Ex-4.1


                          IMPAC CMB TRUST SERIES 2003-7

                                     Issuer

                                       and

                      DEUTSCHE BANK NATIONAL TRUST COMPANY

                                Indenture Trustee

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                                    INDENTURE

                            Dated as of June 30, 2003

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                        COLLATERALIZED ASSET-BACKED BONDS

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                                TABLE OF CONTENTS

Section                                                                  Page
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ARTICLE I

Definitions
        Section 1.01  Definitions...........................................2
        Section 1.02  Incorporation by Reference of Trust Indenture Act.....2
        Section 1.03  Rules of Construction.................................2

Bonds
        Section 2.01  Form..................................................4
        Section 2.02  Execution, Authentication and Delivery................4
        Section 2.03  Acceptance of Mortgage Loans by Indenture Trustee.....4
        Section 2.04  Acceptance of Derivative Contracts and Special
                      Certificate Cap Contract by Indenture Trustee.........6

Covenants
        Section 3.01  Collection of Payments with respect to the
                      Mortgage Loans........................................7
        Section 3.02  Maintenance of Office or Agency.......................7
        Section 3.03  Money for Payments To Be Held in Trust; Paying Agent..7
        Section 3.04  Existence.............................................8
        Section 3.05  Payment of Principal and Interest.....................9
        Section 3.06  Protection of Trust Estate...........................11
        Section 3.07  Opinions as to Trust Estate..........................12
        Section 3.08  Performance of Obligations...........................13
        Section 3.09  Negative Covenants...................................13
        Section 3.10  Annual Statement as to Compliance....................14
        Section 3.11  Representations and Warranties Concerning the
                      Mortgage Loans.......................................14
        Section 3.12  Amendments to Servicing Agreement....................14
        Section 3.13  Master Servicer as Agent and Bailee of the Indenture
                      Trustee..............................................14
        Section 3.14  Investment Company Act...............................15
        Section 3.15  Issuer May Consolidate, etc..........................15
        Section 3.16  Successor or Transferee..............................17
        Section 3.17  No Other Business....................................17
        Section 3.18  No Borrowing.........................................17
        Section 3.19  Guarantees, Loans, Advances and Other Liabilities....17
        Section 3.20  Capital Expenditures.................................18
        Section 3.21  Determination of Bond Interest Rate..................18
        Section 3.22  Restricted Payments..................................18
        Section 3.23  Notice of Events of Default..........................18
        Section 3.24  Further Instruments and Acts.........................18
        Section 3.25  Statements to Bondholders............................18
        Section 3.26  Certain Representations Regarding the Trust
                      Estate...............................................18


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        Section 3.27  Payments Under the Bond Insurance Policy.............20
        Section 3.28  Replacement Bond Insurance Policy....................20
        Section 3.29  Replacement Derivative Contracts.....................21
        Section 3.30  Allocation of Realized Losses........................21

The Bonds; Satisfaction and Discharge of Indenture
        Section 4.01  The Bonds............................................22
        Section 4.02  Registration of and Limitations on Transfer and
                      Exchange of Bonds; Appointment of Bond Registrar
                      and Certificate Registrar............................22
        Section 4.03  Mutilated, Destroyed, Lost or Stolen Bonds...........23
        Section 4.04  Persons Deemed Owners................................24
        Section 4.05  Cancellation.........................................24
        Section 4.06  Book-Entry Bonds.....................................24
        Section 4.07  Notices to Depository................................25
        Section 4.08  Definitive Bonds.....................................25
        Section 4.09  Tax Treatment........................................26
        Section 4.10  Satisfaction and Discharge of Indenture..............26
        Section 4.11  Application of Trust Money...........................27
        Section 4.12  Subrogation and Cooperation..........................27
        Section 4.13  Repayment of Monies Held by Paying Agent.............28
        Section 4.14  Temporary Bonds......................................28
        Section 4.15  Representation Regarding ERISA.......................29

ARTICLE V

Default and Remedies
        Section 5.01  Events of Default....................................30
        Section 5.02  Acceleration of Maturity; Rescission and Annulment...30
        Section 5.03  Collection of Indebtedness and Suits for Enforcement
                      by Indenture Trustee.................................31
        Section 5.04  Remedies; Priorities.................................33
        Section 5.05  Optional Preservation of the Trust Estate............35
        Section 5.06  Limitation of Suits..................................35
        Section 5.07  Unconditional Rights of Bondholders To Receive
                      Principal and Interest...............................36
        Section 5.08  Restoration of Rights and Remedies...................36
        Section 5.09  Rights and Remedies Cumulative.......................36
        Section 5.10  Delay or Omission Not a Waiver.......................37
        Section 5.11  Control By Bond Insurer..............................37
        Section 5.12  Waiver of Past Defaults..............................37
        Section 5.13  Undertaking for Costs................................38
        Section 5.14  Waiver of Stay or Extension Laws.....................38
        Section 5.15  Sale of Trust Estate.................................38
        Section 5.16  Action on Bonds......................................40
        Section 5.17  Performance and Enforcement of Certain Obligations...40


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ARTICLE VI

The Indenture Trustee
        Section 6.01  Duties of Indenture Trustee..........................42
        Section 6.02  Rights of Indenture Trustee..........................43
        Section 6.03  Individual Rights of Indenture Trustee...............44
        Section 6.04  Indenture Trustee's Disclaimer.......................44
        Section 6.05  Notice of Event of Default...........................44
        Section 6.06  Reports by Indenture Trustee to Holders and Tax
                      Administration.......................................44
        Section 6.07  Compensation and Indemnity...........................44
        Section 6.08  Replacement of Indenture Trustee.....................45
        Section 6.09  Successor Indenture Trustee by Merger................46
        Section 6.10  Appointment of Co-Indenture Trustee or Separate
                      Indenture Trustee....................................46
        Section 6.11  Eligibility; Disqualification........................47
        Section 6.12  Preferential Collection of Claims Against Issuer.....47
        Section 6.13  Representations and Warranties.......................47
        Section 6.14  Directions to Indenture Trustee......................48
        Section 6.15  The Agents...........................................48


ARTICLE VII

Bondholders' Lists and Reports
        Section 7.01  Issuer To Furnish Indenture Trustee Names
                      and Addresses of Bondholders.........................49
        Section 7.02  Preservation of Information; Communications to
                      Bondholders..........................................49
        Section 7.03  Reports of Issuer....................................49
        Section 7.04  Reports by Indenture Trustee.........................50
        Section 7.05  Statements to Bondholders............................50


ARTICLE VIII

Accounts, Disbursements and Releases
        Section 8.01  Collection of Money..................................53
        Section 8.02  Trust Accounts.......................................53
        Section 8.03  Officer's Certificate................................53
        Section 8.04  Termination Upon Distribution to Bondholders.........54
        Section 8.05  Release of Trust Estate..............................54
        Section 8.06  Surrender of Bonds Upon Final Payment................54
        Section 8.07  Optional Redemption of the Bonds.....................54

ARTICLE IX

Supplemental Indentures
        Section 9.01  Supplemental Indentures Without Consent of
                      Bondholders..........................................56
        Section 9.02  Supplemental Indentures With Consent of
                      Bondholders..........................................57
        Section 9.03  Execution of Supplemental Indentures.................59


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        Section 9.04  Effect of Supplemental Indenture.....................59
        Section 9.05  Conformity with Trust Indenture Act..................59
        Section 9.06  Reference in Bonds to Supplemental Indentures........59

ARTICLE X

Miscellaneous
Compliance Certificates and Opinions, etc..................................60
        Section 10.02 Form of Documents Delivered to Indenture Trustee.....61
        Section 10.03 Acts of Bondholders..................................62
        Section 10.04 Notices etc., to Indenture Trustee Issuer and
                      Rating Agencies......................................62
        Section 10.05 Notices to Bondholders; Waiver.......................63
        Section 10.06 Conflict with Trust Indenture Act....................64
        Section 10.07 Effect of Headings...................................64
        Section 10.09 Separability.........................................64
        Section 10.10 Benefits of Indenture................................64
        Section 10.11 Legal Holidays.......................................64
        Section 10.12 GOVERNING LAW........................................64
        Section 10.13 Counterparts.........................................65
        Section 10.14 Recording of Indenture...............................65
        Section 10.15 Issuer Obligation....................................65
        Section 10.16 No Petition..........................................65
        Section 10.17 Inspection...........................................65

               EXHIBITS

        Exhibit A-1  --      Form of Class A Bonds
        Exhibit A-2  --      Form of Class M Bonds
        Exhibit A-3  --      Form of Class B Bonds
        Exhibit B    --      Mortgage Loan Schedule
        Exhibit C    --      Form of Initial Certification
        Exhibit D    --      Form of Final Certification
        Exhibit E    --      Derivative Contracts
        Exhibit F    --      Special Certificate Cap Contract

        Appendix A   --      Definitions


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            This Indenture, dated as of June 30, 2003, is entered into between
Impac CMB Trust Series 2003-7, a Delaware statutory trust, as Issuer (the
"Issuer"), and Deutsche Bank National Trust Company, a national banking
association, as Indenture Trustee (the "Indenture Trustee").

                                WITNESSETH THAT:

            Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
Collateralized Asset-Backed Bonds, Series 2003-7 (the "Bonds") and the Bond
Insurer.

                                 GRANTING CLAUSE

            The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Holders of the Bonds and the Bond
Insurer, all of the Issuer's right, title and interest in and to whether now
existing or hereafter created by (a) the Mortgage Loans, Eligible Substitute
Mortgage Loans and the proceeds thereof and all rights under the Related
Documents; (b) all funds on deposit from time to time in the Collection Account
allocable to the Mortgage Loans excluding any investment income from such funds;
(c) all funds on deposit from time to time in the Payment Account and in all
proceeds thereof; (d) all rights under (i) the Mortgage Loan Sale and
Contribution Agreement as assigned to the Issuer, with respect to the Mortgage
Loans, (ii) the Servicing Agreement and any Subservicing Agreements, (iii) any
title, hazard and primary insurance policies with respect to the Mortgaged
Properties and (iv) the rights with respect to the Derivative Contracts and the
Special Certificate Cap Contract as assigned to the Issuer; (e) with respect to
the Holders of the Class A Bonds, the Bond Insurance Policy; and (f) all present
and future claims, demands, causes and choses in action in respect of any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in respect of, any or all of the foregoing and all
payments on or under, and all proceeds of every kind and nature whatsoever in
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every kind,
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Trust Estate" or the "Collateral").

            The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Bonds, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.

            The Indenture Trustee, as trustee on behalf of the Holders of the
Bonds and the Bond Insurer, acknowledges such Grant, accepts the trust under
this Indenture in accordance with the provisions hereof and agrees to perform
its duties as Indenture Trustee as required herein. The Indenture Trustee agrees
that it will hold the Bond Insurance Policy in trust and that it will hold any
proceeds of any claim made upon the Bond Insurance Policy solely for the use and
benefit of the Holders of the Class A Bonds in accordance with the terms hereof
and the terms of the Bond Insurance Policy.

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                                    ARTICLE I

                                   Definitions

      Section 1.01 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.

      Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

            "Commission" means the Securities and Exchange Commission.

            "indenture securities" means the Bonds.

            "indenture security holder" means a Bondholder.

            "indenture to be qualified" means this Indenture.

            "indenture trustee" or "institutional trustee" means the Indenture
      Trustee.

            "obligor" on the indenture securities means the Issuer and any other
      obligor on the indenture securities.

            All other TIA terms used in this Indenture that are defined by the
      TIA, defined by TIA reference to another statute or defined by Commission
      rules and have the meanings assigned to them by such definitions.

            Section 1.03 Rules of Construction. Unless the context otherwise
      requires:

                  (i) a term has the meaning assigned to it;

                  (ii) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with generally accepted accounting principles
      as in effect from time to time;

                  (iii) "or" is not exclusive;

                  (iv) "including" means including without limitation;


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                  (v) words in the singular include the plural and words in the
      plural include the singular; and

                  (vi) any agreement, instrument or statute defined or referred
      to herein or in any instrument or certificate delivered in connection
      herewith means such agreement, instrument or statute as from time to time
      amended, modified or supplemented and includes (in the case of agreements
      or instruments) references to all attachments thereto and instruments
      incorporated therein; references to a Person are also to its permitted
      successors and assigns.


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                                   ARTICLE II

                           Original Issuance of Bonds

      Section 2.01 Form. The Class A, Class M and Class B Bonds, together with
the Indenture Trustee's certificate of authentication, shall be in substantially
the form set forth in Exhibits A-1, A- 2 and A-3 to this Indenture,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture.

      The Bonds shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders).

      The terms of the Bonds set forth in Exhibits A-1, A-2 and A-3 to this
Indenture are part of the terms of this Indenture.

      Section 2.02 Execution, Authentication and Delivery. The Bonds shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Bonds may be manual or
facsimile.

      Bonds bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Bonds or did not hold
such offices at the date of such Bonds.

      The Indenture Trustee shall upon Issuer Request authenticate and deliver
the Class A, Class M and Class B Bonds for original issue in an aggregate
initial principal amount of $[_________]. The Class A Bonds shall be issued in
an aggregate initial principal amount of $[_________], the Class M Bonds shall
be issued in an aggregate initial principal amount of $[_______] and the Class B
Bonds shall be issued in an aggregate initial principal amount of $[_______].

      Each of the Bonds shall be dated the date of its authentication. The Bonds
shall be issuable as registered Bonds and the Bonds shall be issuable in the
minimum initial Bond Principal Balances of $25,000 and in integral multiples of
$1 in excess thereof.

      No Bond shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Bond a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Bond shall be conclusive evidence, and the only
evidence, that such Bond has been duly authenticated and delivered hereunder.

      Section 2.03 Acceptance of Mortgage Loans by Indenture Trustee. (a) The
Indenture Trustee acknowledges receipt of, subject to the exceptions it notes
pursuant to the procedures described below, the documents (or certified copies
thereof) referred to in Section 2.1(b) of the Mortgage Loan Sale and
Contribution Agreement, and declares that it holds and will continue to hold
those documents and any amendments, replacements or supplements thereto and all
other assets of the Trust Estate as Indenture Trustee in trust for the use and
benefit of all present and future


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Holders of the Bonds and the Bond Insurer. No later than 45 days after the
Closing Date (or, with respect to any Eligible Substitute Mortgage Loan, within
5 days after the receipt by the Indenture Trustee thereof and, with respect to
any documents received beyond 45 days after the Closing Date, promptly
thereafter), the Indenture Trustee agrees, for the benefit of the Bondholders
and the Bond Insurer, to review each Mortgage File delivered to it and to
execute and deliver, or cause to be executed and delivered, to the Seller, the
Bond Insurer and the Master Servicer an Initial Certification in the form
annexed hereto as Exhibit C. In conducting such review, the Indenture Trustee
will ascertain whether all required documents described in Section 2.1(b) of (i)
the Mortgage Loan Sale and Contribution Agreement have been executed and
received and whether those documents relate, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans it has received, as identified in Exhibit B to this Indenture, as
supplemented (provided, however, that with respect to those documents described
in subclause (b)(vii) of such section, the Indenture Trustee's obligations shall
extend only to documents actually delivered pursuant to such subclause). In
performing any such review, the Indenture Trustee may conclusively rely on the
purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Indenture Trustee finds
any document constituting part of the Mortgage File not to have been executed or
received, or to be unrelated to the Mortgage Loans identified in Exhibit B to
this Indenture or to appear to be defective on its face, the Indenture Trustee
shall promptly notify the Seller and the Bond Insurer of such finding and the
Seller's obligation to cure such defect or repurchase or substitute for the
related Mortgage Loan. To the extent the Indenture Trustee has not received a
Mortgage File with respect to any of the Mortgage Loans by the Closing Date, the
Indenture Trustee shall not require the deposit of cash into the Payment Account
or any other account to cover the amount of that Mortgage Loan and shall solely
treat such Mortgage Loan as if it were in breach of a representation or
warranty; provided that the aggregate Stated Principal Balance of such Mortgage
Loans does not exceed 1% of the Cut-off Date Balance.

      (b) No later than 180 days after the Closing Date, the Indenture Trustee
will review, for the benefit of the Bondholders and the Bond Insurer, the
Mortgage Files and will execute and deliver or cause to be executed and
delivered to the Seller and the Bond Insurer, a Final Certification in the form
annexed hereto as Exhibit D. In conducting such review, the Indenture Trustee
will ascertain whether an original of each document described in subclauses
(b)(ii)-(iv) of Section 2.1 of (i) the Mortgage Loan Sale and Contribution
Agreement required to be recorded has been returned from the recording office
with evidence of recording thereon or a certified copy has been obtained from
the recording office. If the Indenture Trustee finds any document constituting
part of the Mortgage File has not been received, or to be unrelated, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B to this Indenture or to appear
defective on its face, the Indenture Trustee shall promptly notify the Seller
and the Bond Insurer.

      (c) Upon deposit of the Repurchase Price in the Payment Account, the
Indenture Trustee shall release to the Seller the related Mortgage File and
shall execute and deliver all instruments of transfer or assignment, without
recourse, furnished to it by the Seller as are necessary to vest in the Seller
title to and rights under the related Mortgage Loan. Such purchase shall be
deemed to have occurred on the date on which certification of the deposit of the
Repurchase Price in the Payment Account was received by the Indenture Trustee.
The Indenture Trustee shall amend the applicable


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Mortgage Loan Schedule to reflect such repurchase and shall promptly notify the
Master Servicer, the Bond Insurer and the Rating Agencies of such amendment.

      Section 2.04 Acceptance of Derivative Contracts and Special Certificate
Cap Contract by Indenture Trustee. (a) The Indenture Trustee acknowledges
receipt of the Derivative Contracts and the Special Certificate Cap Contract and
declares that it holds and will continue to hold these documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Estate as Indenture Trustee in trust for the use and benefit of all
present and future Holders of the Bonds. The Indenture Trustee shall enforce the
Derivative Contracts and the Special Certificate Cap Contract in accordance with
their terms.


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                                   ARTICLE III

                                    Covenants

      Section 3.01 Collection of Payments with respect to the Mortgage Loans.
The Indenture Trustee shall establish and maintain an Eligible Account (the
"Payment Account") in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from the Master
Servicer, each remittance received by the Indenture Trustee with respect to the
Mortgage Loans. The Indenture Trustee shall make all payments of principal of
and interest on the Bonds, subject to Section 3.03 as provided in Section 3.05
herein from monies on deposit in the Payment Account.

      Section 3.02 Maintenance of Office or Agency. The Issuer will maintain an
office or agency where, subject to satisfaction of conditions set forth herein,
Bonds may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Bonds and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Indenture Trustee with the address thereof, such surrenders may be made at
the office of the Indenture Trustee located at c/o DTC Transfer Services, 55
Water Street, Jeanette Park Entrance, New York, New York 10041, and notices and
demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.

      Section 3.03 Money for Payments To Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Bonds that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from the Payment
Account for payments of Bonds shall be paid over to the Issuer except as
provided in this Section 3.03. The Issuer hereby appoints the Indenture Trustee
as its Paying Agent.

      The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:

                  (i) hold all sums held by it for the payment of amounts due
      with respect to the Bonds in trust for the benefit of the Persons entitled
      thereto until such sums shall be paid to such Persons or otherwise
      disposed of as herein provided and pay such sums to such Persons as herein
      provided;

                  (ii) give the Indenture Trustee and the Bond Insurer notice of
      any default by the Issuer of which it has actual knowledge in the making
      of any payment required to be made with respect to the Bonds;


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                  (iii) at any time during the continuance of any such default,
      upon the written request of the Indenture Trustee, forthwith pay to the
      Indenture Trustee all sums so held in trust by such Paying Agent;

                  (iv) immediately resign as Paying Agent and forthwith pay to
      the Indenture Trustee all sums held by it in trust for the payment of
      Bonds if at any time it ceases to meet the standards required to be met by
      a Paying Agent at the time of its appointment;

                  (v) comply with all requirements of the Code with respect to
      the withholding from any payments made by it on any Bonds of any
      applicable withholding taxes imposed thereon and with respect to any
      applicable reporting requirements in connection therewith; and

                  (vi) not commence a bankruptcy proceeding against the Issuer
      in connection with this Indenture.

      The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.

      Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Bond (other than amounts paid under the Bond
Insurance Policy) and remaining unclaimed for one year after such amount has
become due and payable shall be discharged from such trust and be paid to the
Issuer on Issuer Request; and the Holder of such Bond shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Indenture Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
Paying Agent, before being required to make any such repayment, shall at the
expense and direction of the Issuer cause to be published once, in an Authorized
Newspaper published in the English language, notice that such money remains
unclaimed and that, after a date specified therein which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer. The Indenture Trustee, with the
written consent of the Bond Insurer, so long as no Bond Insurer Default exists,
may also adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Bonds have been called but
have not been surrendered for redemption or whose right to or interest in monies
due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for each
such Holder).

      Section 3.04 Existence. The Issuer will keep in full effect its existence,
rights and franchises as a statutory trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the


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United States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Bonds, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.

      Section 3.05 Payment of Principal and Interest. (a) On each Payment Date
from amounts on deposit in the Payment Account in accordance with Section 8.02
hereof, the Indenture Trustee shall pay to the Persons specified in clauses (b)
and (c) below, to the extent provided therein, the Available Funds and any
Insured Amount for such Payment Date; provided, however, that any amounts
representing payments from the Bond Insurer shall only be used to pay interest
and principal to the Class A Bondholders pursuant to clauses (b)(i), (c) and (j)
below.

      (b) On each Payment Date, the Available Funds and Insured Amount shall be
distributed in the following order of priority, in each case to the extent of
the Available Funds and Insured Amount remaining for such Payment Date:

                  (i) to the Holders of the Class A Bonds, the related Accrued
      Bond Interest for such Class for such Payment Date;

                  (ii) to the Holders of the Class M Bonds, the related Accrued
      Bond Interest for such Class for such Payment Date; and

                  (iii) to the Holders of the Class B Bonds, the related Accrued
      Bond Interest for such Class for such Payment Date.

      (c) On each Payment Date, the Holders of the Class A, Class M and Class B
Bonds shall be entitled to receive payments in respect of principal equal the
related Principal Distribution Amount for that Payment Date, allocated on a pro
rata basis, based on the Bond Principal Balances thereof, in reduction of the
Bond Principal Balances thereof, until the Bond Principal Balances thereof have
been reduced to zero; provided, however, that the aggregate of all unreimbursed
payments, if any, made by the Bond Insurer under the Bond Insurance Policy,
including interest thereon, shall be paid to the Bond Insurer prior to any
distribution of principal to the holders of the Class M Bonds and Class B Bonds;
and provided further, that on each Payment Date, the Principal Available Funds
Shortfall, if any, will be subtracted from the Principal Distribution Amount
payable to the Class M Bonds and Class B Bonds shall be paid instead first to
the Class A Bonds and then to the Class M Bonds and Class B Bonds, in each case
in reduction of the Bond Principal Balance thereof, until reduced to zero.

      (d) On each Payment Date, any Net Monthly Excess Cashflow shall be paid as
follows:

                  (i) to the Bond Insurer, the aggregate of all payments, if
      any, made by the Bond Insurer under the Bond Insurance Policy with respect
      to the Class A Bonds, including interest thereon, and any other amounts
      due to the Bond Insurer pursuant to the Insurance Agreement, to the extent
      not previously paid or reimbursed;


                                        9

<PAGE>

                  (ii) to the Holders of the Class or Classes of Bonds then
      entitled to receive payments in respect of principal, in an amount equal
      to any Extra Principal Distribution Amount, payable to such Holders as
      part of the Principal Distribution Amount for the Class A, Class M and
      Class B Bonds on that Payment Date;

                  (iii) sequentially, to the Holders of the Class A, Class M and
      Class B Bonds, in that order, any Unpaid Interest Shortfall for such Bonds
      on such Payment Date, to the extent not previously reimbursed;

                  (iv) to the Holders of the Class M Bonds and Class B Bonds, in
      that order, in an amount equal to the Allocated Realized Loss Amount for
      such Bonds;

                  (v) to the Holders of the Class A, Class M and Class B Bonds,
      in that order, any Basis Risk Shortfall Carry-Forward Amount for such
      Bonds on such Payment Date, to the extent not covered by the Derivative
      Contracts;

                  (vi) to the Indenture Trustee for amounts owed the Indenture
      Trustee hereunder (other than the Indenture Trustee Fee) remaining unpaid;
      and

                  (vii) any remaining amounts will be distributed to the
      Certificate Paying Agent, as designee of the Issuer, for the benefit of
      the Holders of the Trust Certificates.

      (e) With respect to the Derivative Contracts and on each Payment Date, the
Net Derivative Contract Payment Amount with respect to such Payment Date shall
be distributed in the following order of priority, in each case to the extent of
amounts available:

                  (i) to the Holders of the Class A, Class M and Class B Bonds,
      in that order, any Basis Risk Shortfall Carry-Forward Amount for such
      Payment Date; and

                  (ii) any remaining amounts will be distributed to the
      Certificate Paying Agent, as designee of the Issuer, for the benefit of
      the Holders of the Trust Certificates.

      (f) On each Payment Date any amounts received in respect of the Special
Certificate Cap Contract shall be distributed to the Certificate Paying Agent,
as designee of the Issuer, for the benefit of the Holders of the Trust
Certificates.

      (g) Each distribution with respect to a Book-Entry Bond shall be paid to
the Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the Bond
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 Bond Owners
that it represents. None of the Indenture Trustee, the Bond Registrar, the
Paying Agent, the Depositor or the Master Servicer shall have any responsibility
therefor except as otherwise provided by this Indenture or applicable law.


                                       10

<PAGE>

      (h) On each Payment Date, the Certificate Paying Agent shall deposit in
the Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders.

      (i) Any installment of interest or principal, if any, payable on any Bond
that is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall, if such Holder shall have so requested at least five
Business Days prior to the related Record Date, be paid to each Holder of record
on the preceding Record Date, by wire transfer to an account specified in
writing by such Holder reasonably satisfactory to the Indenture Trustee as of
the preceding Record Date or in all other cases or if no such instructions have
been delivered to the Indenture Trustee, by check to such Bondholder mailed to
such Holder's address as it appears in the Bond Register in the amount required
to be distributed to such Holder on such Payment Date pursuant to such Holder's
Bonds; provided, however, that the Indenture Trustee shall not pay to such
Holders any amount required to be withheld from a payment to such Holder by the
Code.

      (j) The principal of each Bond shall be due and payable in full on the
Final Scheduled Payment Date for such Bond as provided in the forms of Bond set
forth in Exhibits A-1, A-2 and A-3 to this Indenture. All principal payments on
the Bonds shall be made to the Bondholders entitled thereto in accordance with
the Percentage Interests represented by such Bonds. Upon notice to the Indenture
Trustee by the Issuer, the Indenture Trustee shall notify the Person in whose
name a Bond is registered at the close of business on the Record Date preceding
the Final Scheduled Payment Date or other final Payment Date (including any
final Payment Date resulting from any redemption pursuant to Section 8.07
hereof). Such notice shall to the extent practicable be mailed no later than
five Business Days prior to such Final Scheduled Payment Date or other final
Payment Date and shall specify that payment of the principal amount and any
interest due with respect to such Bond at the Final Scheduled Payment Date or
other final Payment Date will be payable only upon presentation and surrender of
such Bond and shall specify the place where such Bond may be presented and
surrendered for such final payment. No interest shall accrue on the Bonds on or
after the Final Scheduled Payment Date or any such other final Payment Date.

      The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.05 upon the
Issuer's preparation thereof and delivery to the Indenture Trustee.

      Section 3.06 Protection of Trust Estate. (a) The Issuer will from time to
time prepare, execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:

                  (i) maintain or preserve the lien and security interest (and
      the priority thereof) of this Indenture or carry out more effectively the
      purposes hereof;

                  (ii) perfect, publish notice of or protect the validity of any
      Grant made or to be made by this Indenture;


                                       11

<PAGE>

                  (iii) cause the Issuer or Master Servicer to enforce any of
      the rights to the Mortgage Loans; or

                  (iv) preserve and defend title to the Trust Estate and the
      rights of the Indenture Trustee, the Bond Insurer and the Bondholders in
      such Trust Estate against the claims of all persons and parties.

