepayment in full was received from the
mortgagor and delivered to the Trustee for deposit in the Distribution Account;
____ Yes ____ No

            (3) As to each Mortgage Loan so noted on the attached schedule, all
or part of the prepayment penalty required in connection with the Principal
Prepayment in full was waived based upon (Circle one): (i) the Servicer's
determination that such waiver would maximize recovery of Liquidation Proceeds
for such Mortgage Loan, taking into account the value of such prepayment
penalty, or (ii)(A) the enforceability thereof be limited (1) by bankruptcy
insolvency, moratorium, receivership, or other similar law relating to
creditors' rights generally or (2) due to acceleration in connection with a
foreclosure or other involuntary payment, or (B) the enforceability is otherwise
limited or prohibited by applicable law;

            (4) We certify that all amounts due in connection with the waiver of
a prepayment penalty inconsistent with number 3 above which are required to be
delivered to the Trustee for deposit in the Distribution Account pursuant to
Section 3.01 of the Pooling and Servicing Agreement, have been or will be so
delivered.

By [Servicer]
(Name)
Its:  (Title)


<PAGE>
                                    EXHIBIT R

               FORM OF NOTICE OF PREPAYMENT PREMIUM INCONSISTENCY


                                                           ______________, 20__



___________________________________
335 Madison Avenue, 19th Floor
New York, New York  10017

                  Re:   Pooling and Servicing Agreement (the "Agreement")
                        dated as of _____, 200_, among Asset Backed Funding
                        Corporation, ________________________ and
                        , ________________________ and
                        ________________________ -                Mortgage Loan
                        Asset Backed Certificates, Series 200  -



Ladies and Gentlemen:

            Pursuant to Section 3.01 of the Agreement, we have determined the
following inconsistency between the amount of the Prepayment Premium remitted by
the Servicer and the amount of the Prepayment Premium set forth in the Mortgage
Loan Schedule with respect to Mortgage Loan No. _____________:



                              ------------------------------
                              as Trustee

                              By:
                                 ---------------------------
                              Name:
                                   -------------------------
                              Title:
                                    ------------------------
<PAGE>

                                    EXHIBIT S

                OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS

                              Officer's Certificate
              Mortgage Loan Asset-Backed Certificates, Series 200 -


[Date]

Via Facsimile

________________________, Trustee
________________________
________________________
________________________


    Re:   Pre-Payments
          ------------

Dear Sir or Madam:

            __________________ hereby certifies that he/she is an officer of the
Servicer, holding the office set forth beneath his/her name and hereby further
certifies as follows:

            With respect to the Mortgage Loans set forth in the attached
schedule:

1.    A Principal Prepayment in full was received during the related Collection
      Period;

2.    Any prepayment penalty due under the terms of the Mortgage Note with
      respect to such Principal Prepayment in full was received from the
      mortgagor and deposited in the Collection Account; ____ Yes ____ No

3.    As to each Mortgage Loan so noted on the attached schedule, all or part of
      the prepayment penalty required in connection with the Principal
      Prepayment in full was waived based upon (Circle one): (i) the Servicer's
      determination that such waiver would maximize recovery of Liquidation
      Proceeds for such Mortgage Loan, taking into account the value of such
      prepayment penalty, or (ii)(A) the enforceability thereof be limited (1)
      by bankruptcy insolvency, moratorium, receivership, or other similar law
      relating to creditors' rights generally or (2) due to acceleration in
      connection with a foreclosure or other involuntary payment, or (B) the
      enforceability is otherwise limited or prohibited by applicable law;

4.    We certify that all amounts due in connection with the waiver of a
      prepayment penalty inconsistent with number 3 above which are required to
      be deposited by the Servicer pursuant to Section 3.01 of the Pooling and
      Servicing Agreement, have been or will be so deposited.

            Capitalized terms used herein shall have the meanings ascribed to
such terms in the Pooling and Servicing Agreement, dated           , 200  ,
among Asset Backed Funding Corporation, as depositor, __________________________
_______________, as seller, ________________________, as servicer, and _________
_______________, as Trustee.

                                       By: _____________________________________



                                       _________________________________________
                                       Name:
                                       Title:


<PAGE>

                                    EXHIBIT T

                                   [RESERVED]