      (b) Except as otherwise provided in this Indenture, the Indenture Trustee
shall not remove any portion of the Trust Estate that consists of money or is
evidenced by an instrument, certificate or other writing from the jurisdiction
in which it was held at the date of the most recent Opinion of Counsel delivered
pursuant to Section 3.07 hereof (or from the jurisdiction in which it was held
as described in the Opinion of Counsel delivered on the Closing Date pursuant to
Section 3.07(a) hereof, or if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07(b) hereof, unless the Indenture Trustee shall have
first received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will continue
to be maintained after giving effect to such action or actions).

      The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.06 upon the
Issuer's preparation thereof and delivery to the Indenture Trustee.

      Section 3.07 Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee, the Bond Insurer and the Owner
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the lien and first priority security interest in the Collateral and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and first priority
security interest effective.

      (b) On or before April 15 in each calendar year, beginning in 2004, the
Issuer shall furnish to the Indenture Trustee and the Bond Insurer an Opinion of
Counsel at the expense of the Issuer either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the lien and first priority security interest in the Collateral and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest in the Collateral until December 31
in the following calendar year.


                                       12

<PAGE>

      Section 3.08 Performance of Obligations. (a) The Issuer will punctually
perform and observe all of its obligations and agreements contained in this
Indenture, the Basic Documents and in the instruments and agreements included in
the Trust Estate.

      (b) The Issuer, with the consent of the Bond Insurer so long as no Bond
Insurer Default exists, may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.

      (c) The Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's covenants or
obligations under any of the documents relating to the Mortgage Loans or under
any instrument included in the Trust Estate, or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any of the documents relating to the Mortgage
Loans or any such instrument, except such actions as the Master Servicer is
expressly permitted to take in the Servicing Agreement. The Indenture Trustee,
as pledgee of the Mortgage Loans, shall with the consent of, or direction of,
the Bond Insurer, so long as no Bond Insurer Default exists, be able to exercise
the rights of the Issuer to direct the actions of the Master Servicer pursuant
to the Servicing Agreement.

      (d) The Issuer may retain an administrator and may enter into contracts
acceptable to the Bond Insurer with other Persons for the performance of the
Issuer's obligations hereunder, and performance of such obligations by such
Persons shall be deemed to be performance of such obligations by the Issuer.

      Section 3.09 Negative Covenants. So long as any Bonds are Outstanding, the
Issuer shall not:

                  (i) except as expressly permitted by this Indenture, sell,
      transfer, exchange or otherwise dispose of the Trust Estate, unless
      directed to do so by the Indenture Trustee, unless directed to do so by
      the Bond Insurer or the Indenture Trustee with the consent of the Bond
      Insurer, so long as no Bond Insurer Default exists;

                  (ii) claim any credit on, or make any deduction from the
      principal or interest payable in respect of, the Bonds (other than amounts
      properly withheld from such payments under the Code) or assert any claim
      against any present or former Bondholder by reason of the payment of the
      taxes levied or assessed upon any part of the Trust Estate;

                  (iii) (A) permit the validity or effectiveness of this
      Indenture to be impaired, or permit the lien of this Indenture to be
      amended, hypothecated, subordinated, terminated or discharged, or permit
      any Person to be released from any covenants or obligations with respect
      to the Bonds under this Indenture except as may be expressly permitted
      hereby, (B) permit any lien, charge, excise, claim, security interest,
      mortgage or other encumbrance (other than the lien of this Indenture) to
      be created on or extend to or otherwise arise upon or burden the Trust
      Estate or any part thereof or any interest therein or


                                       13

<PAGE>

      the proceeds thereof or (C) permit the lien of this Indenture not to
      constitute a valid first priority security interest in the Trust Estate;
      or

                  (iv) waive or impair, or fail to assert rights under, the
      Mortgage Loans, or impair or cause to be impaired the Issuer's interest in
      the Mortgage Loans, the Mortgage Loan Sale and Contribution Agreement or
      in any Basic Document, if any such action would materially and adversely
      affect the interests of the Bondholders or the Bond Insurer.

      Section 3.10 Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Bond Insurer, by March 1 of each year commencing
with the calendar year 2004, an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:

                  (i) a review of the activities of the Issuer during the
      previous calendar year and of its performance under this Indenture has
      been made under such Authorized Officer's supervision; and

                  (ii) to the best of such Authorized Officer's knowledge, based
      on such review, the Issuer has complied with all conditions and covenants
      under this Indenture throughout such year, or, if there has been a default
      in its compliance with any such condition or covenant, specifying each
      such default known to such Authorized Officer and the nature and status
      thereof.

      Section 3.11 Representations and Warranties Concerning the Mortgage Loans.
The Indenture Trustee, as pledgee of the Mortgage Loans, has the benefit of the
representations and warranties made by the Seller in the Mortgage Loan Sale and
Contribution Agreement concerning the Seller and the Mortgage Loans to the same
extent as though such representations and warranties were made directly to the
Indenture Trustee. If a Responsible Officer of the Indenture Trustee has actual
knowledge of any breach of any representation or warranty made by the Seller in
the Mortgage Loan Sale and Contribution Agreement, the Indenture Trustee shall
promptly notify the Seller and the Bond Insurer of such finding and the Seller's
obligation to cure such defect or repurchase or substitute for the related
Mortgage Loan.

      Section 3.12 Amendments to Servicing Agreement. The Issuer covenants with
the Indenture Trustee and the Bond Insurer that it will not enter into any
amendment or supplement to the Servicing Agreement without the prior written
consent of the Indenture Trustee and, so long as no Bond Insurer Default exists,
the Bond Insurer.

      Section 3.13 Master Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-305 of the Uniform Commercial
Code or other similar applicable law, rule or regulation of the state in which
such property is held by the Master Servicer, the Issuer and the Indenture
Trustee hereby acknowledge that the Master Servicer is acting as bailee of the
Indenture Trustee in holding amounts on deposit in the Collection Account, as
well as its bailee in holding any Related Documents released to the Master
Servicer, and any other items constituting a part of the Trust Estate which from
time to time come into the possession of the Master Servicer. It is intended
that, by the Master Servicer's acceptance of such bailee arrangement, the
Indenture Trustee, as a secured party of the Mortgage Loans, will be deemed to
have possession


                                       14

<PAGE>

of such Related Documents, such monies and such other items for purposes of
Section 9-305 of the Uniform Commercial Code of the state in which such property
is held by the Master Servicer. The Indenture Trustee shall not be liable with
respect to such documents, monies or items while in possession of the Master
Servicer.

      Section 3.14 Investment Company Act. The Issuer shall not become an
"investment company" or be under the "control" of an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.15
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.

      Section 3.15 Issuer May Consolidate, etc. (a) The Issuer shall not
consolidate or merge with or into any other Person, unless:

                  (i) the Person (if other than the Issuer) formed by or
      surviving such consolidation or merger shall be a Person organized and
      existing under the laws of the United States of America or any state or
      the District of Columbia and shall expressly assume, by an indenture
      supplemental hereto, executed and delivered to the Indenture Trustee, in
      form reasonably satisfactory to the Indenture Trustee and the Bond
      Insurer, the due and punctual payment of the principal of and interest on
      all Bonds, and the payment of the Bond Insurance Premium and all other
      amounts payable to the Bond Insurer, the Indenture Trustee and the
      Derivative Contract Counterparty, the payment to the Certificate Paying
      Agent of all amounts due to the Certificateholders, and the performance or
      observance of every agreement and covenant of this Indenture on the part
      of the Issuer to be performed or observed, all as provided herein;

                  (ii) immediately after giving effect to such transaction, no
      Event of Default shall have occurred and be continuing;

                  (iii) the Rating Agencies shall have notified the Issuer that
      such transaction shall not cause the rating of the Class A Bonds without
      regard to the Bond Insurance Policy or the Class M Bonds and Class B Bonds
      to be reduced, suspended or withdrawn or to be considered by either Rating
      Agency to be below investment grade;

                  (iv) the Issuer and the Bond Insurer shall have received an
      Opinion of Counsel (and shall have delivered a copy thereof to the
      Indenture Trustee) to the effect that such transaction will not (A) result
      in a "significant modification" of the Bonds under Treasury Regulation
      section 1.1001-3, or adversely affect the status of the Bonds as
      indebtedness for federal income tax purposes, or (B) if 100% of the
      Certificates are not owned by IMH Assets Corp., cause the Trust to be
      subject to an entity level tax for federal income tax purposes;


                                       15

<PAGE>

                  (v) any action that is necessary to maintain the lien and
      security interest created by this Indenture shall have been taken;

                  (vi) the Issuer shall have delivered to the Indenture Trustee
      and the Bond Insurer an Officer's Certificate and an Opinion of Counsel
      each stating that such consolidation or merger and such supplemental
      indenture comply with this Article III and that all conditions precedent
      herein provided for or relating to such transaction have been complied
      with (including any filing required by the Exchange Act), and that such
      supplemental indenture is enforceable; and

                  (vii) the Bond Insurer, so long as no Bond Insurer Default
      exists, shall have given its prior written consent.

      (b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:

                  (i) the Person that acquires by conveyance or transfer the
      properties and assets of the Issuer, the conveyance or transfer of which
      is hereby restricted, shall (A) be a United States citizen or a Person
      organized and existing under the laws of the United States of America or
      any state thereof, (B) expressly assume, by an indenture supplemental
      hereto, executed and delivered to the Indenture Trustee, in form
      satisfactory to the Indenture Trustee, the due and punctual payment of the
      principal of and interest on all Bonds and the payment of the Bond
      Insurance Premium and all other amounts payable to the Bond Insurer and
      the Derivative Contract Counterparty and the performance or observance of
      every agreement and covenant of this Indenture on the part of the Issuer
      to be performed or observed, all as provided herein, (C) expressly agree
      by means of such supplemental indenture that all right, title and interest
      so conveyed or transferred shall be subject and subordinate to the rights
      of the Holders of the Bonds and the Bond Insurer, (D) unless otherwise
      provided in such supplemental indenture, expressly agree to indemnify,
      defend and hold harmless the Issuer, the Indenture Trustee and the Bond
      Insurer against and from any loss, liability or expense arising under or
      related to this Indenture and the Bonds and (E) expressly agree by means
      of such supplemental indenture that such Person (or if a group of Persons,
      then one specified Person) shall make all filings with the Commission (and
      any other appropriate Person) required by the Exchange Act in connection
      with the Bonds;

                  (ii) immediately after giving effect to such transaction, no
      Default or Event of Default shall have occurred and be continuing;

                  (iii) the Rating Agencies shall have notified the Issuer that
      such transaction shall not cause the rating of the Class A Bonds without
      regard to the Bond Insurance Policy or the Class M Bonds and Class B
      Bonds, to be reduced, suspended or withdrawn;

                  (iv) the Issuer and the Bond Insurer shall have received an
      Opinion of Counsel (and shall have delivered a copy thereof to the
      Indenture Trustee) to the effect that such transaction will not (A) result
      in a "significant modification" of the Bonds under Treasury Regulation
      section 1.1001-3, or adversely affect the status of the Bonds as


                                       16

<PAGE>

      indebtedness for federal income tax purposes, or (B) if 100% of the
      Certificates are not owned by IMH Assets Corp., cause the Trust to be
      subject to an entity level tax for federal income tax purposes;

                  (v) any action that is necessary to maintain the lien and
      security interest created by this Indenture shall have been taken;

                  (vi) the Issuer shall have delivered to the Indenture Trustee
      an Officer's Certificate and an Opinion of Counsel each stating that such
      conveyance or transfer and such supplemental indenture comply with this
      Article III and that all conditions precedent herein provided for relating
      to such transaction have been complied with (including any filing required
      by the Exchange Act); and

                  (vii) the Bond Insurer, so long as no Bond Insurer Default
      exists, shall have given its prior written consent.

      Section 3.16 Successor or Transferee. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.

      (b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Bonds immediately upon the delivery of written
notice to the Indenture Trustee and the Bond Insurer of such conveyance or
transfer and approval of such transaction given by the Bond Insurer to the
Indenture Trustee.

      Section 3.17 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Mortgage Loans and the issuance of the Bonds and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.

      Section 3.18 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Bonds and amounts due to the Bond Insurer under this
Indenture and the Insurance Agreement.

      Section 3.19 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.


                                       17

<PAGE>

      Section 3.20 Capital Expenditures. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital assets
(either realty or personalty).

      Section 3.21 Determination of Bond Interest Rate. On each Interest
Determination Date the Indenture Trustee shall determine One-Month LIBOR and the
related Bond Interest Rate for each Class of Bonds for the following Accrual
Period and shall inform the Issuer, the Bond Insurer, the Master Servicer, and
the Depositor at their respective facsimile numbers given to the Indenture
Trustee in writing thereof. The establishment of One-Month LIBOR on each
Interest Determination Date by the Indenture Trustee and the Indenture Trustee's
calculation of the rate of interest applicable to each Class of Bonds for the
related Accrual Period shall (in the absence of manifest error) be final and
binding.

      Section 3.22 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions and payments to the
Owner Trustee, the Indenture Trustee, Bondholders and the Certificateholders as
contemplated by, and to the extent funds are available for such purpose under
this Indenture and the Trust Agreement and (y) payments to the Master Servicer
and the Subservicers pursuant to the terms of the Servicing Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.

      Section 3.23 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Bond Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.

      Section 3.24 Further Instruments and Acts. Upon request of the Indenture
Trustee or the Bond Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.

      Section 3.25 Statements to Bondholders. On each Payment Date, the
Indenture Trustee and the Certificate Registrar shall prepare and make available
on the Indenture Trustee's website, https://www.corporatetrust.db.com/invr (or
deliver at the recipient's option), to the Bond Insurer and to each Bondholder
and Certificateholder the most recent statement prepared by the Master Servicer
pursuant to Section 4.01 of the Servicing Agreement.

      Section 3.26 Certain Representations Regarding the Trust Estate.

      (a) With respect to that portion of the Collateral described in clauses
(a) through (d) of the definition of Trust Estate, the Issuer represents to the
Indenture Trustee that:

            (i) This Indenture creates a valid and continuing security interest
(as defined in the applicable UCC) in the Collateral in favor of the Indenture
Trustee, which security interest is


                                       18

<PAGE>

prior to all other liens, and is enforceable as such as against creditors of and
purchasers from the Issuer.

            (ii) The Collateral constitutes "deposit accounts" or "instruments,"
as applicable, within the meaning of the applicable UCC.

            (iii) The Issuer owns and has good and marketable title to the
Collateral, free and clear of any lien, claim or encumbrance of any Person.

            (iv) The Issuer has taken all steps necessary to cause the Indenture
Trustee to become the account holder of the Collateral.

            (v) Other than the security interest granted to the Indenture
Trustee pursuant to this Indenture, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Collateral.

            (vi) The Collateral is not in the name of any Person other than the
Issuer or the Indenture Trustee. The Issuer has not consented to the bank
maintaining the Collateral to comply with instructions of any Person other than
the Indenture Trustee.

      (b) With respect to that portion of the Collateral described in clauses
(e) and (f), the Issuer represents to the Indenture Trustee that:

            (i) This Indenture creates a valid and continuing security interest
(as defined in the applicable UCC) in the Collateral in favor of the Indenture
Trustee, which security interest is prior to all other liens, and is enforceable
as such as against creditors of and purchasers from the Issuer.

            (ii) The Collateral constitutes "general intangibles" within the
meaning of the applicable UCC.

            (iii) The Issuer owns and has good and marketable title to the
Collateral, free and clear of any lien, claim or encumbrance of any Person.

            (iv) The Issuer has caused or will have caused, within ten days, the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect the
security interest in the Collateral granted to the Indenture Trustee hereunder.

            (v) Other than the security interest granted to the Indenture
Trustee pursuant to this Indenture, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Collateral. The
Issuer has not authorized the filing of, and is not aware of any financing
statements against, the Issuer, that include a description of collateral
covering the Collateral, other than any financing statement relating to the
security interest granted to the Indenture Trustee hereunder or that has been
terminated. The Issuer is not aware of any judgment or tax lien filings against
the Issuer.


                                       19

<PAGE>

      (d) The foregoing representations may not be waived and shall survive the
issuance of the Bonds.

      Section 3.27 Payments Under the Bond Insurance Policy. (a) On the second
Business Day prior to any Payment Date and at such time as it shall deliver an
acceleration notice to the Bondholders pursuant to Section 5.02, the Indenture
Trustee on behalf of the Class A Bondholders shall make a draw on the Bond
Insurance Policy in an amount, if any, equal to the Deficiency Amount.

      (b) If the Indenture Trustee determines that a Deficiency Amount will
exist for the following Payment Date, then the Indenture Trustee shall submit a
Notice (as defined in the Bond Insurance Policy) for payment in the amount of
the Deficiency Amount to the Bond Insurer no later than 12:00 Noon, New York
City time, on the second Business Day prior to the applicable Payment Date. Upon
receipt of such Deficiency Amount in accordance with the terms of the Bond
Insurance Policy, the Indenture Trustee shall deposit such Deficiency Amount in
the Payment Account for distribution to the Class A Bondholders pursuant to
Section 3.05 hereof or with respect to an acceleration pursuant to Section 5.02
hereof.

      In addition, a draw may be made under the Bond Insurance Policy in respect
of any Preference Amount applicable to any of the Class A Bondholders (as
defined in and pursuant to the terms and conditions of the such Bond Insurance
Policy) and the Indenture Trustee shall submit a Notice (as defined in such Bond
Insurance Policy) for payment with respect thereto together with the other
documents required to be delivered to the Bond Insurer pursuant to the Bond
Insurance Policy in connection with a draw in respect of any Preference Amount.

      Section 3.28 Replacement Bond Insurance Policy. In the event of a Bond
Insurer Default (a "Replacement Event"), the Issuer, at its expense, in
accordance with and upon satisfaction of the conditions set forth in the Bond
Insurance Policy, including, without limitation, payment in full of all amounts
owed to the Bond Insurer, may, but shall not be required to, substitute a new
surety bond or surety bonds for the existing Bond Insurance Policy or may
arrange for any other form of credit enhancement; provided, however, that in
each case after giving effect to such substitute or other form of credit
enhancement the Class A, Class M and Class B Bonds shall be rated no lower than
the rating assigned by each Rating Agency to the Class A, Class M and Class B
Bonds, respectively, immediately prior to such Replacement Event and the timing
and mechanism for drawing on such new credit enhancement shall be reasonably
acceptable to the Indenture Trustee and provided further that the premiums under
the proposed credit enhancement shall not exceed such premiums under the
existing Bond Insurance Policy. It shall be a condition to substitution of any
new credit enhancement that there be delivered to the Indenture Trustee (i) an
Opinion of Counsel, acceptable in form to the Indenture Trustee and the Rating
Agencies, from counsel to the provider of such new credit enhancement with
respect to the enforceability thereof and such other matters as the Indenture
Trustee and the Rating Agencies may require and (ii) an Opinion of Counsel to
the effect that such substitution would not (a) result in a "significant
modification" of the Bonds under Treasury Regulation section 1.1001-3, or
adversely affect the status of the Bonds as indebtedness for federal income tax
purposes, or (b) if 100% of the Certificates are not owned by IMH Assets Corp.,
cause the Trust to be subject to an entity level tax for federal income tax
purposes. Upon receipt of the items referred to above and payment of all amounts
owing to the Bond Insurer and the taking of


                                       20

<PAGE>

physical possession of the new credit enhancement, the Indenture Trustee shall,
within five Business Days following receipt of such items and such taking of
physical possession, deliver the replaced Bond Insurance Policy to the Bond
Insurer. In the event of any such replacement the Issuer shall give written
notice thereof to the Rating Agencies.

      Section 3.29 Replacement Derivative Contracts. In the event of a default
by a Derivative Contract Counterparty with respect to the related Derivative
Contracts (a "Derivative Contract Default"), the Issuer, at its expense, may,
but shall not be required to, substitute a new derivative contract for the
existing Derivative Contracts or any other form of similar coverage for basis
risk shortfalls; provided, however, that the timing and mechanism for receiving
payments under such new derivative contracts shall be reasonably acceptable to
the Indenture Trustee. It shall be a condition to substitution of any new
derivative contracts that there be delivered to the Indenture Trustee an Opinion
of Counsel to the effect that such substitution would not (a) result in a
"significant modification" of the Bonds under Treasury Regulation section
1.1001-3, or adversely affect the status of the Bonds as indebtedness for
federal income tax purposes, or (b) if 100% of the Certificates are not owned by
IMH Assets Corp., cause the Trust to be subject to an entity level tax for
federal income tax purposes.

      Section 3.30 Allocation of Realized Losses. (a) Prior to each Payment
Date, the Master Servicer shall determine the total amount of Realized Losses
that occurred during the related Prepayment Period. The amount of each Realized
Loss shall be evidenced by an Officer's Certificate delivered to the Indenture
Trustee with the related Remittance Report.

      (b) On each Payment Date following the application of all amounts
distributable on such date, to the extent the aggregate Stated Principal Balance
of the Mortgage Loans is less than the aggregate Bond Principal Balances of the
Class A, Class M and Class B Bonds due to Realized Losses on the Mortgage Loans,
the Bond Principal Balances of the Class B Bonds shall be reduced, until the
Bond Principal Balance thereof has been reduced to zero, and then the Bond
Principal Balances of the Class M Bonds shall be reduced, until the Bond
Principal Balance thereof has been reduced to zero. Any further losses will be
covered by the Bond Insurance Policy in accordance with the terms thereof,
however, to the extent such Realized Losses are not covered by the Bond
Insurance Policy, the Bond Principal Balance of the Class A Bonds will not be
reduced by the amount of such Realized Losses. All Realized Losses allocated to
a Class of Bonds will be allocated in proportion to the Percentage Interests
evidenced thereby.


                                       21

<PAGE>

                                   ARTICLE IV

               The Bonds; Satisfaction and Discharge of Indenture

      Section 4.01 The Bonds. Each Class of Bonds shall be registered in the
name of a nominee designated by the Depository. Beneficial Owners will hold
interests in the Bonds through the book- entry facilities of the Depository in
minimum initial Bond Principal Balances of $25,000 and integral multiples of $1
in excess thereof.

      The Indenture Trustee may for all purposes (including the making of
payments due on the Bonds) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Bonds for the
purposes of exercising the rights of Holders of the Bonds hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Bonds shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08
hereof, Beneficial Owners shall not be entitled to definitive certificates for
the Bonds as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Holder of the Bonds shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Bondholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Bond may be transferred by the Depository except to a
successor Depository that agrees to hold such Bond for the account of the
Beneficial Owners.

      In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Bonds it
beneficially owns in the manner prescribed in Section 4.08.

      The Bonds shall, on original issue, be executed on behalf of the Issuer by
the Owner Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
or upon the order of the Issuer.

      Section 4.02 Registration of and Limitations on Transfer and Exchange of
Bonds; Appointment of Bond Registrar and Certificate Registrar. The Issuer shall
cause to be kept at the Corporate Trust Office a Bond Register in which, subject
to such reasonable regulations as it may prescribe, the Bond Registrar shall
provide for the registration of Bonds and of transfers and exchanges of Bonds as
herein provided.

      Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Bond at the Corporate Trust
Office, the Issuer shall execute and the Bond Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Bonds in authorized initial Bond Principal Balances evidencing the same
Class and aggregate Percentage Interests.


                                       22

<PAGE>

      Subject to the foregoing, at the option of the Bondholders, Bonds may be
exchanged for other Bonds of like tenor and in authorized initial Bond Principal
Balances evidencing the same Class and aggregate Percentage Interests upon
surrender of the Bonds to be exchanged at the Corporate Trust Office of the Bond
Registrar. Whenever any Bonds are so surrendered for exchange, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver the Bonds which
the Bondholder making the exchange is entitled to receive. Each Bond presented
or surrendered for registration of transfer or exchange shall (if so required by
the Bond Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Bond Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the city of New York. Bonds delivered upon any
such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Bonds surrendered.

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

      The Issuer hereby appoints the Indenture Trustee as (i) Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement 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 thereof pursuant to
Section 3.05 of the Trust Agreement and (ii) Bond Registrar under this
Indenture. The Indenture Trustee hereby accepts such appointments.

      Section 4.03 Mutilated, Destroyed, Lost or Stolen Bonds. If (i) any
mutilated Bond is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Bond, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer, the Bond Insurer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Bond Registrar or the Indenture Trustee that such Bond has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Bond, a replacement Bond; provided,
however, that if any such destroyed, lost or stolen Bond, but not a mutilated
Bond, shall have become or within seven days shall be due and payable, instead
of issuing a replacement Bond, the Issuer may pay such destroyed, lost or stolen
Bond when so due or payable without surrender thereof. If, after the delivery of
such replacement Bond or payment of a destroyed, lost or stolen Bond pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Bond in lieu of which such replacement Bond was issued presents for payment such
original Bond, the Issuer, the Bond Insurer and the Indenture Trustee shall be
entitled to recover such replacement Bond (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Bond from such
Person to whom such replacement Bond was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer, the Bond Insurer or the Indenture Trustee in
connection therewith.


                                       23

<PAGE>

      Upon the issuance of any replacement Bond under this Section 4.03, the
Issuer may require the payment by the Holder of such Bond of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.

      Every replacement Bond issued pursuant to this Section 4.03 in replacement
of any mutilated, destroyed, lost or stolen Bond shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder.

      The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Bonds.

      Section 4.04 Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Bond, the Issuer, the Bond Insurer, the
Indenture Trustee, the Paying Agent and any agent of the Issuer, the Bond
Insurer or the Indenture Trustee may treat the Person in whose name any Bond is
registered (as of the day of determination) as the owner of such Bond for the
purpose of receiving payments of principal of and interest, if any, on such Bond
and for all other purposes whatsoever, whether or not such Bond be overdue, and
neither the Issuer, the Bond Insurer, the Indenture Trustee, the Paying Agent
nor any agent of the Issuer, the Bond Insurer or the Indenture Trustee shall be
affected by notice to the contrary.

      Section 4.05 Cancellation. All Bonds surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Bonds previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Bonds so delivered shall be promptly cancelled by the Indenture Trustee.
No Bonds shall be authenticated in lieu of or in exchange for any Bonds
cancelled as provided in this Section 4.05, except as expressly permitted by
this Indenture. All cancelled Bonds may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or returned to it; provided, however, that such Issuer Request is
timely and the Bonds have not been previously disposed of by the Indenture
Trustee.

      Section 4.06 Book-Entry Bonds. The Bonds, upon original issuance, will be
issued in the form of typewritten Bonds representing the Book-Entry Bonds, to be
delivered to The Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. The Bonds shall initially be registered on the Bond
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner will receive a Definitive Bond representing such Beneficial
Owner's interest in such Bond, except as provided in Section 4.08. With respect
to such Bonds, unless and until definitive, fully registered Bonds (the
"Definitive Bonds") have been issued to Beneficial Owners pursuant to Section
4.08:


                                       24

<PAGE>

                  (i) the provisions of this Section 4.06 shall be in full force
      and effect;

                  (ii) the Bond Registrar, the Paying Agent and the Indenture
      Trustee shall be entitled to deal with the Depository for all purposes of
      this Indenture (including the payment of principal of and interest on the
      Bonds and the giving of instructions or directions hereunder) as the sole
      holder of the Bonds, and shall have no obligation to the Beneficial Owners
      of the Bonds;

                  (iii) to the extent that the provisions of this Section 4.06
      conflict with any other provisions of this Indenture, the provisions of
      this Section 4.06 shall control;

                  (iv) the rights of Beneficial Owners shall be exercised only
      through the Depository and shall be limited to those established by law
      and agreements between such Owners of Bonds and the Depository and/or the
      Depository Participants. Unless and until Definitive Bonds are issued
      pursuant to Section 4.08, the initial Depository will make book- entry
      transfers among the Depository Participants and receive and transmit
      payments of principal of and interest on the Bonds to such Depository
      Participants; and

                  (v) whenever this Indenture requires or permits actions to be
      taken based upon instructions or directions of Holders of Bonds evidencing
      a specified percentage of the Bond Principal Balances of the Bonds, the
      Depository shall be deemed to represent such percentage with respect to
      the Bonds only to the extent that it has received instructions to such
      effect from Beneficial Owners and/or Depository Participants owning or
      representing, respectively, such required percentage of the beneficial
      interest in the Bonds and has delivered such instructions to the Indenture
      Trustee.

      Section 4.07 Notices to Depository. Whenever a notice or other
communication to the Bond Holders is required under this Indenture, unless and
until Definitive Bonds shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Bonds to the
Depository, and shall have no obligation to the Beneficial Owners.

      Section 4.08 Definitive Bonds. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Bonds and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, Beneficial Owners of Bonds representing beneficial interests
aggregating at least a majority of the Bond Principal Balances of the Bonds
advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Beneficial
Owners, then the Depository shall notify all Beneficial Owners and the Indenture
Trustee of the occurrence of any such event and of the availability of
Definitive Bonds to Beneficial Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Bonds representing the Book-Entry Bonds by
the Depository, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Bonds in
accordance with the instructions of the Depository. None of the Issuer, the Bond
Registrar or the Indenture Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be


                                       25

<PAGE>

protected in relying on, such instructions. Upon the issuance of Definitive
Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Bonds
as Bondholders.

      Section 4.09 Tax Treatment. The Issuer has entered into this Indenture,
and the Bonds will be issued with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Bonds will qualify
as indebtedness. The Issuer and the Indenture Trustee (in accordance with
Section 6.06 hereof), by entering into this Indenture, and each Bondholder, by
its acceptance of its Bond (and each Beneficial Owner by its acceptance of an
interest in the applicable Book-Entry Bond), agree to treat the Bonds for
federal, state and local income, single business and franchise tax purposes as
indebtedness.

      Section 4.10 Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Bonds except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Bonds, (iii) rights of Bondholders (and the Bond
Insurer, as subrogee of the Bondholders) to receive payments of principal
thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09, 3.17, 3.19
and 3.20, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.07 and
the obligations of the Indenture Trustee under Section 4.11), (vi) the right of
the Derivative Contract Counterparty to receive the related Net Derivative Fee
and (vii) the rights of Bondholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them,
and the Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Bonds and shall release and deliver the Collateral
to or upon the order of the Issuer, when

            (A) either

            (1) all Bonds theretofore authenticated and delivered (other than
      (i) Bonds that have been destroyed, lost or stolen and that have been
      replaced or paid as provided in Section 4.03 hereof and (ii) Bonds for
      whose payment money has theretofore been deposited in trust or segregated
      and held in trust by the Issuer and thereafter repaid to the Issuer or
      discharged from such trust, as provided in Section 3.03) have been
      delivered to the Indenture Trustee for cancellation; or

            (2) all Bonds not theretofore delivered to the Indenture Trustee for
      cancellation

                  a.    have become due and payable,

                  b.    will become due and payable at the Final Scheduled
                        Payment Date within one year, or

                  c.    have been called for early redemption and the Trust has
                        been terminated pursuant to Section 8.07 hereof,

and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the


                                       26

<PAGE>

United States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Bonds then outstanding not theretofore
delivered to the Indenture Trustee for cancellation when due on the Final
Scheduled Payment Date or other final Payment Date and has delivered to the
Indenture Trustee and the Bond Insurer a verification report from a nationally
recognized accounting firm certifying that the amounts deposited with the
Indenture Trustee are sufficient to pay and discharge the entire indebtedness of
such Bonds, or, in the case of c. above, the Issuer shall have complied with all
requirements of Section 8.07 hereof,

            (B) the Issuer has paid or caused to be paid all other sums payable
      hereunder and under the Insurance Agreement by the Issuer as evidenced by
      the written consent of the Bond Insurer; and

            (C) the Issuer has delivered to the Indenture Trustee and the Bond
      Insurer an Officer's Certificate and an Opinion of Counsel, each meeting
      the applicable requirements of Section 10.01 hereof, each stating that all
      conditions precedent herein provided for relating to the satisfaction and
      discharge of this Indenture have been complied with and, if the Opinion of
      Counsel relates to a deposit made in connection with Section 4.10(A)(2)b.
      above, such opinion shall further be to the effect that such deposit will
      constitute an "in-substance defeasance" within the meaning of Revenue
      Ruling 85-42, 1985-1 C.B. 36, and in accordance therewith, the Issuer will
      be the owner of the assets deposited in trust for federal income tax
      purposes.

      Section 4.11 Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Bonds and this
Indenture, to the payment, either directly or through any Paying Agent or the
Issuer, Certificate Paying Agent as designee of the Issuer or the Bond Insurer,
as the Indenture Trustee may determine, to the Holders of Securities, of all
sums due and to become due thereon for principal and interest or otherwise; but
such monies need not be segregated from other funds except to the extent
required herein or required by law.

      Section 4.12 Subrogation and Cooperation. (a) The Issuer and the Indenture
Trustee acknowledge that (i) to the extent the Bond Insurer makes payments under
the Bond Insurance Policy on account of principal of or interest on the Class A
Bonds, the Bond Insurer will be fully subrogated to the rights of such Holders
to receive such principal and interest from the Issuer, and (ii) the Bond
Insurer shall be paid such principal and interest but only from the sources and
in the manner provided herein and in the Insurance Agreement for the payment of
such principal and interest.

      The Indenture Trustee shall, so long as it is indemnified to its
satisfaction, cooperate in all respects with any reasonable written request by
the Bond Insurer (unless a Bond Insurer Default exists) for action to preserve
or enforce the Bond Insurer's rights or interest under this Indenture or the
Insurance Agreement, consistent with this Indenture and without limiting the
rights of the Bondholders as otherwise set forth in the Indenture, including,
without limitation, upon the occurrence and continuance of a default under the
Insurance Agreement, a request to take any one or more of the following actions:


                                       27

<PAGE>

                  (i) institute Proceedings for the collection of all amounts
      then payable on the Class A Bonds, or under this Indenture in respect of
      the Class A Bonds and all amounts payable under the Insurance Agreement,
      enforce any judgment obtained and collect from the Issuer monies adjudged
      due;

                  (ii) sell or cause to be sold the Trust Estate or any portion
      thereof or rights or interest therein, at one or more public or private
      Sales (as defined in Section 5.15 (a) hereof) called and conducted in any
      manner permitted by law;

                  (iii) institute Proceedings from time to time for the complete
      or partial foreclosure of this Indenture; and

                  (iv) exercise any remedies of a secured party under the UCC
      and take any other appropriate action to protect and enforce the rights
      and remedies of the Bond Insurer hereunder;

provided, however, action shall be taken pursuant to this Section 4.12 by the
Indenture Trustee to preserve the Bond Insurer's rights or interest under this
Agreement or the Insurance Agreement only to the extent such action is available
to the Class A Bondholders or the Bond Insurer under other provisions of this
Indenture.

      Notwithstanding any provision of this Indenture to the contrary, so long
as no Bond Insurer Default exists, the Bond Insurer shall at all times be
treated as if it were the exclusive owner of all Class A Bonds Outstanding for
the purposes of all approvals, consents, waivers and the institution of any
action and the written direction of all remedies, and the Indenture Trustee
shall act in accordance with the written directions of the Bond Insurer so long
as it is indemnified therefor to its reasonable satisfaction.

      Section 4.13 Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Bonds, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Bonds shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Person shall be released from all further
liability with respect to such monies.

      Section 4.14 Temporary Bonds. Pending the preparation of any Definitive
Bonds, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Bonds that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Bonds in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Bonds may
determine, as evidenced by their execution of such Bonds.

      If temporary Bonds are issued, the Issuer will cause Definitive Bonds to
be prepared without unreasonable delay. After the preparation of the Definitive
Bonds, the temporary Bonds shall be exchangeable for Definitive Bonds upon
surrender of the temporary Bonds at the office of the


                                       28

<PAGE>

Indenture Trustee located at 123 Washington Street, New York, New York 10006,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Bonds, the Issuer shall execute and the Indenture Trustee shall
authenticate and make available for delivery, in exchange therefor, Definitive
Bonds of authorized denominations and of like tenor, class and aggregate
principal amount. Until so exchanged, such temporary Bonds shall in all respects
be entitled to the same benefits under this Indenture as Definitive Bonds.

      Section 4.15 Representation Regarding ERISA. By acquiring a Bond or
interest therein, each Holder of such Bond or Beneficial Owner of any such
interest will be deemed to represent that either (1) it is not acquiring the
Bond with Plan Assets or (2) (A) the acquisition, holding and transfer of such
Bond will not give rise to a nonexempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code as a result of the Issuer, the Seller, the
Depositor, the Underwriter, the Owner Trustee, the Indenture Trustee, the Master
Servicer, any Subservicer, any other servicer, any administrator, any provider
of credit support, including the Derivative Contract Counterparty, any owner of
the Certificates, or any of their Affiliates being a "Party in Interest" (within
the meaning of ERISA) or Disqualified Person (within the meaning of the Code)
with respect to such Holder or Beneficial Owner that is a Plan and (B) the Bonds
are rated investment grade or better and such person believes that the Bonds are
properly treated as indebtedness without substantial equity features for
purposes of the Department of Labor regulation 29 C.F.R. ss. 2510.3-101, and
agrees to so treat the Bonds. Alternatively, regardless of the rating of the
Bonds, such person may provide the Indenture Trustee and the Owner Trustee with
an opinion of counsel, which opinion of counsel will not be at the expense of
the Issuer, the Seller, the Underwriter, the Owner Trustee, the Indenture
Trustee, the Master Servicer or any successor servicer which opines that the
acquisition, holding and transfer of such Bond or interest therein is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Issuer, the Seller, the Depositor, the Underwriter, the Owner
Trustee, the Indenture Trustee, the Master Servicer or any successor servicer to
any obligation in addition to those undertaken in the Indenture.


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<PAGE>

                                    ARTICLE V

                              Default and Remedies

      Section 5.01 Events of Default. The Issuer shall deliver to the Indenture
Trustee and the Bond Insurer, within five days after learning of the occurrence
of an Event of Default, written notice in the form of an Officer's Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii) or (iv) of the definition of "Event of
Default", its status and what action the Issuer is taking or proposes to take
with respect thereto. The Indenture Trustee shall not be deemed to have
knowledge of any Event of Default unless a Responsible Officer has actual
knowledge thereof or unless written notice of such Event of Default is received
by a Responsible Officer and such notice references the Bonds, the Trust Estate
or this Indenture.

      Section 5.02 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee at the written direction of the Holders of Bonds representing
not less than a majority of the aggregate Bond Principal Balance of the Bonds
may declare the Bonds to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if such notice is given by
Bondholders), and upon any such declaration the unpaid Bond Principal Balance of
the Class A, Class M and Class B Bonds, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately due
and payable; provided, however, that for purposes of this sentence and for
purposes of this Article V, unless a Bond Insurer Default exists, the Bond
Insurer may exercise the rights of all of the Holders of the Class A Bonds.

      At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V provided, Holders of Bonds representing not less
than a majority of the aggregate Bond Principal Balance of the Bonds, by written
notice to the Issuer and the Indenture Trustee, may waive the related Event of
Default and rescind and annul such declaration and its consequences if

                  (i) the Issuer or the Bond Insurer has paid or deposited with
      the Indenture Trustee a sum sufficient to pay:

                  (A) all payments of principal of and interest on the Bonds and
            all other amounts that would then be due hereunder or upon the Bonds
            if the Event of Default giving rise to such acceleration had not
            occurred;

                  (B) all sums paid or advanced by the Indenture Trustee
            hereunder and the reasonable compensation, expenses, disbursements
            and advances of the Indenture Trustee and its agents and counsel;
            and

                  (C) all amounts owed to the Derivative Contract Counterparty;
            and


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<PAGE>

                  (ii) all Events of Default, other than the nonpayment of the
      principal of the Bonds that has become due solely by such acceleration,
      have been cured or waived as provided in Section 5.12; provided, however,
      the Bond Insurer, so long as no Bond Insurer Default exists, may waive an
      Event of Default regardless of Section 5.02(i) above.

No such rescission shall affect any subsequent default or impair any right
consequent thereto.

      Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.

      (a) The Issuer covenants that if (i) default is made in the payment of any
interest on any Bond when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Bond when the same
becomes due and payable, the Issuer shall, upon demand of the Indenture Trustee,
at the direction of the Bond Insurer, so long as no Bond Insurer Default exists,
or if a Bond Insurer Default does exist, at the direction of the Holders of a
majority of the aggregate Bond Principal Balances of the Bonds, pay to the
Indenture Trustee, for the benefit of the Holders of Bonds, the whole amount
then due and payable on the Bonds for principal and interest, with interest at
the applicable Bond Interest Rate upon the overdue principal, and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.

      (b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, and at the direction of the Bond Insurer, so long as no Bond Insurer
Default exists, subject to the provisions of Section 10.16 hereof may institute
a Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Bonds and collect in the manner provided by
law out of the property of the Issuer or other obligor the Bonds, wherever
situated, the monies adjudged or decreed to be payable.

      (c) If an Event of Default occurs and is continuing, the Indenture
Trustee, at the direction of the Bond Insurer, so long as no Bond Insurer
Default exists subject to the provisions of Section 10.16 hereof may, as more
particularly provided in Section 5.04 hereof, in its discretion, proceed to
protect and enforce its rights and the rights of the Bondholders and the Bond
Insurer, by such appropriate Proceedings as the Indenture Trustee shall be
directed by the Bond Insurer, so long as no Bond Insurer Default exists, to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.

      (d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Bonds or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial


                                       31

<PAGE>

Proceedings relative to the Issuer or other obligor upon the Bonds, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, at the direction of the Bond Insurer, so long as no Bond Insurer
Default exists, irrespective of whether the principal of any Bonds shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:

                  (i) to file and prove a claim or claims for the whole amount
      of principal and interest owing and unpaid in respect of the Bonds and to
      file such other papers or documents as may be necessary or advisable in
      order to have the claims of the Indenture Trustee (including any claim for
      reasonable compensation to the Indenture Trustee and each predecessor
      Indenture Trustee, and their respective agents, attorneys and counsel, and
      for reimbursement of all expenses and liabilities incurred, and all
      advances made, by the Indenture Trustee and each predecessor Indenture
      Trustee, except as a result of negligence or bad faith), the Bond Insurer
      and of the Bondholders allowed in such Proceedings;

                  (ii) unless prohibited by applicable law and regulations, to
      vote on behalf of the Holders of Bonds in any election of a trustee, a
      standby trustee or Person performing similar functions in any such
      Proceedings;

                  (iii) to collect and receive any monies or other property
      payable or deliverable on any such claims and to distribute all amounts
      received with respect to the claims of the Bondholders, the Bond Insurer
      and of the Indenture Trustee on their behalf, and

                  (iv) to file such proofs of claim and other papers or
      documents as may be necessary or advisable in order to have the claims of
      the Indenture Trustee, the Bond Insurer or the Holders of Bonds allowed in
      any judicial proceedings relative to the Issuer, its creditors and its
      property;

and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Bondholders to make
payments to the Indenture Trustee, with the consent of the Bond Insurer so long
as no Bond Insurer Default exists, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Bondholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee and all amounts due to the Bond Insurer.

      (e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the Bonds or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Bondholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.


                                       32

<PAGE>

      (f) All rights of action and of asserting claims under this Indenture, or
under any of the Bonds, may be enforced by the Indenture Trustee without the
possession of any of the Bonds or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Bonds, subject to Section 5.05 hereof.

      (g) In any Proceedings brought by the Indenture Trustee with the consent
of the Bond Insurer so long as no Bond Insurer Default exists (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Bonds, and it shall not be necessary to
make any Bondholder a party to any such Proceedings.

      Section 5.04 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing and if an acceleration has been declared and not
rescinded pursuant to Section 5.02 hereof, the Indenture Trustee subject to the
provisions of Section 10.16 hereof may with the consent of the Bond Insurer, so
long as a Bond Insurer Default does not exist, and shall at the direction of the
Bond Insurer so long as no Bond Insurer Default exists, do one or more of the
following (subject to Section 5.05 hereof):

                  (i) institute Proceedings in its own name and as trustee of an
      express trust for the collection of all amounts then payable on the Bonds
      or under this Indenture with respect thereto, whether by declaration or
      otherwise, and all amounts payable under the Insurance Agreement, enforce
      any judgment obtained, and collect from the Issuer and any other obligor
      upon such Bonds monies adjudged due;

                  (ii) institute Proceedings from time to time for the complete
      or partial foreclosure of this Indenture with respect to the Trust Estate;

                  (iii) exercise any remedies of a secured party under the UCC
      and take any other appropriate action to protect and enforce the rights
      and remedies of the Indenture Trustee and the Holders of the Bonds and the
      Bond Insurer; and

                  (iv) sell the Trust Estate or any portion thereof or rights or
      interest therein, at one or more public or private sales called and
      conducted in any manner permitted by law;

provided, however, that so long as a Bond Insurer Default exists the Indenture
Trustee may not sell or otherwise liquidate the Trust Estate following an Event
of Default, unless (A) the Indenture Trustee obtains the consent of the Holders
of 100% of the aggregate Bond Principal Balance to discharge in full all amounts
then due and unpaid upon the Bonds for principal and interest and to reimburse
the Bond Insurer for any amounts drawn under the Bond Insurance Policy and any
other amounts due to the Bond Insurer under the Insurance Agreement or (C) the
Indenture Trustee determines that the Mortgage Loans will not continue to
provide sufficient funds for the payment of principal of and interest on the
Bonds as they would have become due if the Bonds had not been


                                       33

<PAGE>

declared due and payable, and the Indenture Trustee obtains the consent of the
Holders of a majority of the aggregate Bond Principal Balance of the Class A,
Class M and Class B Bonds. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain
and rely upon an opinion (obtained at the expense of the Trust) of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose. Notwithstanding the foregoing, so long as an Event of
Servicer Termination has not occurred, any Sale of the Trust Estate shall be
made subject to the continued servicing of the Mortgage Loans by the Master
Servicer as provided in the Servicing Agreement.

      (b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order;
provided, however, that any amounts representing payments from the Bond Insurer
shall only be used to pay interest and principal to the Class A Bondholders
pursuant to clauses FOURTH and FIFTH below:

            FIRST: to the Indenture Trustee for amounts due under Section 6.07
      hereof;

            SECOND: to the Derivative Contract Counterparty, any amounts owed
      under the Derivative Contracts, other than any Additional Derivative
      Counterparty Payment;

            THIRD: to the Bond Insurer, provided no Bond Insurer Default exists,
      with respect to any Premium Amount then due to the extent unpaid pursuant
      to the Servicing Agreement;

            FOURTH: to the Bondholders for amounts due and unpaid on the Bonds
      (other than Unpaid Interest Shortfalls and Basis Risk Shortfall
      Carry-Forward Amounts) with respect to interest, first, to the Class A
      Bondholders, and second, sequentially, to the Class M Bondholders and
      Class B Bondholders, in that order, according to the amounts due and
      payable on the Bonds for interest;

            FIFTH: to Bondholders for amounts due and unpaid on the Class A,
      Class M and Class B Bonds with respect to principal, and to each
      Bondholder ratably, without preference or priority of any kind, according
      to the amounts due and payable on such Bonds for principal, until the Bond
      Principal Balance of each such Class is reduced to zero;

            SIXTH: to the payment of all amounts due and owing to the Bond
      Insurer under the Insurance Agreement (including any Premium Amount not
      paid pursuant to clause SECOND above);

            SEVENTH: to the Bondholders for amounts due and unpaid on the Bonds
      with respect to any related Basis Risk Shortfall Carry-Forward Amounts,
      first, to the Class A Bondholders, and second, sequentially, to the Class
      M Bondholders and Class B Bondholders, in that order, according to the
      amounts due and payable on the Bonds with respect thereto, from amounts
      available in the Trust Estate for the Bondholders;

            EIGHTH: to the Bondholders for amounts due and unpaid on the Bonds
      with respect to any related Unpaid Interest Shortfall, first, to the Class
      A Bondholders, and second,


                                       34

<PAGE>

      sequentially, to the Class M Bondholders and Class B Bondholders, in that
      order, according to the amounts due and payable on the Bonds with respect
      thereto, from amounts available in the Trust Estate for the Bondholders;
      and

            NINTH: to the Derivative Contract Counterparty, any Additional
      Derivative Counterparty Payment; and

            TENTH: to the payment of the remainder, if any to the Certificate
      Paying Agent on behalf of the Issuer or to any other person legally
      entitled thereto.

      The Indenture Trustee may fix a record date and payment date for any
payment to Bondholders pursuant to this Section 5.04. With respect to any
acceleration at the direction of the Bond Insurer, the first payment date after
the acceleration shall be the first Payment Date after the acceleration. At
least 15 days before such record date, the Indenture Trustee shall mail to each
Bondholder a notice that states the record date, the payment date and the amount
to be paid.

      Section 5.05 Optional Preservation of the Trust Estate. If the Bonds have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, with the consent of the Bond Insurer (which
consent shall not be required if a Bond Insurer Default exists), and shall, at
the direction of the Bond Insurer so long as no Bond Insurer Default exists,
elect to take and maintain possession of the Trust Estate. It is the desire of
the parties hereto and the Bondholders that there be at all times sufficient
funds for the payment of principal of and interest on the Bonds and other
obligations of the Issuer including payment to the Bond Insurer, and the
Indenture Trustee, unless directed otherwise by the Bond Insurer, shall take
such desire into account when determining whether or not to take and maintain
possession of the Trust Estate. In determining whether to take and maintain
possession of the Trust Estate, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose.

      Section 5.06 Limitation of Suits. No Holder of any Bond shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.16 hereof

                  (i) such Holder has previously given written notice to the
      Indenture Trustee of a continuing Event of Default;

                  (ii) the Holders of not less than 25% of the aggregate Bond
      Principal Balances of the Bonds have made a written request to the
      Indenture Trustee to institute such Proceeding in respect of such Event of
      Default in its own name as Indenture Trustee hereunder;


                                       35

<PAGE>

                  (iii) such Holder or Holders have offered to the Indenture
      Trustee reasonable indemnity against the costs, expenses and liabilities
      to be incurred in complying with such request;

                  (iv) the Indenture Trustee for 60 days after its receipt of
      such notice of request and offer of indemnity has failed to institute such
      Proceedings;

                  (v) no direction inconsistent with such written request has
      been given to the Indenture Trustee during such 60-day period by the
      Holders of a majority of the Bond Principal Balances of the Bonds; and

                  (vi) such Holder or Holders have the written consent of the
      Bond Insurer, unless a Bond Insurer Default exists.

It is understood and intended that no one or more Holders of Bonds shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Bonds or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.

      Subject to the last paragraph of Section 5.11 herein, in the event the
Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Bonds, each representing less
than a majority of the Bond Principal Balances of the Bonds, the Indenture
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.

      Section 5.07 Unconditional Rights of Bondholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Bond shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Bond on or after the
respective due dates thereof expressed in such Bond or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.

      Section 5.08 Restoration of Rights and Remedies. If the Indenture Trustee
or any Bondholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee, the Bond
Insurer or to such Bondholder, then and in every such case the Issuer, the
Indenture Trustee, the Bond Insurer and the Bondholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Bond Insurer and the Bondholders shall continue as though
no such Proceeding had been instituted.

      Section 5.09 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, to the Bond Insurer or to
the Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or


                                       36

<PAGE>

hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

      Section 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Bond Insurer or any Holder of any Bond to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Bond Insurer or to the Bondholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Bond Insurer or by the Bondholders, as the case may be.

      Section 5.11 Control By Bond Insurer. The Bond Insurer, unless a Bond
Insurer Default exists, or the Holders of a majority of the aggregate Bond
Principal Balances of Bonds, if a Bond Insurer Default exists, shall have the
right (subject to the provisions of Section 5.06) to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Bonds or exercising any trust or power conferred on
the Indenture Trustee; provided that:

                  (i) such direction shall not be in conflict with any rule of
      law or with this Indenture;

                  (ii) if a Bond Insurer Default exists, any direction to the
      Indenture Trustee to sell or liquidate the Trust Estate shall be by
      Holders of Bonds representing not less than 100% of the Bond Principal
      Balances of the Class A, Class M and Class B Bonds and 100%;

                  (iii) if the conditions set forth in Section 5.05 hereof have
      been satisfied and the Indenture Trustee, with the consent of the Bond
      Insurer (which consent shall not be required if a Bond Insurer Default
      exists), elects to retain the Trust Estate pursuant to such Section, then
      any direction to the Indenture Trustee by Holders of Bonds representing
      less than 100% of the Bond Principal Balances of the Class A, Class M and
      Class B Bonds to sell or liquidate the Trust Estate shall be of no force
      and effect; and

                  (iv) if a Bond Insurer Default exists, the Indenture Trustee
      may take any other action deemed proper by the Indenture Trustee that is
      not inconsistent with such direction of the Holders of Bonds representing
      a majority of the Bond Principal Balances of the Bonds.

Notwithstanding the rights of Bondholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability.

      Section 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Bonds as provided in Section 5.02 hereof,
the Holders of Bonds representing not less than a majority of the aggregate Bond
Principal Balance of the Bonds may waive any past Event of Default and its
consequences except an Event of Default (a) with respect to payment of principal
of or interest on any of the Bonds, (b) in respect of a covenant or provision
hereof which cannot be


                                       37

<PAGE>

modified or amended without the consent of the Holder of each Bond or (c) the
waiver of which would materially and adversely affect the interests of the Bond
Insurer or modify its obligation under the Bond Insurance Policy. In the case of
any such waiver, the Issuer, the Indenture Trustee and the Holders of the Bonds
shall be restored to their former positions and rights hereunder, respectively,
but no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereto.

      Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.

      Section 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Bond and each Beneficial Owner of any interest therein by
such Holder's or Beneficial Owner's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Bondholder, or group of
Bondholders, in each case holding in the aggregate more than 10% of the Bond
Principal Balances of the Bonds or (c) any suit instituted by any Bondholder for
the enforcement of the payment of principal of or interest on any Bond on or
after the respective due dates expressed in such Bond and in this Indenture.

        Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
      or plead or in any manner whatsoever, claim or take the benefit or
advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.

      Section 5.15 Sale of Trust Estate. (a) The power to effect any sale or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 hereof is expressly subject to the provisions of Section 5.05
hereof and this Section 5.15. The power to effect any such Sale shall not be
exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Bonds and under this
Indenture and under the Insurance Agreement shall have been paid. The Indenture
Trustee with the consent of the Bond Insurer (which consent shall not be
required if a Bond Insurer Default exists), may from time to time postpone any
public Sale by public announcement made at the time and place of such Sale. The
Indenture Trustee hereby expressly waives its right to any amount fixed by law
as compensation for any Sale.


                                       38

<PAGE>

      (b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless

            (1) the Bond Insurer, unless a Bond Insurer Default exists, or the
      Holders of all Bonds if a Bond Insurer Default exists, consent to or
      direct the Indenture Trustee to make, such Sale, or

            (2) the proceeds of such Sale would be not less than the entire
      amount which would be payable to the Bondholders under the Bonds and the
      Bond Insurer in respect of amounts drawn under the Bond Insurance Policy
      and any other amounts due to the Bond Insurer under the Insurance
      Agreement, in full payment thereof in accordance with Section 5.02 hereof,
      on the Payment Date next succeeding the date of such Sale, or

            (3) the Indenture Trustee determines that the conditions for
      retention of the Trust Estate set forth in Section 5.05 hereof cannot be
      satisfied (in making any such determination, the Indenture Trustee may
      rely upon an opinion of an Independent investment banking firm obtained
      and delivered as provided in Section 5.05 hereof), and the Bond Insurer
      consents to such Sale, or if a Bond Insurer Default exists, the Holders of
      Bonds representing at least 100% of the Bond Principal Balances of the
      Class A, Class M and Class B Bonds consent to such Sale.

The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).

      (c) Unless the Bond Insurer, or if a Bond Insurer Default exists, the
Holders representing at least 66-2/3% of the Bond Principal Balances of the
Bonds have otherwise consented or directed the Indenture Trustee, at any public
Sale of all or any portion of the Trust Estate at which a minimum bid equal to
or greater than the amount described in paragraph (2) of subsection (b) of this
Section 5.15 has not been established by the Indenture Trustee and no Person
bids an amount equal to or greater than such amount, the Indenture Trustee, as
trustee for the benefit of the Holders of the Bonds, shall bid an amount at
least $1.00 more than the highest other bid.

      (d) In connection with a Sale of all or any portion of the Trust Estate,

            (1) any Holder or Holders of Bonds may bid for and purchase the
      property offered for sale, and upon compliance with the terms of sale may
      hold, retain and possess and dispose of such property, without further
      accountability, and may, in paying the purchase money therefor, deliver
      any Bonds or claims for interest thereon in lieu of cash up to the amount
      which shall, upon distribution of the net proceeds of such sale, be
      payable thereon, and such Bonds, in case the amounts so payable thereon
      shall be less than the amount due thereon, shall be returned to the
      Holders thereof after being appropriately stamped to show such partial
      payment;

            (2) the Indenture Trustee, with the consent of the Bond Insurer so
      long as no Bond Insurer Default exists, may bid for and acquire the
      property offered for Sale in connection with any Sale thereof, and,
      subject to any requirements of, and to the extent


                                       39

<PAGE>

      permitted by, applicable law in connection therewith, may purchase all or
      any portion of the Trust Estate in a private sale, and, in lieu of paying
      cash therefor, may make settlement for the purchase price by crediting the
      gross Sale price against the sum of (A) the amount which would be
      distributable to the Holders of the Bonds and Holders of Certificates and
      amounts distributable to the Bond Insurer as a result of such Sale in
      accordance with Section 5.04(b) hereof on the Payment Date next succeeding
      the date of such Sale and (B) the expenses of the Sale and of any
      Proceedings in connection therewith which are reimbursable to it, without
      being required to produce the Bonds in order to complete any such Sale or
      in order for the net Sale price to be credited against such Bonds, and any
      property so acquired by the Indenture Trustee shall be held and dealt with
      by it in accordance with the provisions of this Indenture;

            (3) the Indenture Trustee shall execute and deliver an appropriate
      instrument of conveyance, prepared by the Issuer and satisfactory to the
      Indenture Trustee, transferring its interest in any portion of the Trust
      Estate in connection with a Sale thereof;

            (4) the Indenture Trustee is hereby irrevocably appointed the agent
      and attorney- in-fact of the Issuer to transfer and convey its interest in
      any portion of the Trust Estate in connection with a Sale thereof, and to
      take all action necessary to effect such Sale; and

            (5) no purchaser or transferee at such a Sale shall be bound to
      ascertain the Indenture Trustee's authority, inquire into the satisfaction
      of any conditions precedent or see to the application of any monies.

      Section 5.16 Action on Bonds. The Indenture Trustee's right to seek and
recover judgment on the Bonds or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Bondholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b) hereof.

      Section 5.17 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so, the Issuer in
its capacity as holder of the Mortgage Loans, shall take all such lawful action
as the Indenture Trustee or the Bond Insurer may request to cause the Issuer to
compel or secure the performance and observance by the Seller and the Master
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Mortgage Loan Sale and Contribution Agreement and the
Servicing Agreement, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Mortgage Loan Sale and Contribution Agreement and the Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee, with the consent of
the Bond Insurer so long as no Bond Insurer Default exists, as pledgee of the
Mortgage Loans, including the transmission of notices of default on the part of
the Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Mortgage
Loan Sale and Contribution


                                       40

<PAGE>

Agreement and the Servicing Agreement. So long as no Bond Insurer Default
exists, the Bond Insurer shall have the right to approve or reject any proposed
successor to the Master Servicer (other than the Indenture Trustee) under the
Servicing Agreement.

      (b) The Indenture Trustee, as pledgee of the Mortgage Loans, subject to
the rights of the Bond Insurer under this Agreement and the Servicing Agreement,
may, and at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Bond Insurer or if a Bond
Insurer Default exists, of the Holders of 66-2/3% of the Bond Principal Balances
of the Bonds, shall exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or the Master Servicer under or in connection
with the Mortgage Loan Sale and Contribution Agreement and the Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Seller or the Master Servicer, as the case may
be, of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Mortgage Loan Sale and Contribution Agreement and Contribution Agreement and the
Servicing Agreement, as the case may be, and any right of the Issuer to take
such action shall not be suspended.


                                       41

<PAGE>

                                   ARTICLE VI

                              The Indenture Trustee

      Section 6.01 Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture 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.

      (b) Except during the continuance of an Event of Default:

                  (i) the Indenture Trustee undertakes to perform such duties
      and only such duties as are specifically set forth in this Indenture and
      no implied covenants or obligations shall be read into this Indenture
      against the Indenture Trustee; and

                  (ii) in the absence of bad faith on its part, the Indenture
      Trustee may conclusively rely, as to the truth of the statements and the
      correctness of the opinions expressed therein, upon certificates or
      opinions furnished to the Indenture Trustee and conforming to the
      requirements of this Indenture; however, the Indenture Trustee shall
      examine the certificates and opinions to determine whether or not they
      conform to the requirements of this Indenture.

      (c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (i) this paragraph does not limit the effect of paragraph (b)
      of this Section 6.01;

                  (ii) the Indenture Trustee shall not be liable for any error
      of judgment made in good faith by a Responsible Officer unless it is
      proved that the Indenture Trustee was negligent in ascertaining the
      pertinent facts; and

                  (iii) the Indenture Trustee shall not be liable with respect
      to any action it takes or omits to take in good faith in accordance with a
      direction received by it (A) from Bondholders or from the Issuer, which
      they are entitled to give under the Basic Documents or (B) from the Bond
      Insurer, which it is entitled to give under the Basic Documents.

      (d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.

      (e) Money held in trust by the Indenture Trustee need not be segregated
from other trust funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.

      (f) No provision of this Indenture shall require the Indenture Trustee 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 it shall have reasonable grounds to believe that


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<PAGE>

repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

      (g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

      (h) The Indenture Trustee shall act in accordance with Sections 6.03 and
6.04 of the Servicing Agreement and shall act as successor to the Master
Servicer or appoint a successor Master Servicer in accordance with Section 6.02
of the Servicing Agreement.

      Section 6.02 Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.

      (b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.

      (c) The Indenture 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 or nominee.

      (d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.

      (e) The Indenture Trustee may consult with counsel, and the advice or
Opinion of Counsel with respect to legal matters relating to this Indenture and
the Bonds shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.

      (f) For the limited purpose of effecting any action to be undertaken by
the Indenture Trustee, but not specifically as a duty of the Indenture Trustee
in the Indenture, the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder, either directly or by or through
agents, attorneys, custodians or nominees appointed with due care, and shall not
be responsible for any willful misconduct or negligence on the part of any
agent, attorney, custodian or nominee so appointed.

      (g) The Indenture Trustee or its Affiliates are permitted to receive
additional compensation that could be deemed to be in the Indenture Trustee's
economic self-interest for (i) serving as investment adviser, administrator,
shareholder servicing agent, custodian or sub-custodian with respect to certain
of the Eligible Investments, (ii) using Affiliates to effect transactions in
certain Eligible Investments and (iii) effecting transactions in certain
Eligible Investments. Such compensation shall not be considered an amount that
is reimbursable or payable to the Indenture Trustee (i) as part of the Indenture
Trustee Fee, (ii) pursuant to Sections 3.05(d), 3.05(h), 5.04(b), 6.07 or
8.02(c) hereunder or (iii) out of Available Funds.


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<PAGE>

      Section 6.03 Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Bonds
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee, subject to the requirements of the
Trust Indenture Act. Any Bond Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Indenture Trustee must comply with
Sections 6.11 and 6.12 hereof.

      Section 6.04 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Bonds, it shall not be accountable for the
Issuer's use of the proceeds from the Bonds, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Bonds or in the Bonds other than the Indenture
Trustee's certificate of authentication.

      Section 6.05 Notice of Event of Default. Subject to Section 5.01, the
Indenture Trustee shall promptly mail to each Bondholder and the Bond Insurer
notice of the Event of Default after it is known to a Responsible Officer of the
Indenture Trustee, unless such Event of Default shall have been waived or cured.
Except in the case of an Event of Default in payment of principal of or interest
on any Bond, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Bondholders.

      Section 6.06 Reports by Indenture Trustee to Holders and Tax
Administration. The Indenture Trustee shall deliver to each Bondholder such
information as may be required to enable such holder to prepare its federal and
state income tax returns.

      The Indenture Trustee shall prepare and file (or cause to be prepared and
filed), on behalf of the Owner Trustee, all tax returns (if any) and information
reports, tax elections and such annual or other reports of the Issuer as are
necessary for preparation of tax returns and information reports as provided in
Section 5.03 of the Trust Agreement, including without limitation Form 1099. All
tax returns and information reports shall be signed by the Owner Trustee as
provided in Section 5.03 of the Trust Agreement.

      Section 6.07 Compensation and Indemnity. The Issuer shall pay to the
Indenture Trustee on each Payment Date reasonable compensation for its services.
The amount of the Indenture Trustee's Fee shall be paid by the Master Servicer
to the Indenture Trustee on each Payment Date pursuant to Section 3.07(a)(x) of
the Servicing Agreement and all amounts owing to the Indenture Trustee hereunder
(including amounts owing from the Issuer for indemnification and otherwise) in
excess of such amount shall be paid solely as provided in Section 3.05(d)(ix),
Section 3.05(h)(viii) and Section 5.04(b) hereof. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to compensation for its services. Such expenses shall
include reasonable compensation and expenses, disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall
indemnify the Indenture Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this Trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer promptly of any


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<PAGE>

claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend any such claim, and the Indenture Trustee may have separate
counsel and the Issuer shall pay the fees and expenses of such counsel. The
Issuer is not obligated to reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.

      The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture and the termination
or resignation of the Indenture Trustee. When the Indenture Trustee incurs
expenses after the occurrence of an Event of Default with respect to the Issuer,
the expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.

      Section 6.08 Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer and the Bond Insurer. The Bond
Insurer or, if a Bond Insurer Default exists, the Holders of a majority of Bond
Principal Balances of the Bonds may remove the Indenture Trustee by so notifying
the Indenture Trustee and the Bond Insurer and may appoint a successor Indenture
Trustee. The Issuer shall, with the consent of the Bond Insurer so long as no
Bond Insurer Default exists, remove the Indenture Trustee if:

                  (i) the Indenture Trustee fails to comply with Section 6.11
      hereof;

                  (ii) the Indenture Trustee is adjudged a bankrupt or
      insolvent;

                  (iii) a receiver or other public officer takes charge of the
      Indenture Trustee or its property; or

                  (iv) the Indenture Trustee otherwise becomes incapable of
      acting.

      If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall, with the consent of the Bond Insurer so long as no Bond Insurer
Default exists, promptly appoint a successor Indenture Trustee.

      A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Bond Insurer and to the
Issuer. Thereupon, the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Bondholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.

      If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Bond Insurer


                                       45

<PAGE>

or the Holders of a majority of Bond Principal Balances of the Bonds may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.

      Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.

      Section 6.09 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11 hereof. The Indenture Trustee shall
provide the Rating Agencies and the Bond Insurer with prior written notice of
any such transaction.

      If at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture and any of the Bonds shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee and deliver such Bonds so
authenticated; and if at that time any of the Bonds shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Bonds either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is in the Bonds or in this Indenture provided
that the certificate of the Indenture Trustee shall have.

      Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Bondholders and the Bond Insurer, such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee or the Bond
Insurer may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 hereof and notice to the Bond Insurer but not to the
Bondholders (unless a Bond Insurer Default exists, in which case notice will be
sent to the Bondholders) of the appointment of any co-trustee or separate
trustee shall be required under Section 6.08 hereof.

      (b) 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 Indenture Trustee shall be conferred or imposed upon and
      exercised or performed by the Indenture 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 Indenture


                                       46

<PAGE>

      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
      the Indenture 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 Estate 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
      Indenture Trustee;

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

                  (iii) the Indenture Trustee may at any time accept the
      resignation of or remove any separate trustee or co-trustee.

      (c) Any notice, request or other writing given to the Indenture 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 Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.

      (d) Any separate trustee or co-trustee may at any time constitute the
Indenture 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 Indenture 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.

      Section 6.11 Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it or its parent
shall have a long-term debt rating of Baa3 or better by Moody's and BBB or
better by Standard & Poor's. The Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met.

      Section 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.

      Section 6.13 Representations and Warranties. The Indenture Trustee hereby
represents that:


                                       47

<PAGE>

                  (i) The Indenture Trustee is duly organized and validly
      existing as an association in good standing under the laws of the United
      States with power and authority to own its properties and to conduct its
      business as such properties are currently owned and such business is
      presently conducted;

                  (ii) The Indenture Trustee has the power and authority to
      execute and deliver this Indenture and to carry out its terms; and the
      execution, delivery and performance of this Indenture have been duly
      authorized by the Indenture Trustee by all necessary corporate action;

                  (iii) The consummation of the transactions contemplated by
      this Indenture and the fulfillment of the terms hereof do not conflict
      with, result in any breach of any of the terms and provisions of, or
      constitute (with or without notice or lapse of time) a default under, the
      articles of incorporation or bylaws of the Indenture Trustee or any
      agreement or other instrument to which the Indenture Trustee is a party or
      by which it is bound; and

                  (iv) To the Indenture Trustee's knowledge, there are no
      proceedings or investigations pending or threatened before any court,
      regulatory body, administrative agency or other governmental
      instrumentality having jurisdiction over the Indenture Trustee or its
      properties: (A) asserting the invalidity of this Indenture (B) seeking to
      prevent the consummation of any of the transactions contemplated by this
      Indenture or (C) seeking any determination or ruling that might materially
      and adversely affect the performance by the Indenture Trustee of its
      obligations under, or the validity or enforceability of, this Indenture.

      Section 6.14 Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:

      (a) to accept the pledge of the Mortgage Loans and hold the assets of the
Trust Estate in trust for the Bondholders and the Bond Insurer;

      (b) to authenticate and deliver the Bonds substantially in the form
prescribed by Exhibits A-1, A-2 and A-3 to this Indenture in accordance with the
terms of this Indenture; and

      (c) to take all other actions as shall be required to be taken by the
terms of this Indenture.

      Section 6.15 The Agents. The provisions of this Indenture relating to the
limitations of the Indenture Trustee's liability and to its indemnity, rights
and protections shall inure also to the Paying Agent and Bond Registrar.


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<PAGE>

                                   ARTICLE VII

                         Bondholders' Lists and Reports

      Section 7.01 Issuer To Furnish Indenture Trustee Names and Addresses of
Bondholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Holders of Bonds as of such Record Date, (b) at such other times as the
Indenture Trustee and the Bond Insurer may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Bond
Registrar, no such list shall be required to be furnished to the Indenture
Trustee.

      Section 7.02 Preservation of Information; Communications to Bondholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Bonds contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
hereof and the names and addresses of Holders of Bonds received by the Indenture
Trustee in its capacity as Bond Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.

      (b) Bondholders may communicate pursuant to TIA ss. 312(b) with other
Bondholders with respect to their rights under this Indenture or under the
Bonds.

      (c) The Issuer, the Indenture Trustee and the Bond Registrar shall have
the protection of TIA ss. 312(c).

      Section 7.03 Reports of Issuer. (a) Subject to Section 4.06 of the
Servicing Agreement (i) The Indenture Trustee shall file with the Commission on
behalf of the Issuer, with a copy to the Issuer and the Bond Insurer within 15
days before the Issuer is required to file the same with the Commission, the
annual reports and the information, documents and other reports (or such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;

                  (ii) The Indenture Trustee shall file with the Commission, on
      behalf of the Issuer, in accordance with rules and regulations prescribed
      from time to time by the Commission such additional information, documents
      and reports with respect to compliance by the Issuer with the conditions
      and covenants of this Indenture as may be required from time to time by
      such rules and regulations; and

                  (iii) The Indenture Trustee shall supply (and the Indenture
      Trustee shall transmit by mail to all Bondholders described in TIA ss.
      313(c)) such summaries of any information, documents and reports required
      to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section
      7.03(a) and by rules and regulations prescribed from time to time by the
      Commission.


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<PAGE>

      (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.

      Section 7.04 Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each June 30 beginning with June 30, 2004, the Indenture
Trustee shall mail to each Bondholder as required by TIA ss. 313(c) and the Bond
Insurer a brief report dated as of such date that complies with TIA ss. 313(a).
The Indenture Trustee also shall comply with TIA ss. 313(b).

      A copy of each report at the time of its mailing to Bondholders shall be
filed by the Indenture Trustee with the Commission via EDGAR and each stock
exchange, if any, on which the Bonds are listed. The Issuer shall notify the
Indenture Trustee if and when the Bonds are listed on any stock exchange.

      Section 7.05 Statements to Bondholders. (a) With respect to each Payment
Date, the Indenture Trustee shall make available via the Indenture Trustee's
website https://www.corporatetrust.db.com/invr or deliver at the recipient's
option to each Bondholder and each Certificateholder, the Bond Insurer, the
Derivative Contract Counterparty, the Depositor, the Owner Trustee, the
Certificate Paying Agent and each Rating Agency, a statement setting forth the
following information as to the Bonds, to the extent applicable:

                  (i) the aggregate amount of collections with respect to the
      Mortgage Loans;

                  (ii) the Available Funds and Net Monthly Excess Cash Flow,
      payable to each Class of Bondholders for such Payment Date, the Basis Risk
      Shortfall Carry-Forward Amount on each Class of Bonds for such Payment
      Date and the aggregate Unpaid Interest Shortfall on each Class of Bonds
      for such Payment Date;

                  (iii) (a) the amount of such distribution to each Class of
      Class A, Class M and Class B Bonds applied to reduce the Bond Principal
      Balance thereof, and (b) the aggregate amount included therein
      representing Principal Prepayments;

                  (iv) the Insured Amount, if any, paid by the Bond Insurer
      under the Bond Insurance Policy for such Payment Date and the aggregate
      Insured Amounts for all prior Payment Dates paid by the Bond Insurer under
      the Bond Insurance Policy and not yet reimbursed;

                  (v) the amount of such distribution to Holders of each Class
      of Bonds allocable to interest;

                  (vi) the amount of such distribution to the Certificates;

                  (vii) if the distribution to the Holders of any Class of Bonds
      is less than the full amount that would be distributable to such Holders
      if there were sufficient funds available therefor, the amount of the
      shortfall;


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<PAGE>

                  (viii) the number and the aggregate Stated Principal Balance
      of the Mortgage Loans as of the end of the related Due Period;

                  (ix) the aggregate Bond Principal Balance of each Class of
      Bonds, after giving effect to the amounts distributed on such Payment
      Date, separately identifying any reduction thereof due to Realized Losses
      other than pursuant to an actual distribution of principal and the
      aggregate Bond Principal Balance of all of the Class A, Class M and Class
      B Bonds after giving effect to the distribution of principal on such
      Payment Date;

                  (x) the amount of any Principal Available Funds Shortfalls for
      such Payment Date;

                  (xi) the number and aggregate Stated Principal Balances of
      Mortgage Loans (a) as to which the Monthly Payment is delinquent for 31-60
      days, 61-90 days, 91 or more days, respectively, (b) in foreclosure and
      (c) that have become REO Property, in each case as of the end of the
      preceding calendar month;

                  (xii) the Net Derivative Contract Payment Amount;

                  (xiii) the Overcollateralization Increase Amount with respect
      to each Loan Group, Overcollateralization Release Amount,
      Overcollateralization Target Amount and Overcollateralized Amount, if any,
      in each case as the end of the related Payment Date;

                  (xiv) the amount of any Advances and Compensating Interest
      payments;

                  (xv) the aggregate Realized Losses with respect to the related
      Payment Date and cumulative Realized Losses since the Closing Date;

                  (xvi) the number and aggregate Stated Principal Balance of
      Mortgage Loans repurchased pursuant to the Mortgage Loan Sale and
      Contribution Agreement for the related Payment Date and cumulatively since
      the Closing Date;

                  (xvii) the Sixty Day Rolling Delinquency Percentage, Ninety
      Day Rolling Delinquency Percentage and Cumulative Losses for such Payment
      Date;

                  (xviii)the book value of any REO Property;

                  (xix) the amount of any Prepayment Interest Shortfalls or
      Relief Act Shortfalls for such Payment Date; and

                  (xx) the aggregate Stated Principal Balance of Mortgage Loans
      purchased pursuant to Section 3.18 of the Servicing Agreement for the
      related Payment Date and cumulatively since the Closing Date.

      Items (iii) and (v) above shall be presented on the basis of a Bond having
a $1,000 denomination. In addition, by January 31 of each calendar year
following any year during which the


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<PAGE>

Bonds are outstanding, the Indenture Trustee shall furnish a report to each
Bondholder of record if so requested in writing at any time during each calendar
year as to the aggregate of amounts reported pursuant to (iii), (iv) and (v)
with respect to the Bonds for such calendar year.

      The Indenture Trustee may conclusively rely upon the Remittance Report
provided by the Master Servicer pursuant to Section 4.01 of the Servicing
Agreement and on the amount of the Net Derivative Contract Payment Amount
furnished to the Indenture Trustee pursuant to the Derivative Contracts in its
preparation of its Statement to Bondholders.


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<PAGE>

                                  ARTICLE VIII

                      Accounts, Disbursements and Releases

      Section 8.01 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.

      Section 8.02 Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Bondholders, the Bond Insurer
and the Derivative Contract Counterparty, the Payment Account as provided in
Section 3.01 hereof.

      (b) All monies deposited from time to time in the Payment Account and all
deposits therein pursuant to this Indenture (other than deposits of any gain or
income on investments thereof) are for the benefit of the Bondholders and the
Bond Insurer. Any loss on any investment made by the Indenture Trustee with
funds in the Payment Account shall be reimbursed immediately to the Trust Estate
by the Master Servicer. All investments made with monies in the Payment Account
and the Certificate Distribution Account including all income or other gain from
such investments shall be for the benefit of and the risk of the Master
Servicer.

      (c) On each Payment Date, the Indenture Trustee shall pay itself the
Indenture Trustee's Fee for such Payment Date and then shall pay the Derivative
Contract Counterparty the Net Derivative Contract Payment Amount, and then the
Indenture Trustee shall distribute all remaining amounts on deposit in the
Payment Account to the Bondholders in respect of the Bonds and to such other
persons in the order of priority set forth in Section 3.05 hereof (except as
otherwise provided in Section 5.04(b) hereof).

      (d) The Indenture Trustee shall invest any funds in the Payment Account,
but only in Eligible Investments, as directed by the Master Servicer, maturing
no later than the Business Day preceding each Payment Date and such Eligible
Investments shall not be sold or disposed of prior to their maturity.

      Section 8.03 Officer's Certificate. The Indenture Trustee shall receive at
least seven Business Days' notice when requested by the Issuer to take any
action pursuant to Section 8.05(a) hereof, accompanied by copies of any
instruments to be executed, and the Indenture Trustee shall also require, as a
condition to such action, an Officer's Certificate, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to


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<PAGE>

complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with.

      Section 8.04 Termination Upon Distribution to Bondholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to
Bondholders, the Bond Insurer, the Certificate Paying Agent on behalf of the
Certificateholders and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the 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.

      Section 8.05 Release of Trust Estate. (a) Subject to the payment of its
fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture, including for the purposes of any repurchase by
the Master Servicer of a Mortgage Loan pursuant to Section 3.18 of the Servicing
Agreement. No party relying upon an instrument executed by the Indenture Trustee
as provided in Article VIII hereunder shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent,
or see to the application of any monies.

      (b) The Indenture Trustee shall, at such time as (i) there are no Bonds
Outstanding, (ii) all sums due to the Indenture Trustee pursuant to this
Indenture have been paid and (iii) all sums due to the Bond Insurer have been
paid, release any remaining portion of the Trust Estate that secured the Bonds
from the lien of this Indenture.

      (c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of a request from the
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel stating
that all applicable requirements have been satisfied, and a letter from the Bond
Insurer stating that the Bond Insurer has no objection to such request from the
Issuer, except as otherwise provided in clause (a).

      Section 8.06 Surrender of Bonds Upon Final Payment. By acceptance of any
Bond, the Holder thereof agrees to surrender such Bond to the Indenture Trustee
promptly, prior to such Bondholder's receipt of the final payment thereon.

      Section 8.07 Optional Redemption of the Bonds. (a) The Majority
Certificateholder shall have the option to redeem the Bonds in whole, but not in
part, on any Payment Date on or after the earlier of (i) the Payment Date on
which the aggregate Stated Principal Balance of the Mortgage Loans as of the end
of the prior Due Period is less than or equal to 25% of the aggregate Stated
Principal Balance of the Mortgage Loans as of Cut-off Date and (ii) the Payment
Date in July 2013. The aggregate redemption price for the Bonds will be equal to
the unpaid Bond Principal Balance of the Bonds as of the Payment Date on which
the proposed redemption will take place in accordance with the foregoing,
together with accrued and unpaid interest thereon at the applicable Bond
Interest Rate through such Payment Date (including any related Unpaid Interest
Shortfall and


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<PAGE>

Basis Risk Shortfall Carry-Forward Amount), plus an amount sufficient to pay in
full all amounts owing to the Bond Insurer and the Indenture Trustee under this
Indenture and the Insurance Agreement (which amounts shall be specified in
writing upon request of the Issuer by the Indenture Trustee and the Bond
Insurer) and plus an amount equal to any amounts owing to the Derivative
Contract Counterparty under the Derivative Contracts.

      (b) In order to exercise the foregoing option, the Issuer shall provide
written notice of its exercise of such option to the Indenture Trustee, the Bond
Insurer, the Owner Trustee and the Master Servicer at least 15 days prior to its
exercise. Following receipt of the notice, the Indenture Trustee shall provide
notice to the Bondholders of the final payment on the Bonds. In addition, the
Issuer shall, not less than one Business Day prior to the proposed Payment Date
on which such redemption is to be made, deposit the aggregate redemption price
specified in (a) above with the Indenture Trustee, who shall deposit the
aggregate redemption price into the Payment Account and shall, on the Payment
Date after receipt of the funds, apply such funds to make final payments of
principal and interest on the Bonds in accordance with Section 3.05(b) and (c)
hereof and payment in full to the Bond Insurer for all amounts owing under the
Insurance Agreement and the Indenture Trustee, and this Indenture shall be
discharged subject to the provisions of Section 4.10 hereof. If for any reason
the amount deposited by the Issuer is not sufficient to make such redemption or
such redemption cannot be completed for any reason, the amount so deposited by
the Issuer with the Indenture Trustee shall be immediately returned to the
Issuer in full and shall not be used for any other purpose or be deemed to be
part of the Trust Estate.


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<PAGE>

                                   ARTICLE IX

                             Supplemental Indentures

      Section 9.01 Supplemental Indentures Without Consent of Bondholders. (a)
Without the consent of the Holders of any Bonds but with the prior written
consent of the Bond Insurer and prior notice to the Rating Agencies and the Bond
Insurer, the Issuer and the Indenture Trustee, when authorized by an Issuer
Request, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:

                  (i) to correct or amplify the description of any property at
      any time subject to the lien of this Indenture, or better to assure,
      convey and confirm unto the Indenture Trustee any property subject or
      required to be subjected to the lien of this Indenture, or to subject to
      the lien of this Indenture additional property;

                  (ii) to evidence the succession, in compliance with the
      applicable provisions hereof, of another person to the Issuer, and the
      assumption by any such successor of the covenants of the Issuer herein and
      in the Bonds contained;

                  (iii) to add to the covenants of the Issuer, for the benefit
      of the Holders of the Bonds, or to surrender any right or power herein
      conferred upon the Issuer;

                  (iv) to convey, transfer, assign, mortgage or pledge any
      property to or with the Indenture Trustee;

                  (v) to cure any ambiguity, to correct or supplement any
      provision herein or in any supplemental indenture that may be inconsistent
      with any other provision herein or in any supplemental indenture;

                  (vi) to make any other provisions with respect to matters or
      questions arising under this Indenture or in any supplemental indenture;
      provided, that such action shall not materially and adversely affect the
      interests of the Holders of the Bonds;

                  (vii) to evidence and provide for the acceptance of the
      appointment hereunder by a successor trustee with respect to the Bonds and
      to add to or change any of the provisions of this Indenture as shall be
      necessary to facilitate the administration of the trusts hereunder by more
      than one trustee, pursuant to the requirements of Article VI hereof; or

                  (viii) to modify, eliminate or add to the provisions of this
      Indenture to such extent as shall be necessary to effect the qualification
      of this Indenture under the TIA or under any similar federal statute
      hereafter enacted and to add to this Indenture such other provisions as
      may be expressly required by the TIA;


                                       56

<PAGE>

provided, however, that no such indenture supplements shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel as to the
enforceability of any such indenture supplement and to the effect that (i) such
indenture supplement is permitted hereunder and (ii) entering into such
indenture supplement will not result in a "significant modification" of the
Bonds under Treasury Regulation Section 1.1001-3 or adversely affect the status
of the Bonds as indebtedness for federal income tax purposes.

      The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.

      (b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, also without the consent of any of the Holders of the Bonds but
with the prior written consent of the Bond Insurer and prior notice to the
Rating Agencies and the Bond Insurer, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Bonds under this
Indenture; provided, however, that such action as evidenced by an Opinion of
Counsel, (i) is permitted by this Indenture, and shall not (ii) adversely affect
in any material respect the interests of any Bondholder or (iii) if 100% of the
Certificates are not owned by IMH Assets Corp., cause the Issuer to be subject
to an entity level tax for federal income tax purposes.

      Section 9.02 Supplemental Indentures With Consent of Bondholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and, with the prior written
consent of the Bond Insurer and with the consent of the Holders of not less than
a majority of the Bond Principal Balance of each Class of Bonds affected
thereby, by Act (as defined in Section 10.03 hereof) of such Holders delivered
to the Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Bonds under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Bond affected thereby:

                  (i) change the date of payment of any installment of principal
      of or interest on any Bond, or reduce the principal amount thereof or the
      interest rate thereon, change the provisions of this Indenture relating to
      the application of collections on, or the proceeds of the sale of, the
      Trust Estate to payment of principal of or interest on the Bonds, or
      change any place of payment where, or the coin or currency in which, any
      Bond or the interest thereon is payable, or impair the right to institute
      suit for the enforcement of the provisions of this Indenture requiring the
      application of funds available therefor, as provided in Article V, to the
      payment of any such amount due on the Bonds on or after the respective due
      dates thereof;

                  (ii) reduce the percentage of the Bond Principal Balances of
      the Bonds, the consent of the Holders of which is required for any such
      supplemental indenture, or the consent of the Holders of which is required
      for any waiver of compliance with certain


                                       57

<PAGE>

      provisions of this Indenture or certain defaults hereunder and their
      consequences provided for in this Indenture;

                  (iii) modify or alter the provisions of the proviso to the
      definition of the term "Outstanding" or modify or alter the exception in
      the definition of the term "Holder";

                  (iv) reduce the percentage of the Bond Principal Balances of
      the Bonds required to direct the Indenture Trustee to direct the Issuer to
      sell or liquidate the Trust Estate pursuant to Section 5.04 hereof;

                  (v) modify any provision of this Section 9.02 except to
      increase any percentage specified herein or to provide that certain
      additional provisions of this Indenture or the Basic Documents cannot be
      modified or waived without the consent of the Holder of each Bond affected
      thereby;

                  (vi) modify any of the provisions of this Indenture in such
      manner as to affect the calculation of the amount of any payment of
      interest or principal due on any Bond on any Payment Date (including the
      calculation of any of the individual components of such calculation); or

                  (vii) permit the creation of any lien ranking prior to or on a
      parity with the lien of this Indenture with respect to any part of the
      Trust Estate or, except as otherwise permitted or contemplated herein,
      terminate the lien of this Indenture on any property at any time subject
      hereto or deprive the Holder of any Bond of the security provided by the
      lien of this Indenture;

and provided, further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer (if 100% of the Certificates are not owned by IMH
Assets Corp.) to be subject to an entity level tax.

      Any such action shall not adversely affect in any material respect the
interest of any Holder (other than a Holder who shall consent to such
supplemental indenture) as evidenced by an Opinion of Counsel (provided by the
Person requesting such supplemental indenture) delivered to the Indenture
Trustee.

      No supplemental indenture adverse to the interests of the Derivative
Contract Counterparty shall be entered into without the Derivative Contract
Counterparty's written consent.

      It shall not be necessary for any Act of Bondholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.

      Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Bonds to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such


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<PAGE>

notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

      Section 9.03 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 hereof, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.

      Section 9.04 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Bonds affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Bonds shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

      Section 9.05 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.

      Section 9.06 Reference in Bonds to Supplemental Indentures. Bonds
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Bonds so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Bonds.


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<PAGE>

                                    ARTICLE X

                                  Miscellaneous

      Section 10.01 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Bond Insurer (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

            (1) a statement that each signatory of such certificate or opinion
      has read or has caused to be read such covenant or condition and the
      definitions herein relating thereto;

            (2) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (3) a statement that, in the opinion of each such signatory, such
      signatory has made such examination or investigation as is necessary to
      enable such signatory to express an informed opinion as to whether or not
      such covenant or condition has been complied with;

            (4) a statement as to whether, in the opinion of each such
      signatory, such condition or covenant has been complied with; and

            (5) if the signatory of such certificate or opinion is required to
      be Independent, the statement required by the definition of the term
      "Independent".

      (b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 10.01 (a) or
elsewhere in this Indenture, furnish to the Indenture Trustee and the Bond
Insurer an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days prior to
such deposit) to the Issuer of the Collateral or other property or securities to
be so deposited and a report from a nationally recognized accounting firm
verifying such value.

                  (ii) Whenever the Issuer is required to furnish to the
      Indenture Trustee and the Bond Insurer an Officer's Certificate certifying
      or stating the opinion of any signer thereof as to the matters described
      in clause (i) above, the Issuer shall also deliver to the Indenture
      Trustee an Independent Certificate from a nationally recognized accounting
      firm as to the same matters, if the fair value of the securities to be so
      deposited and of all other


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<PAGE>

      such securities made the basis of any such withdrawal or release since the
      commencement of the then current fiscal year of the Issuer, as set forth
      in the certificates delivered pursuant to clause (i) above and this clause
      (ii), is 10% or more of the Bond Principal Balances of the Bonds, but such
      a certificate need not be furnished with respect to any securities so
      deposited, if the fair value thereof as set forth in the related Officer's
      Certificate is less than $25,000 or less than one percent of the Bond
      Principal Balances of the Bonds.

                  (iii) Whenever any property or securities are to be released
      from the lien of this Indenture, the Issuer shall also furnish to the
      Indenture Trustee and the Bond Insurer an Officer's Certificate certifying
      or stating the opinion of each person signing such certificate as to the
      fair value (within 90 days prior to such release) of the property or
      securities proposed to be released and stating that in the opinion of such
      person the proposed release will not impair the security under this
      Indenture in contravention of the provisions hereof.

                  (iv) Whenever the Issuer is required to furnish to the
      Indenture Trustee and the Bond Insurer an Officer's Certificate certifying
      or stating the opinion of any signer thereof as to the matters described
      in clause (iii) above, the Issuer shall also furnish to the Indenture
      Trustee an Independent Certificate as to the same matters if the fair
      value of the property or securities and of all other property or
      securities released from the lien of this Indenture since the commencement
      of the then-current calendar year, as set forth in the certificates
      required by clause (iii) above and this clause (iv), equals 10% or more of
      the Bond Principal Balances of the Bonds, but such certificate need not be
      furnished in the case of any release of property or securities if the fair
      value thereof as set forth in the related Officer's Certificate is less
      than $25,000 or less than one percent of the then Bond Principal Balances
      of the Bonds.

      Section 10.02 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.

      Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.


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<PAGE>

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

      Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.

      Section 10.03 Acts of Bondholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Bondholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Bondholders 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 Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03 hereof.

      (b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.

      (c) The ownership of Bonds shall be proved by the Bond Registrar.

      (d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Bonds shall bind the Holder of every Bond
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Bond.

      Section 10.04 Notices etc., to Indenture Trustee Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Bondholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or act of Bondholders is to be made upon, given or
furnished to or filed with:

                  (i) the Indenture Trustee by any Bondholder or by the Issuer
      shall be sufficient for every purpose hereunder if made, given, furnished
      or filed in writing to or with


                                       62

<PAGE>

      the Indenture Trustee at the Corporate Trust Office. The Indenture Trustee
      shall promptly transmit any notice received by it from the Bondholders to
      the Issuer; or

                  (ii) the Issuer by the Indenture Trustee or by any Bondholder
      shall be sufficient for every purpose hereunder if in writing and mailed
      first-class, postage prepaid to the Issuer addressed to: Impac CMB Trust
      Series 2003-7, in care of Wilmington Trust Company, Rodney Square North,
      1100 North Market Street, Wilmington, Delaware 19990- 0001, Attention:
      Corporate Trust Administration, or at any other address previously
      furnished in writing to the Indenture Trustee by the Issuer. The Issuer
      shall promptly transmit any notice received by it from the Bondholders to
      the Indenture Trustee; or

                  (iii) the Bond Insurer by the Issuer, the Indenture Trustee or
      by any Bondholders shall be sufficient for every purpose hereunder if in
      writing and mailed, first- class postage pre-paid, or personally delivered
      or telecopied to: Ambac Assurance Corporation, One State Street Plaza, New
      York, New York 10004, Attention: Consumer Asset-Backed Securities Group,
      Telephone: (212) 208-3394, Telecopier: (212) 363-1459. The Bond Insurer
      shall promptly transmit any notice received by it from the Issuer, the
      Indenture Trustee or the Bondholders to the Issuer or Indenture Trustee,
      as the case may be.

      Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, mailed first-class
postage pre-paid, to (i) in the case of Moody's, at the following address:
Moody's Investors Service, Inc., Residential Mortgage Monitoring Department, 99
Church Street, New York, New York 10007 and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's, 55 Water Street, 41st
Floor, New York, New York 10041, Attention of Asset Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

      Section 10.05 Notices to Bondholders; Waiver. Where this Indenture
provides for notice to Bondholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Bondholder affected by such
event, at such Person's address as it appears on the Bond Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Bondholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Bondholder shall affect the sufficiency of such notice with
respect to other Bondholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.

      Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Bondholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.

      In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Bondholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of


                                       63

<PAGE>

giving such notice as shall be satisfactory to the Indenture Trustee shall be
deemed to be a sufficient giving of such notice.

      Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.

      Section 10.06 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.

      The provisions of TIA ss.ss. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

      Section 10.07 Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.

      Section 10.08 Successors and Assigns. All covenants and agreements in this
Indenture and the Bonds by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.

      Section 10.09 Separability. In case any provision in this Indenture or in
the Bonds shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

      Section 10.10 Benefits of Indenture. The Bond Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture. To the extent that this Indenture confers upon or gives or grants to
the Bond Insurer any right, remedy or claim under or by reason of this
Indenture, the Bond Insurer may enforce any such right, remedy or claim
conferred, given or granted hereunder. Nothing in this Indenture or in the
Bonds, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Bondholders and the Bond Insurer,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.

      Section 10.11 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Bonds or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.

      Section 10.12 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.


                                       64

<PAGE>

      Section 10.13 Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

      Section 10.14 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
at its expense (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Bondholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.

      Section 10.15 Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Bonds or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.

      Section 10.16 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Bondholder, by accepting a Bond, hereby covenant and agree
that they will not at any time prior to one year from the date of termination
hereof, institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Bonds, this Indenture or any
of the Basic Documents.

      Section 10.17 Inspection. The Issuer agrees that, at its expense, on
reasonable prior notice, it shall permit any representative of the Indenture
Trustee and the Bond Insurer, during the Issuer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be audited
by Independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
Independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee and the Bond Insurer
shall cause its representatives to hold in confidence all such information
except to the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing)


                                       65

<PAGE>

and except to the extent that the Indenture Trustee or the Bond Insurer may
reasonably determine that such disclosure is consistent with its obligations
hereunder.


                                       66

<PAGE>

        IN WITNESS WHEREOF, the Issuer and the Indenture 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.

                                    IMPAC CMB TRUST SERIES 2003-7, as Issuer
                                    Wilmington Trust Company, not in its
                                    individual capacity but solely as
                                    Owner Trustee


                                    By: /s/ Kathleen A. Pedelini
                                       -------------------------------
                                    Name: Kathleen A. Pedelini
                                    Title: Financial Services Officer


                                    DEUTSCHE BANK NATIONAL TRUST
                                    COMPANY, as Indenture Trustee


                                    By:     /s/ James F. Noriega
                                       ------------------------------
                                    Name: James F. Noriega
                                    Title:   Associate


                                    By:      /s/ Ronaldo Reyes
                                       ------------------------------
                                    Name: Ronaldo Reyes
                                    Title: Associate

<PAGE>

STATE OF CALIFORNIA          )
                             ) ss.:
COUNTY OF      ORANGE        )

      On this 30th day of June 2003, before me personally appeared James F.
Noriega to me known, who being by me duly sworn, did depose and say, that he is
the Associate of the Indenture Trustee, one of the corporations described in and
which executed the above instrument; and that he signed his name thereto by like
order.

                                                   Notary Public


                                                   ---------------------------
                                                   NOTARY PUBLIC

[NOTARIAL SEAL]



<PAGE>

STATE OF CALIFORNIA          )
                             ) ss.:
COUNTY OF      ORANGE        )

      On this 30th day of June 2003, before me personally appeared Ronaldo Reyes
to me known, who being by me duly sworn, did depose and say, that he is an
Associate of the Indenture Trustee, one of the corporations described in and
which executed the above instrument; and that he signed his name thereto by like
order.

                                                   Notary Public


                                                   ---------------------------
                                                   NOTARY PUBLIC]

[NOTARIAL SEAL]

<PAGE>

STATE OF DELAWARE            )
                             ) ss.:
COUNTY OF NEW CASTLE         )

      On this 30th day of June 2003, before me personally appeared Kathleen A.
Pedelini to me known, who being by me duly sworn, did depose and say, that he or
she is a Financial Services Officer of the Owner Trustee, one of the entities
described in and which executed the above instrument; and that he or she signed
their name thereto by like order.

                                                   Notary Public


                                                   ---------------------------
                                                   NOTARY PUBLIC

[NOTARIAL SEAL]

<PAGE>

                                   EXHIBIT A-1

                              FORM OF CLASS A BONDS

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND 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 BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST AND THE BOND INSURANCE POLICY AS
PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS BOND.

PRINCIPAL OF THIS BOND IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.


                                      A-1-1

<PAGE>

                          IMPAC CMB TRUST SERIES 2003-7
                        COLLATERALIZED ASSET-BACKED BONDS
                                     CLASS A

Aggregate Bond Principal                    Bond Interest
Balance:                                    Rate: Adjustable Rate
$________________

Initial Bond Principal                      Bond No. ___
Balance of this Bond:  $_______________

Percentage Interest:  ______%               CUSIP No. ___________

      Impac CMB Trust Series 2003-7 (the "Issuer"), a Delaware statutory trust,
for value received, hereby promises to pay to Cede & Co. or registered assigns,
the principal sum of ($_________________) in monthly installments on the
twenty-fifth day of each month or, if such day is not a Business Day, the next
succeeding Business Day (each a "Payment Date"), commencing in July 2003 and
ending on or before the Payment Date occurring in August 2033 (the "Final
Scheduled Payment Date") and to pay interest on the Bond Principal Balance of
this Bond (this "Bond") outstanding from time to time as provided below.

      This Bond is one of a duly authorized issue of the Issuer's Collateralized
Asset-Backed Bonds, Series 2003-7 (the "Bonds"), issued under an Indenture dated
as of June 30, 2003 (the "Indenture"), between the Issuer and Deutsche Bank
National Trust Company, as indenture trustee (the "Indenture Trustee", which
term includes any successor Indenture Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Bonds and the terms upon which the Bonds are to
be authenticated and delivered. All terms used in this Bond which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.

      Ambac Assurance Corporation (the "Bond Insurer"), in consideration of the
payment of the premium and subject to the terms of the bond insurance policy
(the "Bond Insurance Policy") issued thereby, has unconditionally and
irrevocably guaranteed the payment of the Insured Amount with respect to the
Class A Bonds with respect to each Payment Date. Such Bond Insurance Policy will
not cover any Prepayment Interest Shortfalls, Relief Act Shortfalls or Basis
Risk Shortfall Carry- Forward Amount.

      Payments of principal and interest on this Bond will be made on each
Payment Date to the Bondholder of record as of the related Record Date. The
"Bond Principal Balance" of a Bond as of any date of determination is equal to
the initial Bond Principal Balance thereof, reduced by the aggregate of all
amounts previously paid with respect to such Bond on account of principal and
the aggregate amount of cumulative Realized Losses allocated to such Bond on all
prior Payment Dates.

      The principal of, and interest on, this Bond are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for


                                      A-1-2

<PAGE>

payment of public and private debts. All payments made by the Issuer with
respect to this Bond shall be equal to this Bond's pro rata share of the
aggregate payments on all Class A Bonds as described above, and shall be applied
as between interest and principal as provided in the Indenture.

      All principal and interest accrued on the Bonds, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.

      The Bonds are subject to redemption in whole, but not in part, by the
Majority Certificateholder on any Payment Date on or after the earlier of (i)
the Payment Date on which the aggregate Stated Principal Balance of the Mortgage
Loans as of the end of the prior Due Period is less than or equal to 25% of the
aggregate Stated Principal Balance of the Mortgage Loans as of Cut- off Date and
(ii) the Payment Date in July 2013.

      The Issuer shall not be liable upon the indebtedness evidenced by the
Bonds except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Bonds. The assets included in the
Trust Estate will be the sole source of payments on the Class A Bonds, and each
Holder hereof, by its acceptance of this Bond, agrees that (i) such Bond will be
limited in right of payment to amounts available from the Trust Estate as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Owner Trustee, the Indenture Trustee, IMH Assets Corp., Impac
Mortgage Holdings, Inc., the Master Servicer or any of their respective
affiliates, or to the assets of any of the foregoing entities, except the assets
of the Issuer pledged to secure the Class A Bonds pursuant to the Indenture and
the rights conveyed to the Issuer under the Indenture.

      Any payment of principal or interest payable on this Bond which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Bond is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Bond Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Bond, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Bond delivered to the Indenture
Trustee at least five Business Days prior to the Record Date, any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Bond and of any bond
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Bond. The final
payment of this Bond shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.

      Subject to the foregoing provisions, each Bond delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Bond shall carry the right to unpaid principal and interest that were
carried by such other Bond.


                                      A-1-3

<PAGE>

      If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Bonds, the Bonds may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Bond Principal Balance of the Bonds, the amount payable to the Holder of this
Bond will be equal to the sum of the unpaid Bond Principal Balance of the Bonds,
together with accrued and unpaid interest thereon as described in the Indenture.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Bonds, under certain circumstances specified therein, all amounts collected
as proceeds of the Trust Estate securing the Bonds or otherwise shall continue
to be applied to payments of principal of and interest on the Bonds as if they
had not been declared due and payable.

      The failure to pay any Unpaid Interest Shortfall at any time when funds
are not available to make such payment as provided in the Indenture shall not
constitute an Event of Default under the Indenture.

      The Holder of this Bond or Beneficial Owner of any interest herein is
deemed to represent that either (1) it is not acquiring the Bond with Plan
Assets or (2) (A) the acquisition, holding and transfer of a Bond will not give
rise to a nonexempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code as a result of the Issuer, the Seller, the Depositor, the
Underwriters, the Owner Trustee, the Indenture Trustee, the Master Servicer, any
Subservicer, any other servicer, any administrator, any provider of credit
support, any owner of the Certificates, or any of their Affiliates being a
"Party in Interest" (within the meaning of ERISA) or Disqualified Person (within
the meaning of the Code) with respect to such Holder or Beneficial Owner that is
a Plan and (B) the Bonds are rated investment grade or better and such person
believes that the Bonds are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Bonds. Alternatively, regardless of the rating of the Bonds, such person may
provide the Indenture Trustee and the Owner Trustee with an opinion of counsel,
which opinion of counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Master Servicer
or any successor servicer which opines that the acquisition, holding and
transfer of such Bond or interest therein is permissible under applicable law,
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Issuer, the Seller, the
Depositor, any Underwriter, the Owner Trustee, the Indenture Trustee, the Master
Servicer or any successor servicer to any obligation in addition to those
undertaken in the Indenture.

      Pursuant to the Indenture, unless a Bond Insurer Default (as defined in
the Indenture) exists (i) the Bond Insurer shall be deemed to be the holder of
the Class A Bonds for certain purposes specified in the Indenture (other than
with respect to payment on the Class A Bonds), and will be entitled to exercise
all rights of the Bondholders thereunder, including the rights of Bondholders
relating to the occurrence of, and the remedies with respect to, an Event of
Default, without the consent of such Bondholders, and (ii) the Trustee may take
actions which would otherwise be at its option or within its discretion,
including actions relating to the occurrence of, and the remedies with respect
to, an Event of Default, only at the direction, or with the consent, of the Bond
Insurer.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond may be registered on the Bond Register of
the Issuer. Upon surrender for registration


                                      A-1-4

<PAGE>

of transfer of, or presentation of a written instrument of transfer for, this
Bond at the office or agency designated by the Issuer pursuant to the Indenture,
accompanied by proper instruments of assignment in form satisfactory to the
Indenture Trustee, one or more new Bonds of any authorized denominations and of
a like aggregate initial Bond Principal Balance, will be issued to the
designated transferee or transferees.

      Prior to the due presentment for registration of transfer of this Bond,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Bond is registered as the owner
of such Bond (i) on the applicable Record Date for the purpose of making
payments and interest of such Bond, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Bond be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Bond Insurer and the Holders of a
majority of all Bonds at the time outstanding. The Indenture also contains
provisions permitting (i) the Bond Insurer or (ii) if the Bond Insurer defaults,
the Holders of Bonds representing specified percentages of the aggregate Bond
Principal Balance of the Bonds on behalf of the Holders of all the Bonds, to
waive any past Default under the Indenture and its consequences. Any such waiver
by the Holder, at the time of the giving thereof, of this Bond (or any one or
more Predecessor Bonds) shall bind the Holder of every Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon such Bond. The Indenture
also permits the Issuer and the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Holders of the Bonds issued thereunder.

      Initially, the Bonds will be registered in the name of Cede & Co. as
nominee of DTC, acting in its capacity as the Depository for the Bonds. The
Bonds will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Bonds
are exchangeable for a like aggregate initial Bond Principal Balance of Bonds of
different authorized denominations, as requested by the Holder surrendering
same.

      Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Bond shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

      AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE CREATING THIS
BOND SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.


                                      A-1-5

<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee.

Dated: June 30, 2003

                                IMPAC CMB TRUST SERIES 2003-7

                                BY:  WILMINGTON TRUST COMPANY, not in its
                                individual capacity but solely in its capacity
                                as Owner Trustee


                                By:_______________________________________
                                Authorized Signatory

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Class A Bonds referred to in the within-mentioned Indenture.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Indenture Trustee


By:______________________________________
    Authorized Signatory


                                      A-1-6

<PAGE>

                                  ABBREVIATIONS

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

        TEN COM                  --     as tenants in common

        TEN ENT                  --     as tenants by the entireties

        JT TEN                   --     as joint tenants with right of
                                        survivorship and not as tenants in
                                        common

UNIF GIFT MIN ACT                --     __________ Custodian


                                        ------------------------------
                                        (Cust)                 (Minor)

                                        under Uniform Gifts to Minor Act

                                        ---------------------
                                                                     (State)

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


                                      A-1-7

<PAGE>

                                          ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
                                      unto

          PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
                                    ASSIGNEE:

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

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

         -------------------------------------------------------------
  (Please print or typewrite name and address, including zip code, of assignee)

------------------------------------------------------------------------------
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints _________ attorney to transfer said Bond on the books kept for
registration thereof, with full power of substitution in the premises.

Dated:
       ---------------       -------------------------------------------

Signature Guaranteed by
                        -----------------------------------------

      NOTICE: The signature(s) to this assignment must correspond with the name
as it appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.


                                      A-1-8

<PAGE>

                                   EXHIBIT A-2

                              FORM OF CLASS M BONDS

THIS BOND IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A BONDS AS DESCRIBED
IN THE INDENTURE.

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND 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.

THE HOLDER OF THIS BOND OR BENEFICIAL OWNER OF ANY INTEREST HEREIN WILL BE
DEEMED TO REPRESENT TO ONE OF THE REPRESENTATIONS CONTAINED IN SECTION 4.15 OF
THE INDENTURE.

THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS BOND.

PRINCIPAL OF THIS BOND IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.


                                      A-2-1

<PAGE>

                          IMPAC CMB TRUST SERIES 2003-7
                        COLLATERALIZED ASSET-BACKED BONDS
                                     CLASS M

Aggregate Bond Principal                                Bond Interest
Balance:                                                Rate: Adjustable Rate
$________________

Initial Bond Principal                                  Bond No. ___
Balance of this Bond: $___________________

Percentage Interest: _______%                           CUSIP No. ______________

      Impac CMB Trust Series 2003-7 (the "Issuer"), a Delaware statutory trust,
for value received, hereby promises to pay to Cede & Co. or registered assigns,
the principal sum of ______________________________ ($___________) in monthly
installments on the twenty-fifth day of each month or, if such day is not a
Business Day, the next succeeding Business Day (each a "Payment Date"),
commencing in July 2003 and ending on or before the Payment Date occurring in
August 2033 (the "Final Scheduled Payment Date") and to pay interest on the Bond
Principal Balance of this Bond (this "Bond") outstanding from time to time as
provided below.

      This Bond is one of a duly authorized issue of the Issuer's Collateralized
Asset-Backed Bonds, Series 2003-7 (the "Bonds"), issued under an Indenture dated
as of June 30, 2003 (the "Indenture"), between the Issuer and Deutsche Bank
National Trust Company, as indenture trustee (the "Indenture Trustee", which
term includes any successor Indenture Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Bonds and the terms upon which the Bonds are to
be authenticated and delivered. All terms used in this Bond which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.

      Payments of principal and interest on this Bond will be made on each
Payment Date to the Bondholder of record as of the related Record Date. The
"Bond Principal Balance" of a Bond as of any date of determination is equal to
the initial Bond Principal Balance thereof, reduced by the aggregate of all
amounts previously paid with respect to such Bond on account of principal and
the aggregate amount of cumulative Realized Losses allocated to such Bond on all
prior Payment Dates.

      The principal of, and interest on, this Bond are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Bond shall
be equal to this Bond's pro rata share of the aggregate payments on all Class M
Bonds as described above, and shall be applied as between interest and principal
as provided in the Indenture.


                                      A-2-2

<PAGE>

      All principal and interest accrued on the Bonds, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.

      The Bonds are subject to redemption in whole, but not in part, by the
Majority Certificateholder on any Payment Date on or after the earlier of (i)
the Payment Date on which the aggregate Stated Principal Balance of the Mortgage
Loans is less than or equal to 25% of aggregate Stated Principal Balance of the
Mortgage Loans as of Cut-off Date and (ii) the Payment Date in July 2013.

      The Issuer shall not be liable upon the indebtedness evidenced by the
Bonds except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Bonds. The assets included in the
Trust Estate will be the sole source of payments on the Class M Bonds, and each
Holder hereof, by its acceptance of this Bond, agrees that (i) such Bond will be
limited in right of payment to amounts available from the Trust Estate as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Owner Trustee, the Indenture Trustee, IMH Assets Corp., Impac
Mortgage Holdings, Inc., the Master Servicer or any of their respective
affiliates, or to the assets of any of the foregoing entities, except the assets
of the Issuer pledged to secure the Class M Bonds pursuant to the Indenture and
the rights conveyed to the Issuer under the Indenture.

      Any payment of principal or interest payable on this Bond which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Bond is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Bond Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Bond, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Bond delivered to the Indenture
Trustee at least five Business Days prior to the Record Date, any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Bond and of any bond
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Bond. The final
payment of this Bond shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.

      Subject to the foregoing provisions, each Bond delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Bond shall carry the right to unpaid principal and interest that were
carried by such other Bond.

      If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Bonds, the Bonds may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Bond Principal Balance of the Bonds, the amount payable to the Holder of this
Bond will be equal to the sum of the unpaid Bond Principal Balance of the Bonds,
together with


                                      A-2-3

<PAGE>

accrued and unpaid interest thereon as described in the Indenture. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Bonds,
under certain circumstances specified therein, all amounts collected as proceeds
of the Trust Estate securing the Bonds or otherwise shall continue to be applied
to payments of principal of and interest on the Bonds as if they had not been
declared due and payable.

      The failure to pay any Unpaid Interest Shortfall at any time when funds
are not available to make such payment as provided in the Indenture shall not
constitute an Event of Default under the Indenture.

      The Holder of this Bond or Beneficial Owner of any interest herein is
deemed to represent that either (1) it is not acquiring the Bond with Plan
Assets or (2) (A) the acquisition, holding and transfer of a Bond will not give
rise to a nonexempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code as a result of the Issuer, the Seller, the Depositor, the
Underwriters, the Owner Trustee, the Indenture Trustee, the Master Servicer, any
Subservicer, any other servicer, any administrator, any provider of credit
support, any owner of the Certificates, or any of their Affiliates being a
"Party in Interest" (within the meaning of ERISA) or Disqualified Person (within
the meaning of the Code) with respect to such Holder or Beneficial Owner that is
a Plan and (B) the Bonds are rated investment grade or better and such person
believes that the Bonds are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Bonds. Alternatively, regardless of the rating of the Bonds, such person may
provide the Indenture Trustee and the Owner Trustee with an opinion of counsel,
which opinion of counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Master Servicer
or any successor servicer which opines that the acquisition, holding and
transfer of such Bond or interest therein is permissible under applicable law,
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Issuer, the Seller, the
Depositor, any Underwriter, the Owner Trustee, the Indenture Trustee, the Master
Servicer or any successor servicer to any obligation in addition to those
undertaken in the Indenture.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond may be registered on the Bond Register of
the Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Bond at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Bonds
of any authorized denominations and of a like aggregate initial Bond Principal
Balance, will be issued to the designated transferee or transferees.

      Prior to the due presentment for registration of transfer of this Bond,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Bond is registered as the owner
of such Bond (i) on the applicable Record Date for the purpose of making
payments and interest of such Bond, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Bond be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.


                                      A-2-4

<PAGE>

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Bond Insurer and the Holders of a
majority of all Bonds at the time outstanding. The Indenture also contains
provisions permitting the Holders of Bonds representing specified percentages of
the aggregate Bond Principal Balance of the Bonds on behalf of the Holders of
all the Bonds, to waive any past Default under the Indenture and its
consequences. Any such waiver by the Holder, at the time of the giving thereof,
of this Bond (or any one or more Predecessor Bonds) shall bind the Holder of
every Bond issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not notation of such consent or waiver is made
upon such Bond. The Indenture also permits the Issuer and the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Holders of the Bonds issued thereunder.

      Initially, the Bonds will be registered in the name of Cede & Co. as
nominee of DTC, acting in its capacity as the Depository for the Bonds. The
Bonds will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Bonds
are exchangeable for a like aggregate initial Bond Principal Balance of Bonds of
different authorized denominations, as requested by the Holder surrendering
same.

      Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Bond shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

      AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE CREATING THIS
BOND SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.


                                      A-2-5

<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee.

Dated: June 30, 2003

                                 IMPAC CMB TRUST SERIES 2003-7

                                 BY:    WILMINGTON TRUST COMPANY, not in
                                        its individual capacity but solely
                                        in its capacity as Owner Trustee


                                 By:
                                        ------------------------------------
                                        Authorized Signatory

                       INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Class M Bonds referred to in the within-mentioned Indenture.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Indenture Trustee

By:
        ------------------------------------
        Authorized Signatory


                                      A-2-6

<PAGE>

                                  ABBREVIATIONS

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

        TEN COM                  --     as tenants in common

        TEN ENT                  --     as tenants by the entireties

        JT TEN                   --     as joint tenants with right of
                                        survivorship and not
                                        as tenants in common

UNIF GIFT MIN ACT                --     __________ Custodian

                                        ------------------------------
                                        (Cust)                 (Minor)

                                        under Uniform Gifts to Minor Act

                                        ---------------------
                                                               (State)

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


                                      A-2-7

<PAGE>

                                   ASSIGNMENT

  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

          PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
                                    ASSIGNEE:

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

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

              ---------------------------------------------------
  (Please print or typewrite name and address, including zip code, of assignee)

--------------------------------------------------------------------------------
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________ attorney to transfer said Bond on the
books kept for registration thereof, with full power of substitution in the
premises.

Dated:
      ---------------------      ------------------------------------------

Signature Guaranteed by
                        --------------------------------------------------------

      NOTICE: The signature(s) to this assignment must correspond with the name
as it appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.


                                      A-2-8

<PAGE>

                                   EXHIBIT A-3

                              FORM OF CLASS B BONDS

THIS BOND IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A BONDS AND CLASS M
BONDS AS DESCRIBED IN THE INDENTURE.

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND 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.

THE HOLDER OF THIS BOND OR BENEFICIAL OWNER OF ANY INTEREST HEREIN WILL BE
DEEMED TO REPRESENT TO ONE OF THE REPRESENTATIONS CONTAINED IN SECTION 4.15 OF
THE INDENTURE.

THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS BOND.

PRINCIPAL OF THIS BOND IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.


                                      A-3-1

<PAGE>

                          IMPAC CMB TRUST SERIES 2003-7
                        COLLATERALIZED ASSET-BACKED BONDS
                                     CLASS B

Aggregate Bond Principal                                Bond Interest
Balance:                                                Rate: Adjustable Rate
$____________

Initial Bond Principal                                  Bond No. ___
Balance of this Bond: $___________________

Percentage Interest: _______%                           CUSIP No. ______________

      Impac CMB Trust Series 2003-7 (the "Issuer"), a Delaware statutory trust,
for value received, hereby promises to pay to Cede & Co. or registered assigns,
the principal sum of ______________________________ ($___________) in monthly
installments on the twenty-fifth day of each month or, if such day is not a
Business Day, the next succeeding Business Day (each a "Payment Date"),
commencing in July 2003 and ending on or before the Payment Date occurring in
August 2033 (the "Final Scheduled Payment Date") and to pay interest on the Bond
Principal Balance of this Bond (this "Bond") outstanding from time to time as
provided below.

      This Bond is one of a duly authorized issue of the Issuer's Collateralized
Asset-Backed Bonds, Series 2003-7 (the "Bonds"), issued under an Indenture dated
as of June 30, 2003 (the "Indenture"), between the Issuer and Deutsche Bank
National Trust Company, as indenture trustee (the "Indenture Trustee", which
term includes any successor Indenture Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Bonds and the terms upon which the Bonds are to
be authenticated and delivered. All terms used in this Bond which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.

      Payments of principal and interest on this Bond will be made on each
Payment Date to the Bondholder of record as of the related Record Date. The
"Bond Principal Balance" of a Bond as of any date of determination is equal to
the initial Bond Principal Balance thereof, reduced by the aggregate of all
amounts previously paid with respect to such Bond on account of principal and
the aggregate amount of cumulative Realized Losses allocated to such Bond on all
prior Payment Dates.

      The principal of, and interest on, this Bond are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Bond shall
be equal to this Bond's pro rata share of the aggregate payments on all Class B
Bonds as described above, and shall be applied as between interest and principal
as provided in the Indenture.


                                     A-3-2

<PAGE>

      All principal and interest accrued on the Bonds, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.

      The Bonds are subject to redemption in whole, but not in part, by the
Majority Certificateholder on any Payment Date on or after the earlier of (i)
the Payment Date on which the aggregate Stated Principal Balance of the Mortgage
Loans is less than or equal to 25% of aggregate Stated Principal Balance of the
Mortgage Loans as of Cut-off Date and (ii) the Payment Date in July 2013.

      The Issuer shall not be liable upon the indebtedness evidenced by the
Bonds except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Bonds. The assets included in the
Trust Estate will be the sole source of payments on the Class B Bonds, and each
Holder hereof, by its acceptance of this Bond, agrees that (i) such Bond will be
limited in right of payment to amounts available from the Trust Estate as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Owner Trustee, the Indenture Trustee, IMH Assets Corp., Impac
Mortgage Holdings, Inc., the Master Servicer or any of their respective
affiliates, or to the assets of any of the foregoing entities, except the assets
of the Issuer pledged to secure the Class B Bonds pursuant to the Indenture and
the rights conveyed to the Issuer under the Indenture.

      Any payment of principal or interest payable on this Bond which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Bond is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Bond Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Bond, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Bond delivered to the Indenture
Trustee at least five Business Days prior to the Record Date, any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Bond and of any bond
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Bond. The final
payment of this Bond shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.

      Subject to the foregoing provisions, each Bond delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Bond shall carry the right to unpaid principal and interest that were
carried by such other Bond.

      If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Bonds, the Bonds may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Bond Principal Balance of the Bonds, the amount payable to the Holder of this
Bond will be equal to the sum of the unpaid Bond Principal Balance of the Bonds,
together with


                                      A-3-3

<PAGE>

accrued and unpaid interest thereon as described in the Indenture. The Indenture
provides that, notwithstanding the acceleration of the maturity of the Bonds,
under certain circumstances specified therein, all amounts collected as proceeds
of the Trust Estate securing the Bonds or otherwise shall continue to be applied
to payments of principal of and interest on the Bonds as if they had not been
declared due and payable.

      The failure to pay any Unpaid Interest Shortfall at any time when funds
are not available to make such payment as provided in the Indenture shall not
constitute an Event of Default under the Indenture.

      The Holder of this Bond or Beneficial Owner of any interest herein is
deemed to represent that either (1) it is not acquiring the Bond with Plan
Assets or (2) (A) the acquisition, holding and transfer of a Bond will not give
rise to a nonexempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code as a result of the Issuer, the Seller, the Depositor, the
Underwriters, the Owner Trustee, the Indenture Trustee, the Master Servicer, any
Subservicer, any other servicer, any administrator, any provider of credit
support, any owner of the Certificates, or any of their Affiliates being a
"Party in Interest" (within the meaning of ERISA) or Disqualified Person (within
the meaning of the Code) with respect to such Holder or Beneficial Owner that is
a Plan and (B) the Bonds are rated investment grade or better and such person
believes that the Bonds are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Bonds. Alternatively, regardless of the rating of the Bonds, such person may
provide the Indenture Trustee and the Owner Trustee with an opinion of counsel,
which opinion of counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Master Servicer
or any successor servicer which opines that the acquisition, holding and
transfer of such Bond or interest therein is permissible under applicable law,
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Issuer, the Seller, the
Depositor, any Underwriter, the Owner Trustee, the Indenture Trustee, the Master
Servicer or any successor servicer to any obligation in addition to those
undertaken in the Indenture.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond may be registered on the Bond Register of
the Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Bond at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Bonds
of any authorized denominations and of a like aggregate initial Bond Principal
Balance, will be issued to the designated transferee or transferees.

      Prior to the due presentment for registration of transfer of this Bond,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Bond is registered as the owner
of such Bond (i) on the applicable Record Date for the purpose of making
payments and interest of such Bond, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Bond be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.


                                      A-3-4

<PAGE>

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Bond Insurer and the Holders of a
majority of all Bonds at the time outstanding. The Indenture also contains
provisions permitting the Holders of Bonds representing specified percentages of
the aggregate Bond Principal Balance of the Bonds on behalf of the Holders of
all the Bonds, to waive any past Default under the Indenture and its
consequences. Any such waiver by the Holder, at the time of the giving thereof,
of this Bond (or any one or more Predecessor Bonds) shall bind the Holder of
every Bond issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not notation of such consent or waiver is made
upon such Bond. The Indenture also permits the Issuer and the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Holders of the Bonds issued thereunder.

      Initially, the Bonds will be registered in the name of Cede & Co. as
nominee of DTC, acting in its capacity as the Depository for the Bonds. The
Bonds will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Bonds
are exchangeable for a like aggregate initial Bond Principal Balance of Bonds of
different authorized denominations, as requested by the Holder surrendering
same.

      Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Bond shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

      AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE CREATING THIS
BOND SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.


                                      A-3-5

<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee.

Dated: June 30, 2003

                                 IMPAC CMB TRUST SERIES 2003-7

                                 BY:    WILMINGTON TRUST COMPANY, not in
                                        its individual capacity but solely in
                                        its capacity as Owner Trustee

                                 By:
                                        ------------------------------------
                                        Authorized Signatory

                INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Class B Bonds referred to in the within-mentioned Indenture.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Indenture Trustee

By:
        ------------------------------------
        Authorized Signatory


                                      A-3-6

<PAGE>

                                         ABBREVIATIONS

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

        TEN COM                  --     as tenants in common

        TEN ENT                  --     as tenants by the entireties

        JT TEN                   --     as joint tenants with right of
                                        survivorship and not
                                        as tenants in common

UNIF GIFT MIN ACT                --     __________ Custodian


                                        ------------------------------
                                         (Cust)                 (Minor)

                                        under Uniform Gifts to Minor Act

                                        ---------------------
                                                                    (State)

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


                                      A-3-7

<PAGE>

                                   ASSIGNMENT

  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

          PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
                                    ASSIGNEE:

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

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

               -------------------------------------------------
  (Please print or typewrite name and address, including zip code, of assignee)

--------------------------------------------------------------------------------
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________ attorney to transfer said Bond on the
books kept for registration thereof, with full power of substitution in the
premises.

Dated:
        ---------------------              ---------------------------------

Signature Guaranteed by
                        --------------------------------------------------------

      NOTICE: The signature(s) to this assignment must correspond with the name
as it appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.


                                      A-3-8

<PAGE>

                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

(In accordance with Rule 202 of Regulation S-T, this Mortgage Loan Schedule is
being filed in paper pursuant to a continuing hardship exemption.)


                                       B-1

<PAGE>

                                    EXHIBIT C

                          FORM OF INITIAL CERTIFICATION

                                                                        , 200_
                                                   ---------------------

[Issuer]

[Bond Insurer]

[Master Servicer]

Attention:  Impac CMB Trust Series 2003-7

            Re:   Indenture dated as of June 30, 2003, between Impac CMB Trust
                  Series 2003- 7 and Deutsche Bank National Trust Company

Ladies and Gentlemen:

            In accordance with Section 2.03(a) of the above-captioned Indenture,
and Section 2.1(b)(i)-(v) of the Mortgage Loan Sale and Contribution Agreement,
dated as of June 30, 2003 between Impac Mortgage Holdings, Inc. and Impac
Funding Corporation (the "MLSCA"; and together with the Indenture, the
"Agreements"), the undersigned, as Indenture 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 the exception report attached hereto) it
has reviewed the Mortgage File and the Mortgage Loan Schedule and has determined
that: (i) all documents required to be included in the Mortgage File are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan; and (iii) based on examination by
it, and only as to such documents, the information set forth in items (iii) and
(v) of the definition or description of "Mortgage Loan Schedule" is correct.

            The Indenture Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Agreements. The Indenture Trustee makes no
representation that any documents specified in clause (v) of Section 2.1 (b) of
the MLSCA should be included in any Mortgage File. The Indenture Trustee makes
no representations as to and shall not be responsible to verify: (i) the
validity, legality, sufficiency, enforceability, due authorization,
recordability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan, or (iii) the existence of any assumption, modification, written
assurance or substitution agreement with respect to any Mortgage File if no such
documents appear in the Mortgage File delivered to the Indenture Trustee.


                                       C-1

<PAGE>

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Indenture.

                                  DEUTSCHE BANK NATIONAL
                                  TRUST COMPANY,
                                  as Indenture Trustee


                                  By:
                                      --------------------------------
                                      Name:
                                      Title:


                                       C-2

<PAGE>

                                    EXHIBIT D

                           FORM OF FINAL CERTIFICATION

                                                                        , 200__
                                                   ---------------------

[Issuer]

[Bond Insurer]

[Master Servicer]

Attention:  Impac CMB Trust Series 2003-7

            Re:   Indenture, dated as of June 30, 2003, between Impac CMB Trust
                  Series 2003- 7 and Deutsche Bank National Trust Company

Ladies and Gentlemen:

            In accordance with Section 2.03(b) of the above-captioned Indenture,
and Section 2.1(b) of the Mortgage Loan Sale and Contribution Agreement, dated
as of June 30, 2003, between Impac Mortgage Holdings, Inc. (formerly known as
Imperial Credit Mortgage Holdings, Inc.) and Impac Funding Corporation (formerly
known as ICI Funding Corporation) (the "MLSCA"; and together with the Indenture,
the "Agreements"), the undersigned, as Indenture 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 the exception report attached hereto) it
has received the documents set forth in Section 2.1(b) of the MLSCA.

            The Indenture Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Agreements. The Indenture Trustee makes no representation that
any documents specified in clause (v) of Section 2.1 (b) should be included in
any Mortgage File. The Indenture Trustee makes no representations as to and
shall not be responsible to verify: (i) the validity, legality, sufficiency,
enforceability, due authorization, recordability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the existence of
any assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Indenture Trustee.


                                       D-1

<PAGE>

            Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Indenture.

                                        DEUTSCHE BANK NATIONAL
                                        TRUST COMPANY,
                                        as Indenture Trustee


                                        By:
                                            -----------------------------
                                           Name:
                                           Title:


                                       D-2

<PAGE>

                                    EXHIBIT E

                              DERIVATIVE CONTRACTS

                             (Provided Upon Request)


                                       E-1

<PAGE>

                                    EXHIBIT F

                        SPECIAL CERTIFICATE CAP CONTRACT

                             (Provided Upon Request)


                                       F-1
<PAGE>

                                   APPENDIX A
                                   DEFINITIONS

      Accrual Period: With respect to each Class of Bonds and any Payment Date,
the period from the preceding Payment Date (or in the case of the first Payment
Date, from the Closing Date) through the day preceding such Payment Date.

      Accrued Bond Interest: With respect to any Payment Date and each Class of
Bonds, interest accrued during the related Accrual Period on the Bond Principal
Balance at the related Bond Interest Rate on the related Bond Principal Balance
thereof immediately prior to such Payment Date, less such Bonds' Unpaid Interest
Shortfall for such Payment Date, plus any Accrued Bond Interest remaining unpaid
from any prior Payment Date with interest thereon at the related Bond Interest
Rate. Accrued Bond Interest for each Class of Bonds shall be calculated on the
basis of the actual number of days in the Accrual Period and a 360-day year.

      Additional Derivative Contract Counterparty Payment: With respect to any
Payment Date, any termination payments to the Derivative Contract Counterparty
as a result of a default of the Derivative Contract Counterparty under the
related Derivative Contracts.

      Adjustment Date: As to each Mortgage Loan, each date set forth in the
related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.

      Advance: As to any Mortgage Loan, any advance made by the Master Servicer
pursuant to Section 4.04 of the Servicing Agreement or by a Subservicer in
respect of delinquent Monthly Payments of principal and interest pursuant to the
related Subservicing Agreement.

      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.

      Allocated Realized Loss Amount: With respect to the Class M Bonds and
Class B Bonds and any Payment Date, an amount equal to the sum of any Realized
Loss allocated to such Bonds on that Payment Date and any Allocated Realized
Loss Amount for such Class remaining unpaid from the previous Payment Date.

      Appraised Value: The appraised value of a Mortgaged Property based upon
the lesser of (i) the appraisal made at the time of the origination of the
related Mortgage Loan, or (ii) the sale price of such Mortgaged Property at such
time of origination. With respect to a Mortgage Loan, the proceeds of which were
used to refinance an existing Mortgage Loan, the appraised value of the
Mortgaged Property based upon the appraisal obtained at the time of refinancing.

      Assignment of Mortgage: 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, which

<PAGE>

assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

      Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays.

      Authorized Officer: With respect to the Issuer, any officer of the Owner
Trustee who is authorized to act for the Owner Trustee in matters relating to
the Issuer and who is identified on the list of Authorized Officers delivered by
the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).

      Available Funds: With respect to any Payment Date, an amount equal to the
amount received by the Indenture Trustee and available in the Payment Account,
which generally is equal to the sum of the following, in each case with respect
to the Mortgage Loans:

                  (i) each previously undistributed Monthly Payment due after
      the Cut-off Date received on or prior to the related Determination Date or
      advanced prior to such Payment Date (other than Monthly Payments due after
      the related Due Period, which shall be treated as if received during the
      Due Period they were due and other than Monthly Payments with respect to
      which the Master Servicer has made an unreimbursed Advance) on each
      outstanding Mortgage Loan (less the related Master Servicing Fees, any
      Subservicing Fees under any Subservicing Agreement and any fees or
      penalties retained by the Master Servicer or any Subservicer, the fees of
      the Owner Trustee and the Indenture Trustee and any amounts in respect of
      the premium payable to Radian under the Radian Lender-Paid PMI Policies);

                  (ii) all proceeds of any Mortgage Loan repurchased during the
      related Prepayment Period (or deemed to have been so repurchased in
      accordance with the Servicing Agreement) pursuant to the Servicing
      Agreement and the amount of any shortfall deposited in the Collection
      Account in connection with the substitution of a Deleted Mortgage Loan
      pursuant to the Mortgage Loan Sale and Contribution Agreement, during the
      related Prepayment Period;

                  (iii) all other unscheduled collections (including, without
      limitation, Principal Prepayments, Insurance Proceeds, Liquidation
      Proceeds and REO Proceeds) received during the related Prepayment Period
      to the extent applied by the Master Servicer as recoveries of principal or
      interest of the related Mortgage Loan pursuant to the Servicing Agreement;
      and

                  (iv) any (i) Compensating Interest payments and (ii)
      Foreclosure Profits, to the extent not payable to the Subservicers;

      minus


                                              2

<PAGE>

                  (v) expenses incurred by and reimbursable to the Master
      Servicer or the Depositor pursuant to the Servicing Agreement or
      otherwise, or in connection with enforcing any repurchase, substitution or
      indemnification obligation of the Seller (other than an Affiliate of the
      Depositor) in respect of a Mortgage Loan;

                  (vi) amounts expended by the Master Servicer (a) pursuant to
      the Servicing Agreement in good faith in connection with the restoration
      of property related to a Mortgage Loan damaged by an Uninsured Cause, and
      (b) in connection with the liquidation of a Mortgage Loan or disposition
      of an REO Property related to a Mortgage Loan to the extent not otherwise
      reimbursed to the Master Servicer pursuant to the Servicing Agreement;

                  (vii) if the Bonds have been declared due and payable
      following an Event of Default on such Payment Date, any amounts owed to
      the Indenture Trustee by the Issuer pursuant to Section 6.07 of the
      Indenture;

                  (viii) the related Net Derivative Fee;

                  (ix) the Premium Amount in respect of the Class A Bonds; and

                  (x) any other amounts withdrawn from the Collection Account by
      the Master Servicer pursuant to Section 3.07(a)(ii) through (xv) of the
      Servicing Agreement, not described above in clauses (v) through (ix)
      above.

      Available Funds Rate: On any Payment Date, the per annum rate equal to the
product of:


(i)               (A) the product of:

                             (1) the weighted average of the Net Mortgage Rates
                             on the Mortgage Loans included in the trust as of
                             the end of the prior Due Period, weighted on the
                             basis of the Stated Principal Balances thereof as
                             of the end of the prior Due Period and

                             (2) a fraction equal to

                                    (x) the sum of the aggregate Stated
                             Principal Balance of the Mortgage Loans as of the
                             end of the prior Due Period divided by

                                    (y) the aggregate Bond Principal Balance of
                             the Class A, Class M and Class B Bonds immediately
                             prior to such Payment Date, minus

                  (B) the Policy Premium Rate in respect of the Class A
                  Bonds times a fraction equal to


                                        3
<PAGE>

                             (x) the Bond Principal Balance of the Class A Bonds
                      immediately prior to such Payment Date divided by

                             (y) the aggregate Bond Principal Balance of the
                      Class A, Class M and Class B Bonds immediately prior to
                      such Payment Date, and

      (ii) a fraction equal to (x) 30 divided by (y) the number of days in the
related Accrual Period.

      Bankruptcy Code: The Bankruptcy Code of 1978, as amended.

      Basic Documents: The Trust Agreement, the Certificate of Trust, the
Indenture, the Servicing Agreement, the Insurance Agreement, the Mortgage Loan
Sale and Contribution Agreement, the Derivative Contracts, the Special
Certificate Cap Contract and the other documents and certificates delivered in
connection with any of the above.

      Basic Principal Distribution Amount: With respect to any Payment Date, the
lesser of (a) the excess of (i) the Available Funds and the Insured Amount, if
any, for such Payment Date over (ii) the aggregate amount of Accrued Bond
Interest for the Bonds for such Payment Date and (b) the excess of (i) the
Principal Remittance Amount for such Payment Date over (ii) the related
Overcollateralization Release Amount, if any, for such Payment Date.

      Basis Risk Shortfall: With respect to any Class of Bonds, on each Payment
Date where clause (iii) of the definition of "Bond Interest Rate" is less than
clauses (i) or (ii) of the definition of "Bond Interest Rate", the excess, if
any, of (x) the aggregate Accrued Bond Interest thereon for such Payment Date
calculated pursuant to the lesser of clause (i) or (ii) of the definition of
Bond Interest Rate over (y) interest accrued on the Mortgage Loans at the
Available Funds Rate.

      Basis Risk Shortfall Carry-Forward Amount: With respect to each Class of
Bonds and any Payment Date, as determined separately for each Class of Bonds, an
amount equal to the aggregate amount of Basis Risk Shortfall for such Bonds on
such Payment Date, plus any unpaid Basis Risk Shortfall for such Class of Bonds
from prior Payment Dates, plus interest thereon at the Bond Interest Rate for
such Payment Date, to the extent previously unreimbursed by Net Monthly Excess
Cashflow or the Derivative Contracts.

      Beneficial Owner: With respect to any Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of the Depository or on
the books of a Person maintaining an account with such Depository (directly as a
Depository Participant or indirectly through a Depository Participant, in
accordance with the rules of such Depository).

      Bond Insurance Policy: The bond guaranty insurance policy issued by the
Bond Insurer for the benefit of the Class A Bondholders.

      Bond Insurance Premium: The premium payable to the Bond Insurer with
respect to the Bond Insurance Policy, as specified in the Insurance Agreement.


                                       4
<PAGE>

      Bond Insurer: Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, any successor thereto or any replacement bond insurer
substituted pursuant to Section 3.30 of the Indenture.

      Bond Insurer Default: The existence and continuance of any of the
following: (a) a failure by the Bond Insurer to make a payment required under
the Bond Insurance Policy in accordance with its terms; or (b)(i) the Bond
Insurer (A) files any petition or commences any case or proceeding under any
provision or chapter of the Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (B) makes a general assignment for the benefit of its creditors,
or (C) has an order for relief entered against it under the Bankruptcy Code or
any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and nonappealable;
or (ii) a court of competent jurisdiction, the New York or Wisconsin Department
of Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian, trustee,
agent or receiver for the Bond Insurer or for all or any material portion of its
property or (B) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Bond Insurer (or the taking of possession of all or any
material portion of the property of the Bond Insurer).

      Bond Interest Rate: With respect to each Payment Date and each Class of
Bonds, a floating rate equal to the least of (i) One-Month LIBOR plus the
related Bond Margin, (ii) the Maximum Bond Rate and (iii) the Available Funds
Rate with respect to such Payment Date.

      Bond Margin: With respect to the Class A Bonds, on any Payment Date prior
to the Step-Up Date, 0.320% per annum, and on any Payment Date on and after the
Step-Up Date, 0.640% per annum. With respect to the Class M Bonds, on any
Payment Date prior to the Step-Up Date, 1.650% per annum, and on any Payment
Date on and after the Step-Up Date, 2.475% per annum. With respect to the Class
B Bonds, on any Payment Date prior to the Step-Up Date, 3.000% per annum, and on
any Payment Date on and after the Step-Up Date, 4.500% per annum.

      Bond Owner: The Beneficial Owner of a Bond.

      Bond Principal Balance: With respect to any Bond as of any date of
determination, the initial Bond Principal Balance as stated on the face thereof,
minus all amounts distributed in respect of principal with respect to such Bond
and, in the case of any Class M Bond or Class B Bond, the aggregate amount of
any reductions in the Bond Principal Balance thereof deemed to have occurred in
connection with allocations of Realized Losses on all prior Payment Dates.

      Bond Register: The register maintained by the Bond Registrar in which the
Bond Registrar shall provide for the registration of Bonds and of transfers and
exchanges of Bonds.

      Bond Registrar: The Indenture Trustee, in its capacity as Bond Registrar,
or any successor to the Indenture Trustee in such capacity.

      Bondholder or Holder: The Person in whose name a Bond is registered in the
Bond Register, except that, any Bond registered in the name of the Depositor,
the Issuer, the Indenture Trustee, the


                                       5
<PAGE>

Seller or the Master Servicer or any Affiliate of any of them shall be deemed
not to be a holder or holders, nor shall any so owned be considered outstanding,
for purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or the Trust Agreement; provided that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Bonds that a Responsible Officer of the Indenture Trustee or the Owner Trustee
actually knows to be so owned shall be so disregarded. Owners of Bonds that have
been pledged in good faith may be regarded as Holders if the pledgee establishes
to the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Bonds and that the pledgee is not the
Issuer, any other obligor upon the Bonds or any Affiliate of any of the
foregoing Persons. Any bonds on which payments are made under the Bond Insurance
Policy shall be deemed Outstanding until the Bond Insurer has been reimbursed
with respect thereto and the Bond Insurer shall be deemed the Bondholder thereof
to the extent of such unreimbursed payment.

      Bonds: A Class A, Class M or Class B Bond.

      Book-Entry Bonds: Beneficial interests in the Bonds, ownership and
transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.

      Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the City of New York, Delaware or California or
in the city in which the corporate trust offices of the Indenture Trustee or the
principal office of the Bond Insurer are located, are required or authorized by
law to be closed.

      Cash Liquidation: As to any defaulted Mortgage Loan other than a Mortgage
Loan as to which an REO Acquisition occurred, a determination by the Master
Servicer evidenced in a certificate of a Servicing Officer that it has received
all Insurance Proceeds, Liquidation Proceeds and other payments or cash
recoveries which the Master Servicer reasonably and in good faith expects to be
finally recoverable with respect to such Mortgage Loan.

      Certificate Distribution Account: The account or accounts created and
maintained pursuant to Section 3.10(c) of the Trust Agreement. The Certificate
Distribution Account shall be an Eligible Account.

      Certificate Paying Agent: The meaning specified in Section 3.10 of the
Trust Agreement.

      Certificate Percentage Interest: With respect to each Certificate, the
Certificate Percentage Interest stated on the face thereof.

      Certificate Register: The register maintained by the Certificate Registrar
in which the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates.

      Certificate Registrar: Initially, the Indenture Trustee, in its capacity
as Certificate Registrar, or any successor to the Indenture Trustee in such
capacity.


                                       6
<PAGE>

      Certificate of Trust: The Certificate of Trust filed for the Trust
pursuant to Section 3810(a) of the Statutory Trust Statute.

      Certificates or Trust Certificates: The Impac CMB Trust Series 2003-7
Trust Certificates, Series 2003-7, evidencing the beneficial ownership interest
in the Issuer and executed by the Owner Trustee in substantially the form set
forth in Exhibit A to the Trust Agreement.

      Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register. Owners of Certificates that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee, as the case may
be, the pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of any of the foregoing Persons.

      Class: Any of the Class A, Class M or Class B Bonds.

      Closing Date: June 30, 2003.

      Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

      Collateral: The meaning specified in the Granting Clause of the Indenture.

      Collection Account: The account or accounts created and maintained
pursuant to Section 3.06(d) of the Servicing Agreement. The Collection Account
shall be an Eligible Account.

      Collection Period: With respect to each Payment Date, the calendar month
immediately preceding the month in which such Payment Date occurs.

      Commission: The Securities and Exchange Commission.

      Compensating Interest: With respect to any Payment Date, the amount of any
Prepayment Interest Shortfalls resulting from prepayments in full during the
preceding calendar month, but only to the extent such Prepayment Interest
Shortfalls do not exceed an amount equal to the lesser of (a) one-twelfth of
0.125% of the aggregate Stated Principal Balance of the Mortgage Loans
immediately preceding such Payment Date and (b) the sum of the Master Servicing
Fee and Subservicing Fee for such Payment Date.

      Corporate Trust Office: With respect to the Indenture Trustee, Certificate
Registrar, Certificate Paying Agent and Paying Agent, the principal corporate
trust office of the Indenture Trustee and Bond Registrar at which at any
particular time its corporate trust business shall be administered, which office
at the date of the execution of this instrument is located at 1761 East St.
Andrew Place, Santa Ana, California 92705, Attention: IM0307. With respect to
the Owner Trustee, the principal corporate trust office of the Owner Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Trust Agreement


                                       7
<PAGE>

is located at Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19801, Attention: Impac CMB Trust Series 2003-7
(IM0307).

      Cumulative Losses: As to any Payment Date and the Mortgage Loans, the
cumulative aggregate amount of Realized Losses on the Mortgage Loans from the
Cut-off Date through the end of the calendar month immediately preceding such
Payment Date.

      Cumulative Loss Percentage: As to any Payment Date, the percentage
equivalent of the fraction obtained by dividing (i) the aggregate of Realized
Losses on the Mortgage Loans from the Cut-off Date through such Payment Date by
(ii) the aggregate Cut-off Date Principal Balance of the Mortgage Loans.

      Cut-off Date: With respect to the Mortgage Loans, June 1, 2003.

      Cut-off Date Balance: The aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date.

      Cut-off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date after applying the
principal portion of Monthly Payments due on or before such date, whether or not
received, and without regard to any payments due after such date.

      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
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.

      Default: Any occurrence which is or with notice or the lapse of time or
both would become an Event of Default.

      Deficiency Amount: With respect to each Payment Date prior to the Final
Scheduled Payment Date and the Class A Bonds, an amount equal to the sum of (i)
the excess, if any, of (a) the aggregate amount of Accrued Bond Interest on the
Class A Bonds for that Payment Date over (b) the Available Funds for that
Payment Date and (ii) any Undercollateralization Amount with respect to the
Class A Bonds. With respect to the Final Scheduled Payment Date and the Class A
Bonds, an amount equal to the sum of (i) the excess, if any, of (a) the
aggregate amount of Accrued Bond Interest on the Class A Bonds over (b) the
Available Funds for that Payment Date and (ii) the excess, if any, of the
aggregate Bond Principal Balance of all outstanding Class A Bonds due on such
Final Scheduled Payment Date over the Available Funds not used to pay the
Accrued Bond Interest on the Class A Bonds, Class M Bonds and Class B Bonds for
such Final Scheduled Payment Date. For the Class A Bonds and any date on which
the acceleration of the Bonds has been directed or consented to by the Bond
Insurer pursuant to the Indenture, the amount required to pay the Bond Principal
Balance of such Class A Bonds in full, together with accrued and unpaid interest
thereon through the date of payment of such Class A Bonds.


                                       8
<PAGE>

      Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.

      Definitive Bonds: The meaning specified in Section 4.06 of the Indenture.

      Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with an
Eligible Substitute Mortgage Loan.

      Delinquency Percentage: As of the last day of any Due Period and with
respect to the Mortgage Loans, the percentage equivalent of a fraction, the
numerator of which equals the aggregate Principal Balance of the Mortgage Loans
that are 90 or more days delinquent, in foreclosure or converted to REO
Properties as of such last day of such Due Period, and the denominator of which
is the aggregate Stated Principal Balance of such Mortgage Loans as of the last
day of such Due Period.

      Depositor: IMH Assets Corp., a California corporation, or its successor in
interest.

      Depository or Depository Agency: The Depository Trust Company or a
successor appointed by the Indenture Trustee. Any successor to the Depository
shall be an organization registered as a "clearing agency" pursuant to Section
17A of the Exchange Act and the regulations of the Securities and Exchange
Commission thereunder.

      Depository Participant: A Person for whom, from time to time, the
Depository effects book- entry transfers and pledges of securities deposited
with the Depository.

      Derivative Contracts: The seven Derivative Contracts between the Seller
and the Derivative Contract Counterparty for the benefit of the Bonds and the
Certificates, set forth in Exhibit E of the Indenture.

      Derivative Contract Counterparty: Bear Stearns Financial Products Inc.

      Determination Date: With respect to any Payment Date, the 15th of the
related month, or if the 15th day of such month is not a Business Day, the
immediately preceding Business Day.

      Due Date: With respect to each Mortgage Loan, the day of the month on
which each scheduled Monthly Payment is due.

      Due Period: With respect to any Payment Date and the Mortgage Loans, the
period commencing on the second day of the month immediately preceding the month
of such Payment Date (or, with respect to the first Due Period, the day
following the Cut-off Date) and ending on the first day of the month of such
Payment Date.


                                       9
<PAGE>

      Eligible Account: An account that is any of the following: (i) maintained
with a depository institution the short term deposits of which have been rated
by each Rating Agency in its highest rating available, or (ii) an account or
accounts in a depository institution in which such accounts are fully insured to
the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to the Bond Insurer and each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of
Counsel delivered to the Indenture Trustee, the Bond Insurer and each Rating
Agency) the Indenture Trustee has a claim with respect to the funds in such
account or a perfected first security interest against any collateral (which
shall be limited to Eligible 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, or (iii) in the case of the Collection
Account, either (A) a trust account or accounts maintained at the corporate
trust department of the Indenture Trustee or (B) an account or accounts
maintained at the corporate trust department of the Indenture Trustee or the
Subservicer (or an affiliate thereof), as long as their short term debt
obligations are rated F-1 by Fitch Ratings, P-1 by Moody's and A-1 by Standard &
Poor's or better and their long term debt obligations are rated A by Fitch
Ratings, A2 by Moody's and A by Standard & Poor's or better, or (iv) in the case
of the Collection Account and the Payment Account, a trust account or accounts
maintained in the corporate trust division of the Indenture Trustee, or (v) an
account or accounts of a depository institution acceptable to each Rating Agency
as evidenced in writing by each Rating Agency that use of any such account as
the Collection Account or the Payment Account will not reduce the rating
assigned to any of the Securities by such Rating Agency below investment grade
without taking into account the Bond Insurance Policy and acceptable to the Bond
Insurer as evidenced in writing.

      Eligible Investments: One or more of the following:

                  (i) direct obligations of, and obligations fully guaranteed
      by, the United States of America, the Federal Home Mortgage Corporation,
      the Federal National Mortgage Association, the Federal Home Loan Banks or
      any agency or instrumentality of the United States of America the
      obligations of which are backed by the full faith and credit of the United
      States of America;

                  (ii) (A) demand and time deposits in, certificates of deposit
      of, banker's acceptances issued by or federal funds sold by any depository
      institution or trust company (including the Indenture 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 has a short
      term unsecured debt rating in the highest available rating category of
      each of the Rating Agencies 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 a
      principal) rated "A" or higher by Standard & Poor's and A2 or higher by
      Moody's; provided, however, that collateral transferred pursuant to such


                                       10
<PAGE>

      repurchase obligation must (A) be valued weekly at current market price
      plus accrued interest, (B) pursuant to such valuation, equal, at all
      times, 105% of the cash transferred by the Indenture Trustee in exchange
      for such collateral and (C) be delivered to the Indenture Trustee or, if
      the Indenture Trustee is supplying the collateral, an agent for the
      Indenture Trustee, in such a manner as to accomplish perfection of a
      security interest in the collateral by possession of certificated
      securities;

                  (iv) securities bearing interest or sold at a discount issued
      by any corporation incorporated under the laws of the United States of
      America or any State thereof which has a long term unsecured debt rating
      in the highest available rating category of each of the Rating Agencies at
      the time of such investment;

                  (v) commercial paper having an original maturity of less than
      365 days and issued by an institution having a short term unsecured debt
      rating in the highest available rating category of each of the Rating
      Agencies at the time of such investment;

                  (vi) a guaranteed investment contract approved by each of the
      Rating Agencies and the Bond Insurer and issued by an insurance company or
      other corporation having a long term unsecured debt rating in the highest
      available rating category of each of the Rating Agencies at the time of
      such investment;

                  (vii) money market funds having ratings in the highest
      available long term rating category of each of the Rating Agencies at the
      time of such investment; any such money market funds which provide for
      demand withdrawals being conclusively deemed to satisfy any maturity
      requirement for Eligible Investments set forth in the Indenture, including
      money market funds of the Indenture Trustee or any such funds that are
      managed or advised by the Indenture Trustee or any Affiliate thereof; and

                  (viii) any investment approved in writing by each of the
      Rating Agencies and the Bond Insurer.

The Indenture Trustee may purchase from or sell to itself or an affiliate, as
principal or agent, the Eligible Investments listed above.

provided, however, that each such instrument shall be acquired in an arm's
length transaction and no such instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; provided further, however, that each such instrument acquired shall
not be acquired at a price in excess of par.

      Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in an Officer's Certificate delivered to the Indenture Trustee, (i)
have an outstanding principal balance, after deduction of the principal portion
of the monthly payment due in the month of substitution (or in the case of a


                                       11
<PAGE>

substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of
the outstanding principal balance of the Deleted Mortgage Loan (the amount of
any shortfall to be deposited by the Seller in the Collection Account in the
month of substitution); (ii) comply with each non-statistical representation and
warranty set forth in Section 3.1(b) of the Mortgage Loan Sale and Contribution
Agreement as of the date of substitution; (iii) have a Mortgage Rate no lower
than and not more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan as of the date of substitution; (iv) have a Loan-to-Value Ratio at
the time of substitution no higher than that of the Deleted Mortgage Loan at the
time of substitution; (v) have a remaining term to stated maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan;
and (vi) not be 30 days or more delinquent.

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

      Event of Default: With respect to the Indenture, any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

                  (i) a failure by the Issuer to pay (a) Accrued Bond Interest
      on any Class of Bonds or the Principal Distribution Amount with respect to
      a Payment Date on such Payment Date or (b) the Unpaid Interest Shortfall
      with respect to any Class of Bonds, but only, with respect to clause (b),
      to the extent funds are available to make such payment as provided in the
      Indenture; or

                  (ii) the failure by the Issuer on the Final Scheduled Payment
      Date to reduce the Bond Principal Balance of the Class A, Class M or Class
      B Bonds to zero; or

                  (iii) there occurs a default in the observance or performance
      of any covenant or agreement of the Issuer made in the Indenture, or any
      representation or warranty of the Issuer made in the Indenture or in any
      certificate or other writing delivered pursuant hereto or in connection
      herewith proving to have been incorrect in any material respect as of the
      time when the same shall have been made, and such default shall continue
      or not be cured, or the circumstance or condition in respect of which such
      representation or warranty was incorrect shall not have been eliminated or
      otherwise cured, for a period of 30 days after there shall have been
      given, by registered or certified mail, to the Issuer by the Indenture
      Trustee or to the Issuer and the Indenture Trustee by the Bond Insurer, or
      if a Bond Insurer Default exists, the Holders of at least 25% of the
      aggregate Bond Principal Balance of the Outstanding Bonds, a written
      notice specifying such default or incorrect representation or warranty and
      requiring it to be remedied and stating that such notice is a notice of
      default hereunder; or

                  (iv) there occurs the filing of a decree or order for relief
      by a court having jurisdiction in the premises in respect of the Issuer or
      any substantial part of the Trust Estate in an involuntary case under any
      applicable federal or state bankruptcy, insolvency or other similar law
      now or hereafter in effect, or appointing a receiver, liquidator,
      assignee,


                                       12
<PAGE>

      custodian, trustee, sequestrator or similar official of the Issuer or for
      any substantial part of the Trust Estate, or ordering the winding-up or
      liquidation of the Issuer's affairs, and such decree or order shall remain
      unstayed and in effect for a period of 60 consecutive days; or

                  (v) there occurs the commencement by the Issuer of a voluntary
      case under any applicable federal or state bankruptcy, insolvency or other
      similar law now or hereafter in effect, or the consent by the Issuer to
      the entry of an order for relief in an involuntary case under any such
      law, or the consent by the Issuer to the appointment or taking possession
      by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
      similar official of the Issuer or for any substantial part of the assets
      of the Trust Estate, or the making by the Issuer of any general assignment
      for the benefit of creditors, or the failure by the Issuer generally to
      pay its debts as such debts become due, or the taking of any action by the
      Issuer in furtherance of any of the foregoing.

      Event of Servicer Termination: With respect to the Servicing Agreement, a
Servicing Default as defined in Section 6.01 of the Servicing Agreement.

      Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

      Expense Fee Rate: With respect to each Mortgage Loan, the sum of the
Master Servicing Fee Rate, the Subservicing Fee Rate, the Minimum Spread Rate,
the Indenture Trustee's Fee Rate, the Owner Trustee's Fee Rate, the Radian PMI
Rate, if such Mortgage Loan is a Radian PMI Insured Loan, and the related Net
Derivative Fee Rate.

      Expenses: The meaning specified in Section 7.02 of the Trust Agreement.

      Extra Principal Distribution Amount: With respect to any Payment Date, the
lesser of (x) the Net Monthly Excess Cashflow for such Payment Date and (y) the
Overcollateralization Increase Amount for such Payment Date.

      Fannie Mae: Fannie Mae (formerly, the Federal National Mortgage
Association), or any successor thereto.

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

      Final Certification: The final certification delivered by the Indenture
Trustee pursuant to Section 2.03(b) of the Indenture in the form attached
thereto as Exhibit D.

      Final Scheduled Payment Date: With respect to each Class of Bonds, the
Payment Date in August 2033.

      Fitch Ratings: Fitch, Inc., or its successor in interest.

      Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Stated Principal


                                       13
<PAGE>

Balance (plus accrued and unpaid interest thereon at the applicable Mortgage
Rate from the date interest was last paid through the date of receipt of the
final Liquidation Proceeds) of such Liquidated Mortgage Loan immediately prior
to the final recovery of its Liquidation Proceeds.

      Freddie Mac: Freddie Mac (formerly, the Federal Home Loan Mortgage
Corporation), or any successor thereto.

      Grant: Pledge, bargain, sell, warrant, alienate, remise, release, convey,
assign, transfer, create, and grant a lien upon and a security interest in and
right of set-off against, deposit, set over and confirm pursuant to the
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.

      Gross Margin: With respect to any Mortgage Loan, the percentage set forth
as the "Gross Margin" for such Mortgage Loan on the Mortgage Loan Schedule, as
adjusted from time to time in accordance with the terms of the Servicing
Agreement.

      Impac Holdings: Impac Mortgage Holdings, Inc., a Maryland corporation, and
its successors and assigns.

      Indemnified Party: The meaning specified in Section 7.02 of the Trust
Agreement.

      Indenture: The indenture dated as of June 30, 2003, between the Issuer and
the Indenture Trustee, relating to the Impac CMB Trust Series 2003-7 Bonds.

      Indenture Trustee: Deutsche Bank National Trust Company, and its
successors and assigns or any successor indenture trustee appointed pursuant to
the terms of the Indenture.

      Indenture Trustee's Fee: With respect to any Payment Date, one month's
interest accrued at the Indenture Trustee's Fee Rate on the Stated Principal
Balance of each Mortgage Loan as of the first day of the related Due Period.

      Indenture Trustee's Fee Rate: On each Mortgage Loan, a rate equal to
0.00525% per annum.

      Independent: When used with respect to any specified Person, the Person
(i) is in fact independent of the Issuer, any other obligor on the Bonds, the
Seller, the Master Servicer, the Depositor and any Affiliate of any of the
foregoing Persons, (ii) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Seller, the Master Servicer, the Depositor or


                                       14
<PAGE>

any Affiliate of any of the foregoing Persons and (iii) is not connected with
the Issuer, any such other obligor, the Seller, the Master Servicer, the
Depositor or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.

      Independent Certificate: A certificate or opinion to be delivered to the
Indenture Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 10.01 of the Indenture, made by an
independent appraiser or other expert appointed by an Issuer Request and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.

      Index: With respect to any Mortgage Loan, the index for the adjustment of
the Mortgage Rate set forth as such on the related Mortgage Note.

      Initial Bond Principal Balance: With respect to the Class A Bonds,
$278,250,000, with respect to the Class M Bonds, $13,500,000 and with respect to
the Class B Bonds, $6,000,000.

      Initial Certification: The initial certification delivered by the
Indenture Trustee pursuant to Section 2.03(a) of the Indenture in the form
attached thereto as Exhibit C.

      Initial Subservicers: With respect to substantially all of the Mortgage
Loans, Wendover Funding, Inc. and Countrywide Home Loans Servicing LP, or their
respective successors in interest.

      Insurance Agreement: The Insurance and Indemnity Agreement dated as of
June 30, 2003, among the Master Servicer, the Depositor, the Issuer, Impac
Holdings, the Indenture Trustee and the Bond Insurer, including any amendments
and supplements thereto.

      Insurance Proceeds: Proceeds paid by any insurer pursuant to any insurance
policy covering a Mortgage Loan which are required to be remitted to the Master
Servicer, net of any component thereof (i) covering any expenses incurred by or
on behalf of the Master Servicer in connection with obtaining such proceeds,
(ii) that is applied to the restoration or repair of the related Mortgaged
Property or (iii) released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures.

      Insured Amount: Shall have the meaning assigned to the term "Insured
Amount" in the Bond Insurance Policy.

      Interest Determination Date: With respect to the first Accrual Period, the
second LIBOR Business Day preceding the Closing Date, and with respect to each
Accrual Period thereafter, the second LIBOR Business Day preceding the related
Payment Date on which such Accrual Period commences.

      Interest Rate Adjustment Date: With respect to each Mortgage Loan, the
date or dates on which the Mortgage Rate is adjusted in accordance with the
related Mortgage Note.


                                       15
<PAGE>

      Interested Person: As of any date of determination, the Depositor, the
Master Servicer, the Bond Insurer, the Indenture Trustee, any Mortgagor, or any
Person actually known to a Responsible Officer of the Trustee to be an Affiliate
of any of them.

      Investment Company Act: The Investment Company Act of 1940, as amended,
and any amendments thereto.

      IRS: The Internal Revenue Service.

      Issuer: Impac CMB Trust Series 2003-7, a Delaware statutory trust, or its
successor in interest.

      Issuer Request: A written order or request signed in the name of the
Issuer by any one of its Authorized Officers and approved in writing by the Bond
Insurer, so long as no Bond Insurer Default exists, and delivered to the
Indenture Trustee.

      LIBOR Business Day: A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.

      Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 6.02 of the Servicing Agreement
shall not be deemed to constitute a Lien.

      Lifetime Rate Cap: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a lifetime rate cap, the maximum
Mortgage Rate permitted over the life of such Mortgage Loan under the terms of
such Mortgage Note, as set forth on the Mortgage Loan Schedule and initially as
set forth on Exhibit A to the Servicing Agreement.

      Liquidated Mortgage Loan: With respect to any Payment Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified in the Servicing Agreement, as of the end of
the related Due Period that substantially all Liquidation Proceeds which it
reasonably expects to recover with respect to the disposition of the related
Mortgaged Property or REO Property have been recovered.

      Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) which
are incurred by or on behalf of the Master Servicer or on the Master Servicer's
behalf, in connection with the liquidation of any Mortgage Loan and not
recovered under any insurance policy, such expenses including, without
limitation, legal fees and expenses, any unreimbursed amount expended
(including, without limitation, amounts advanced to correct defaults on any
mortgage loan which is senior to such Mortgage Loan, amounts advanced to keep
current or pay off a mortgage loan that


                                       16
<PAGE>

is senior to such Mortgage Loan and Disposition Fees) respecting the related
Mortgage Loan and any related and unreimbursed expenditures for real estate
property taxes or for property restoration, preservation or insurance against
casualty loss or damage.

      Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.

      Loan-to-Value Ratio: With respect to any Mortgage Loan, as of any date of
determination, a fraction expressed as a percentage, the numerator of which is
the then current principal amount of the Mortgage Loan, and the denominator of
which is the Appraised Value of the related Mortgaged Property.

      Loan Year: With respect to any Mortgage Loan, the one-year period
commencing on the day succeeding the origination of such Mortgage Loan and
ending on the anniversary date of such Mortgage Loan, and each annual period
thereafter.

      Lost Note Affidavit: With respect to any Mortgage Loan as to which the
original Mortgage Note has been 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).

      Majority Certificateholder: A Holder of a 50.01% or greater Certificate
Percentage Interest of the Certificates.

      Master Servicer: Impac Funding Corporation, a California corporation, and
its successors and assigns.

      Master Servicing Fee: With respect to each Mortgage Loan and any Payment
Date, the fee payable monthly to the Master Servicer in respect of master
servicing compensation that accrues at an annual rate equal to the Master
Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage
Loan as of the related Due Date in the related Due Period.

      Master Servicing Fee Rate: With respect to any Mortgage Loan, 0.030% per
annum.

      Maximum Bond Rate: 12.00% per annum.

      Maximum Mortgage Rate: With respect to each Mortgage Loan, the maximum
Mortgage Rate.

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

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


                                       17
<PAGE>

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

      Minimum Mortgage Rate: With respect to each Mortgage Loan, the minimum
Mortgage Rate.

      Minimum Spread Rate: Commencing on the tenth Payment Date, 0.50% per
annum.

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

      Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after
adjustment, if any, for partial Principal Prepayments and for Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period).

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

      Mortgage: The mortgage, deed of trust or other instrument creating a first
lien on an estate in fee simple interest in real property securing a Mortgage
Loan.

      Mortgage File: The file containing the Related Documents pertaining to a
particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to the Mortgage Loan Sale and Contribution Agreement
or the Servicing Agreement.

      Mortgage Loans: The Mortgage Loans that will be transferred and assigned
to the Trust pursuant to Section 2.03(a) of the Indenture, each Mortgage Loan so
held being identified in the Mortgage Loan Schedule.

      Mortgage Loan Sale and Contribution Agreement: The Mortgage Loan Sale and
Contribution Agreement, dated as of the Closing Date, between the Seller, as
seller, and the Purchaser, as purchaser, relating to the sale, transfer and
assignment of the Mortgage Loans.

      Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage
Loans held by the Issuer on such date. The schedule of Mortgage Loans as of the
Cut-off Date is the schedule set forth in Exhibit B of the Indenture, which
schedule sets forth as to each Mortgage Loan:

                  (i) the loan number and name of the Mortgagor;

                  (ii) the street address, city, state and zip code of the
      Mortgaged Property;

                  (iii) the original Mortgage Rate;


                                       18
<PAGE>

                  (iv) the maturity date;

                  (v) the original principal balance;

                  (vi) the first Payment Date;

                  (vii) the type of Mortgaged Property;

                  (viii) the Monthly Payment in effect as of the Cut-off Date;

                  (ix) the Cut-off Date Principal Balance;

                  (x) the Index and the Gross Margin, if applicable;

                  (xi) the Adjustment Date frequency and Payment Date frequency,
      if applicable;

                  (xii) the occupancy status;

                  (xiii) the purpose of the Mortgage Loan;

                  (xiv) the Appraised Value of the Mortgaged Property;

                  (xv) (A) the original term to maturity and (B) if such
      Mortgage Loan is a Balloon Loan, the amortization term thereof;

                  (xvi) the paid-through date of the Mortgage Loan;

                  (xvii) whether the Mortgage Loan is a Balloon Mortgage Loan or
      a Mortgage Loan the terms of which do not provide for a Balloon Payment;

                  (xviii) the Loan-to-Value Ratio;

                  (xix) whether such Mortgage Loan is a Radian PMI Insured Loan,
      and if so, the related Radian PMI Rate; and

                  (xx) whether or not the Mortgage Loan was underwritten
      pursuant to a limited documentation program.

      The Mortgage Loan Schedule shall also set forth the total of the amounts
described under (ix) above for all of the Mortgage Loans.

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


                                       19
<PAGE>

      Mortgage Rate: With respect to any Mortgage Loan, the annual rate at which
interest accrues on such Mortgage Loan.

      Mortgaged Property: The underlying property, including real property and
improvements thereon, securing a Mortgage Loan.

      Mortgagor: The obligor or obligors under a Mortgage Note.

      Net Collections: With respect to any Corrected Mortgage Loan, an amount
equal to all payments on account of interest and principal on such Mortgage
Loan.

      Net Derivative Contract Payment Amount: With respect to any Payment Date,
the amount equal to the excess, if any, of (a) the aggregate amount payable on
that Payment Date to the Issuer from the Derivative Contract Counterparty
pursuant to the Derivative Contracts, over (b) the aggregate amount payable on
that Payment Date to the Derivative Contract Counterparty under the Derivative
Contracts, in each case as described in Section 8.02(c) of the Indenture.

      Net Derivative Fee: With respect to any Payment Date, the amount equal to
the excess, if any, of (a) the aggregate amount payable on that Payment Date to
the Derivative Contract Counterparty in respect of the Derivative Contracts,
other than any termination payments to the Derivative Contract Counterparty as a
result of a default of the Derivative Contract Counterparty over (b) the
aggregate amount payable on that Payment Date to the Issuer from the Derivative
Contract Counterparty pursuant to the Derivative Contracts.

      Net Derivative Fee Rate: With respect to any Payment Date, the fraction,
expressed as a rate per annum, equal to (x) the Net Derivative Fee on such
Payment Date over (y) the aggregate Stated Principal Balance of the Mortgage
Loans as of the beginning of the related Due Period.

      Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.

      Net Monthly Excess Cash Flow: For any Payment Date, the sum of (a) any
Overcollateralization Release Amount and (b) the excess of (x) the Available
Funds and the Insured Amount, if any, for such Payment Date over (y) the sum for
such Payment Date of (A) the aggregate amount of Accrued Bond Interest for the
Bonds and (B) the Principal Remittance Amount.

      Net Mortgage Rate: On any Mortgage Loan, the then applicable mortgage rate
thereon minus the sum of (1) the Master Servicing Fee Rate, (2) the Subservicing
Fee Rate, (3) the Indenture Trustee's Fee Rate, (4) the Owner Trustee's Fee
Rate, (5) the Minimum Spread Rate, (6) the Net Derivative Fee Rate and (7) the
related Radian PMI Rate, if such Mortgage Loan is a Radian PMI Insured Loan.

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


                                       20
<PAGE>

      Ninety Day Rolling Delinquency Percentage: For any Payment Date, the
three-month average of the aggregate Stated Principal Balance of the Mortgage
Loans that are 90 or more days delinquent, in foreclosure or converted to REO
Properties as of the close of business on the last day of the preceding calendar
month. For purposes of the foregoing calculations, a mortgage loan is considered
"90 days" delinquent if a payment due on the first day of a month has not been
received by the second day of the third following month.

      Nonrecoverable Advance: Any advance (i) which was previously made or is
proposed to be made by the Master Servicer; and (ii) which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed advance,
would not, be ultimately recoverable by the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on any Mortgage Loan. The
Indenture Trustee may conclusively rely on any determination of
nonrecoverability made by the Master Servicer.

      Officer's Certificate: With respect to the Master Servicer, a certificate
signed by the President, Managing Director, a Director, a Vice President or an
Assistant Vice President, of the Master Servicer and delivered to the Indenture
Trustee. With respect to the Issuer, a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in the Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.

      One-Month LIBOR: With respect to any Accrual Period, the rate determined
by the Indenture Trustee on the related Interest Determination Date on the basis
of the London interbank offered rate for one-month United States dollar
deposits, as such rates appear on the Telerate Screen Page 3750, as of 11:00
a.m. (London time) on such Interest Determination Date.

      In the event that on any Interest Determination Date, Telerate Screen 3750
fails to indicate the London interbank offered rate for one-month United States
dollar deposits, then One-Month LIBOR for the related Interest Accrual Period
will be established by the Indenture Trustee as follows:

                  (i) If on such Interest Determination Date two or more
      Reference Banks provide such offered quotations, One-Month LIBOR for the
      related Accrual Period shall be the arithmetic mean of such offered
      quotations (rounded upwards if necessary to the nearest whole multiple of
      1/16%).

                  (ii) If on such Interest Determination Date fewer than two
      Reference Banks provide such offered quotations, One-Month LIBOR for the
      related Accrual Period shall be the higher of (i) One-Month LIBOR as
      determined on the previous Interest Determination Date and (ii) the
      Reserve Interest Rate.

      The establishment of One-Month LIBOR on each Interest Determination Date
by the Indenture Trustee and the Indenture Trustee's calculation of the rate of
interest applicable for the related Accrual Period shall (in the absence of
manifest error) be final and binding.


                                       21
<PAGE>

      Opinion of Counsel: A written opinion of counsel acceptable to the
Indenture Trustee and/or the Bond Insurer, as applicable, in its reasonable
discretion which counsel may be in-house counsel for the Master Servicer if
acceptable to the Indenture Trustee, the Bond Insurer and the Rating Agencies or
counsel for the Depositor, as the case may be.

      Original Value: Except in the case of a refinanced Mortgage Loan, the
lesser of the Appraised Value or sales price of Mortgaged Property at the time a
Mortgage Loan is closed, and for a refinanced Mortgage Loan, the Original Value
is the value of such property set forth in an appraisal acceptable to the Master
Servicer.

      Outstanding: With respect to the Bonds, as of the date of determination,
all Bonds theretofore executed, authenticated and delivered under this Indenture
except:

                  (i) Bonds theretofore canceled by the Bond Registrar or
      delivered to the Indenture Trustee for cancellation; and

                  (ii) Bonds in exchange for or in lieu of which other Bonds
      have been executed, authenticated and delivered pursuant to the Indenture
      unless proof satisfactory to the Indenture Trustee is presented that any
      such Bonds are held by a holder in due course;

all Bonds that have been paid with funds provided under the Bond Insurance
Policy shall be deemed to be Outstanding until the Bond Insurer has been
reimbursed with respect thereto.

      Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan (including
an REO Property) which was not the subject of a Principal Prepayment in Full,
Cash Liquidation or REO Disposition and which was not purchased, deleted or
substituted for prior to such Due Date pursuant to the Servicing Agreement.

      Overcollateralization Increase Amount: As of any Payment Date, the excess,
if any, of (a) the Overcollateralization Target Amount over (b) the
Overcollateralized Amount on such Payment Date (after giving effect to
distributions in respect of the Basic Principal Distribution Amount on such
Payment Date).

      Overcollateralization Release Amount: With respect to any Payment Date,
the lesser of (x) the Principal Remittance Amount for such Payment Date and (y)
the excess, if any, of (i) the Overcollateralized Amount for such Payment Date
(assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Payment Date) over (ii) the Overcollateralization Target Amount
for such Payment Date.

      Overcollateralization Target Amount: With respect to any Payment Date
prior to the Stepdown Date or on or after the Stepdown Date for which a Trigger
Event is in effect, 0.75% of the Cut-off Date Balance. With respect to any
Payment Date on or after the Stepdown Date for which a Trigger Event is not in
effect, the greatest of (i) 1.50% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the end of the related Due Period, (ii) 0.50% of the
Cut-off Date Balance, (iii) two times the excess of (1) 50% of the aggregate
Stated Principal Balance of the Mortgage Loans 90 or more days delinquent
(including for this purpose any such Mortgage Loans


                                       22
<PAGE>

in bankruptcy or foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust) as of the end of the
related Due Period over (2) four times the Net Monthly Excess Cashflow for such
Payment Date (calculated without regard to the Overcollateralization Release
Amount) and (iv) the aggregate Stated Principal Balance of the three Mortgage
Loans with the greatest Stated Principal Balance as of the end of the related
Due Period.

      Overcollateralized Amount: As of any Payment Date, the amount, if any, by
which (i) the aggregate principal balance of the Mortgage Loans (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or Advanced, and unscheduled collections of principal
received during the related Prepayment Period and after reduction for Realized
Losses incurred during the related Prepayment Period) exceeds (ii) the aggregate
Bond Principal Balance of the related Bonds as of such Payment Date (after
giving effect to distributions to be made on such Payment Date).

      Owner Trust Estate: The corpus of the Issuer created by the Trust
Agreement which consists of items referred to in Section 3.01 of the Trust
Agreement.

      Owner Trustee: Wilmington Trust Company and its successors and assigns or
any successor owner trustee appointed pursuant to the terms of the Trust
Agreement.

      Owner Trustee's Fee: With respect to any Payment Date the product of (i)
the Owner Trustee's Fee Rate divided by 12 and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the first day of the related Due
Period.

      Owner Trustee's Fee Rate: On each Mortgage Loan, a rate equal to 0.0017%
per annum.

      Paying Agent: Any paying agent or co-paying agent appointed pursuant to
Section 3.03 of the Indenture, which initially shall be the Indenture Trustee.

      Payment Account: The account established by the Indenture Trustee pursuant
to Section 3.01 of the Indenture. The Payment Account shall be an Eligible
Account.

      Payment Date: The 25th day of each month, or if such day is not a Business
Day, then the next Business Day.

      Percentage Interest: With respect to any Bond, the percentage obtained by
dividing the Bond Principal Balance of such Bond by the aggregate Bond Principal
Balances of all Bonds of that Class. With respect to any Certificate, the
percentage as stated on the face thereof.

      Periodic Rate Cap: With respect to any Mortgage Loan, the maximum rate, if
any, by which the Mortgage Rate on such Mortgage Loan can adjust on any
Adjustment Date, as stated in the related Mortgage Note or Mortgage.

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


                                       23
<PAGE>

      Plan: Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.

      Plan Assets: Assets of a Plan within the meaning of Department of Labor
regulation 29 C.F.R. ss. 2510.3-101.

      Policy Premium Rate: With respect to any Payment Date, the rate per annum
at which the Premium Amount for the Bond Insurance Policy accrues, as specified
in the Insurance Agreement.

      Pool Balance: With respect to any date of determination, the aggregate of
the Stated Principal Balances of the Mortgage Loans as of such date.

      Preference Amount: With respect to the Class A Bonds, any amount
previously distributed to a Class A Bondholder that is recoverable and sought to
be recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.

      Premium Amount: The amount of premium due to the Bond Insurer in
accordance with the terms of the Insurance Agreement.

      Prepayment Interest Shortfall: As to any Payment Date and any Mortgage
Loan (other than a Mortgage Loan relating to an REO Property) that was the
subject of (a) a Principal Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of interest accrued during the related
Prepayment Period at the Net Mortgage Rate on the Stated Principal Balance of
such Mortgage Loan over the sum of the amount of interest (less interest at the
related Expense Fee Rate) paid by the Mortgagor for such Prepayment Period to
the date of such Principal Prepayment in Full and any Advances made by the
Master Servicer pursuant to Section 4.04 of the Servicing Agreement or (b) a
partial Principal Prepayment during the related Prepayment Period, an amount
equal to the interest at the Mortgage Rate (less the Subservicing Fee Rate)
during the related Prepayment Period on the amount of such partial Principal
Prepayment.

      Prepayment Period: With respect to each Mortgage Loan and any Payment
Date, the prior calendar month.

      Primary Insurance Policy: Each primary policy of mortgage guaranty
insurance issued by a Qualified Insurer or any replacement policy therefor,
including the Radian Lender-Paid PMI Policies.

      Principal Available Funds Shortfall: On any Payment Date for which the
Basic Principal Distribution Amount is determined by clause (a) of the
definition thereof, the excess of (x) the amount determined pursuant to clause
(b) of the definition of Basic Principal Distribution Amount over (y) the amount
determined pursuant to clause (a) of the definition of Basic Principal
Distribution Amount.


                                       24
<PAGE>

      Principal Distribution Amount: For any Payment Date, the Basic Principal
Distribution Amount plus the Extra Principal Distribution Amount.

      Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.

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

      Principal Remittance Amount: With respect to any Payment Date, the sum of
the following:

                  (i) the principal portion of each previously undistributed
      Monthly Payment due after the Cut-off Date received on or prior to the
      related Determination Date or advanced prior to such Payment Date (other
      than Monthly Payments due after the related Due Period, which shall be
      treated as if received during the Due Period they were due) on each
      Outstanding Mortgage Loan;

                  (ii) the principal portion of all proceeds of any Mortgage
      Loan repurchased during the related Prepayment Period (or deemed to have
      been so repurchased in accordance with the Servicing Agreement) pursuant
      to the Servicing Agreement and the amount of any shortfall deposited in
      the Collection Account in connection with the substitution of a Deleted
      Mortgage Loan pursuant to the Mortgage Loan Sale and Contribution
      Agreement during the related Collection Period; and

                  (iii) the principal portion of all other unscheduled
      collections received during the related Prepayment Period (including,
      without limitation, Principal Prepayments, Insurance Proceeds, Liquidation
      Proceeds and REO Proceeds) to the extent applied by the Master Servicer as
      recoveries of principal of the related Mortgage Loan pursuant to the
      Servicing Agreement; and

                  (iv) any portion of any Insured Amount for such Payment Date
      representing an Undercollateralization Amount allocable to the Class A
      Bonds.

      Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

      Prospectus: The Prospectus Supplement, dated June 26, 2003, together with
the attached Prospectus, dated March 28, 2003.

      Purchase Price: The meaning specified in Section 2.2(a) of the Mortgage
Loan Sale and Contribution Agreement.

      Purchaser: IMH Assets Corp., a California corporation, and its successors
and assigns.


                                       25
<PAGE>

      Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as an insurer
by the Master Servicer and as a Fannie Mae-approved mortgage insurer.

      Radian: Radian Guaranty, Inc., or its successors or assigns.

      Radian Lender-Paid PMI Policy: A lender-paid primary mortgage insurance
policy issued by Radian in accordance with a March 29, 2002 letter between the
Seller and Radian.

      Radian PMI Insured Loans: The Mortgage Loans included in the Trust Fund
covered by a Radian Lender-Paid PMI Policy, as indicated on the Mortgage Loan
Schedule.

      Radian PMI Policy Fee: With respect to each Radian PMI Insured Loan and
any Payment Date, the product of (i) the Radian PMI Rate divided by 12 and (ii)
the Stated Principal Balance of such Mortgage Loan as of the first day of the
related Due Period.

      Radian PMI Rate: With respect to any Mortgage Loan covered by the Radian
Lender-Paid PMI Policy, the rate per annum at which the premium with respect to
such policy accrues as indicated in the Mortgage Loan Schedule.

      Rating Agency: Any nationally recognized statistical rating organization,
or its successor, that rated the Bonds at the request of the Depositor at the
time of the initial issuance of the Bonds. Initially, Standard & Poor's or
Moody's. If such organization or a successor is no longer in existence, "Rating
Agency" with respect to the Class A Bonds shall be such nationally recognized
statistical rating organization, or other comparable Person, designated by the
Bond Insurer so long as no Bond Insurer Default exists, notice of which
designation shall be given to the Indenture Trustee. References herein to the
highest short term unsecured rating category of a Rating Agency shall mean A-1
or better in the case of Standard & Poor's and P-1 or better in the case of
Moody's and in the case of any other Rating Agency shall mean such equivalent
ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa" in the case
of Moody's and in the case of any other Rating Agency, such equivalent rating.

      Realized Loss: With respect to each Mortgage Loan (or REO Property) as to
which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan (or
REO Property) as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Bondholders up to the
last day of the month in which the Cash Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash
Liquidation (or REO Disposition) occurred, to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage Loan, net
of the portion thereof reimbursable to the


                                       26
<PAGE>

Master Servicer or any Subservicer with respect to related Advances or expenses
as to which the Master Servicer or any Subservicer is entitled to reimbursement
thereunder but which have not been previously reimbursed. With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan which has become the object of a Debt Service Reduction, the
amount of such Debt Service Reduction.

      Record Date: With respect to any Book-Entry Bonds and any Payment Date,
the close of business on the Business Day immediately preceding such Payment
Date. With respect to any Bonds that are not Book-Entry Bonds, the close of
business on the last Business Day of the calendar month preceding such Payment
Date.

      Reference Banks: Any leading banks selected by the Indenture Trustee after
consultation with the Master Servicer and the Bond Insurer and engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, (ii) whose quotations appear on
the Telerate Screen Page 3750 on the Interest Determination Date in question,
(iii) which have been designated as such by the Indenture Trustee after
consultation with the Master Servicer and the Bond Insurer, and (iv) which are
not Affiliates of the Depositor or the Seller.

      Registered Holder: The Person in whose name a Bond is registered in the
Bond Register on the applicable Record Date.

      Related Documents: With respect to each Mortgage Loan, the documents
specified in Section 2.1(b) of the Mortgage Loan Sale and Contribution Agreement
and any documents required to be added to such documents pursuant to the
Mortgage Loan Sale and Contribution Agreement, the Trust Agreement, Indenture or
the Servicing Agreement.

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

      Relief Act Shortfall: As to any Payment Date and any Mortgage Loan (other
than a Mortgage Loan relating to an REO Property), any shortfalls relating to
the Relief Act or similar legislation or regulations.

      Remittance Report: The report prepared by the Master Servicer pursuant to
Section 4.01 of the Servicing Agreement.

      REO Acquisition: The acquisition by the Master Servicer on behalf of the
Indenture Trustee for the benefit of the Bondholders of any REO Property
pursuant to Section 3.13 of the Servicing Agreement.

      REO Disposition: As to any REO Property, a determination by the Master
Servicer that it has received substantially all Insurance Proceeds, Liquidation
Proceeds, REO Proceeds and other payments and recoveries (including proceeds of
a final sale) which the Master Servicer expects to be finally recoverable from
the sale or other disposition of the REO Property.


                                       27
<PAGE>

      REO Imputed Interest: As to any REO Property, for any period, an amount
equivalent to interest (at the Net Mortgage Rate that would have been applicable
to the related Mortgage Loan had it been Outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof for such
period as such balance is reduced pursuant to Section 3.13 of the Servicing
Agreement by any income from the REO Property treated as a recovery of
principal.

      REO Proceeds: Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged Property) which proceeds are required to be deposited into the
Collection Account only upon the related REO Disposition.

      REO Property: A Mortgaged Property that is acquired by the Issuer by
foreclosure or by deed in lieu of foreclosure.

      Repurchase Event: With respect to any Mortgage Loan, either (i) a
discovery that, as of the Closing Date, the related Mortgage was not a valid
first lien on the related Mortgaged Property, or (ii) with respect to any
Mortgage Loan as to which the Seller delivers an affidavit certifying that the
original Mortgage Note has been lost or destroyed, a subsequent default on such
Mortgage Loan if the enforcement thereof or of the related Mortgage is
materially and adversely affected by the absence of such original Mortgage Note.

      Repurchase Price: With respect to any Mortgage Loan required to be
repurchased on any date pursuant to the Mortgage Loan Sale and Contribution
Agreement or purchased by the Master Servicer pursuant to the Servicing
Agreement, an amount equal to the sum, without duplication, of (i) 100% of the
Stated Principal Balance thereof (without reduction for any amounts charged off)
and (ii) unpaid accrued interest at the Mortgage Rate on the outstanding
principal balance thereof from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month of purchase plus
(iii) the amount of unreimbursed Advances or unreimbursed Servicing Advances
made with respect to such Mortgage Loan plus (iv) any other amounts owed to the
Master Servicer or any Subservicer pursuant to Section 3.07 of the Servicing
Agreement and not included in clause (iii) of this definition plus (v) any costs
and damages incurred by the trust in connection with any violation by such loan
of any predatory-lending law.

      Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Indenture Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of the one-month United States dollar lending rates which New York City
banks selected by the Indenture Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month United States dollar
lending rate which New York City banks selected by the Indenture Trustee are
quoting on such Interest Determination Date to leading European banks.

      Responsible Officer: With respect to the Indenture Trustee, any officer of
the Indenture Trustee with direct responsibility for the administration of the
Indenture and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.


                                       28
<PAGE>

      Rolling Delinquency Percentage: For any Payment Date, the average of the
Delinquency Percentages for the Mortgage Loans as of the last day of each of the
six (or 1, 2, 3, 4, and 5 in the case of the first five Payment Dates, as
applicable) most recently ended Due Periods.

      Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

      Securities Intermediary: Deutsche Bank National Trust Company, or its
successors and assigns.

      Security: Any of the Certificates or Bonds.

      Securityholder or Holder: Any Bondholder or a Certificateholder.

      Security Instrument: A written instrument creating a valid first lien or
second lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.

      Seller: Impac Mortgage Holdings, Inc., a Maryland corporation, and its
successors and assigns.

      Servicing Account: The separate trust account created and maintained by
the Master Servicer or each Subservicer with respect to the Mortgage Loans or
REO Property, which shall be an Eligible Account, for collection of taxes,
assessments, insurance premiums and comparable items as described in Section
3.08 of the Servicing Agreement.

      Servicing Advances: All customary, reasonable and necessary "out of
pocket"costs and expenses incurred in connection with a default, delinquency or
other unanticipated event in the performance by the Master Servicer or any
Subservicer of its servicing obligations, including, without duplication, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures and any expenses incurred in relation to any such proceedings that
result from the Mortgage Loan being registered on the MERS System, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Sections 3.10, 3.11, 3.13 of the Servicing Agreement.

      Servicing Agreement: The Servicing Agreement dated as of June 30, 2003,
among the Master Servicer, the Issuer and the Indenture Trustee.

      Servicing Certificate: A certificate completed and executed by a Servicing
Officer on behalf of the Master Servicer in accordance with Section 4.01 of the
Servicing Agreement.

      Servicing Default: The meaning assigned in Section 6.01 of the Servicing
Agreement.

      Servicing Fee: The sum of the Master Servicing Fee and the Subservicing
Fee.


                                       29
<PAGE>

      Servicing Fee Rate: The sum of the Master Servicing Fee Rate and the
related Subservicing Fee Rate.

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

      Sixty Day Rolling Delinquency Percentage: For any Payment Date and the
Mortgage Loans, the three month average of the aggregate Stated Principal
Balance of such Mortgage Loans that are 60 or more days delinquent, in
bankruptcy, in foreclosure or converted to REO Properties as of the close of
business on the last day of the preceding calendar month. For purposes of the
foregoing calculations, a mortgage loan is considered "60 days" delinquent if a
payment due on the first day of a month has not been received by the second day
of the second following month.

      Special Certificate Cap Contract: The Confirmation together with the
associated ISDA Master Agreement, delivered to the Indenture Trustee on the
Closing Date and attached to the Indenture as Exhibit F, for which amounts
payable shall be distributed in accordance with Section 3.05(f) of the
Indenture.

      Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.

      Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property as of any date of determination, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut- off Date, after application of all
scheduled Monthly Payments due on or before such date, whether or not received,
minus (ii) the sum of (a) the principal portion of the Monthly Payments due with
respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Payment Date which were received or with respect to
which an Advance was made, (b) all Principal Prepayments with respect to such
Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation Proceeds
and REO Proceeds to the extent applied by the Master Servicer as recoveries of
principal in accordance with Section 3.13 of the Servicing Agreement with
respect to such Mortgage Loan or REO Property, which were distributed pursuant
to Section 3.05 of the Indenture on any previous Payment Date, and (c) the
principal portion of any Realized Loss with respect thereto allocated pursuant
to Section 3.30 of the Indenture for any previous Payment Date.

      Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss.ss.3801 et seq., as the same may be amended from time to time.

      Stepdown Date: The later to occur of (x) the Payment Date occurring in
July 2006 and (y) the first Payment Date for which the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period) is less than or equal to 50.00% of the Cut-off Date Balance.


                                       30
<PAGE>

      Step-Up Date: The first Payment Date following the earlier of (i) the
first Payment Date for which the Issuer can cause the redemption of the Bonds
pursuant to Section 8.07 of the Indenture and (ii) the Payment Date in July
2013.

      Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer and acceptable to the Bond Insurer,
including the Initial Subservicers.

      Subservicing Account: An Eligible Account established or maintained by a
Subservicer as provided for in Section 3.06(e) of the Servicing Agreement.

      Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02 of the Servicing Agreement.

      Subservicing Fee: With respect to each Mortgage Loan and any Payment Date,
the fee payable monthly to the subservicer in respect of servicing compensation
that accrues at an annual rate equal to the Subservicing Fee Rate multiplied by
the Stated Principal Balance of such Mortgage Loan as of the related Due Date in
the related Due Period.

      Subservicing Fee Rate: On each Mortgage Loan, a rate equal to 0.375% per
annum.

      Substitution Adjustment Amount: With respect to any Eligible Substitute
Mortgage Loan, the amount as defined in Section 2.03 of the Servicing Agreement.

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

      Treasury Regulations: Regulations, including proposed or temporary
Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

      Trigger Event: A Trigger Event is in effect with respect to any Payment
Date if:

      (1) in the case of any Payment Date after the 36th Payment Date, the three
month average of the aggregate principal balance of Mortgage Loans that are 60
or more days delinquent (including for this purpose any such Mortgage Loans in
bankruptcy or foreclosure and Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust) as of the close of business
on the last day of the preceding calendar month exceeds 4.00% of the aggregate
Stated Principal Balance of the Mortgage Loans; or

      (2) (a) in the case of any Payment Date after the 36th Payment Date and on
or before the 48th Payment Date, the cumulative amount of Realized Losses
incurred on the Mortgage Loans from the Cut-off Date through the end of the
calendar month immediately preceding such Payment Date exceeds 0.50% of the
Cut-off Date Balance, (b) in the case of any Payment Date after the 48th


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Payment Date and on or before the 60th Payment Date, the cumulative amount of
Realized Losses incurred on the Mortgage Loans from the Cut-off Date through the
end of the calendar month immediately preceding such Payment Date exceeds 1.00%
of the Cut-off Date Balance, (c) in the case of any Payment Date after the 60th
Payment Date and on or before the 72nd Payment Date, the cumulative amount of
Realized Losses incurred on the Mortgage Loans from the Cut-off Date through the
end of the calendar month immediately preceding such Payment Date exceeds 1.50%
of the Cut-off Date Balance and (d) in the case of any Payment Date after the
72nd Payment Date, the cumulative amount of Realized Losses incurred on the
Mortgage Loans from the Cut-off Date through the end of the calendar month
immediately preceding such Payment Date exceeds 1.75% of the Cut-off Date
Balance.

For purposes of the foregoing calculations, a Mortgage Loan is considered "60
days" and "90 days" delinquent if a payment due on the first day of a month has
not been received by the second day of the second following month and third
following month, respectively.

      Trust: The Impac CMB Trust Series 2003-7 to be created pursuant to the
Trust Agreement.

      Trust Agreement: The Amended and Restated Trust Agreement dated as of June
30, 2003, among the Owner Trustee, the Depositor and Deutsche Bank National
Trust Company, as Certificate Registrar and Certificate Paying Agent, relating
to the Trust.

      Trust Estate: The meaning specified in the Granting Clause of the
Indenture.

      Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as amended
from time to time, as in effect on any relevant date.

      UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.

      Undercollateralization Amount: With respect to any Payment Date, the
amount by which the aggregate Bond Principal Balance of the Class A Bonds
exceeds the aggregate Stated Principal Balance of the Mortgage Loans immediately
following such Payment Date.

      Underwriters: Bear, Stearns & Co. Inc. and Countrywide Securities
Corporation, or their successors.

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

      Unpaid Interest Shortfall: For each class of Bonds and any Payment Date,
such Bonds' pro rata share, based on the amount of Accrued Bond Interest
otherwise payable on such Bond on such Payment Date, of (a) any Prepayment
Interest Shortfalls, to the extent not covered by Compensating Interest, and (b)
any Relief Act Shortfalls, plus interest on the amount of previously allocated
Unpaid Interest Shortfall on such class of Bonds which remains unreimbursed, at
the Bond Interest Rate for such Class for the related Accrual Period.


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