ACE SECURITIES CORP.
                                    Depositor


                             WELLS FARGO BANK, N.A.

             Master Servicer, Servicer and Securities Administrator


                       HSBC BANK USA, NATIONAL ASSOCIATION
                                     Trustee


                         POOLING AND SERVICING AGREEMENT
                           Dated as of October 1, 2004




          ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                     Asset Backed Pass-Through Certificates

<PAGE>


                                TABLE OF CONTENTS


ARTICLE I DEFINITIONS..........................................................4

   SECTION 1.01. Defined Terms................................................ 4

      Accepted Master Servicing Practices......................................4
      Accepted Servicing Practices.............................................4
      Account..................................................................4
      Accrued Certificate Interest.............................................4
      Adjustable Rate Mortgage Loan............................................4
      Adjustment Date..........................................................5
      Administration Fees......................................................5
      Administration Fee Rate..................................................5
      Advance Facility.........................................................5
      Advance Financing Person.................................................5
      Advance Reimbursement Amounts............................................5
      Affiliate................................................................5
      Aggregate Loss Severity Percentage.......................................5
      Agreement................................................................5
      Allocated Realized Loss Amount...........................................5
      Amounts Held for Future Distribution.....................................5
      Assignment...............................................................5
      Assignment Agreement.....................................................6
      Available Distribution Amount............................................6
      Balloon Mortgage Loan....................................................6
      Balloon Payment..........................................................6
      Bankruptcy Code..........................................................6
      Book-Entry Certificates..................................................6
      Book-Entry Custodian.....................................................6
      Business Day.............................................................7
      Cap Contracts............................................................7
      Cash-Out Refinancing.....................................................7
      Certificate..............................................................7
      Certificate Factor.......................................................7
      Certificate Margin.......................................................7
      Certificateholder........................................................9
      Holder...................................................................9
      Certificate Owner........................................................9
      Certificate Principal Balance...........................................10
      Certificate Register....................................................10
      Class...................................................................10
      Class A Certificate.....................................................10
      Class A Principal Distribution Amount...................................10

<PAGE>


      Class A-1 Allocation Percentage.........................................10
      Class A-1 Certificate...................................................10
      Class A-1A Certificate..................................................10
      Class A-1B Certificate..................................................10
      Class A-1 Principal Distribution Amount.................................10
      Class A-2 Allocation Percentage.........................................11
      Class A-2 Certificate...................................................11
      Class A-2A Certificate..................................................11
      Class A-2B Certificate..................................................11
      Class A-2C Certificate..................................................11
      Class A-2D Certificate..................................................11
      Class A-2 Principal Distribution Amount.................................11
      Class B Certificate.....................................................12
      Class B Principal Distribution Amount...................................12
      Class CE-1 Certificate..................................................12
      Class CE-2 Certificate..................................................13
      Class M Certificates....................................................13
      Class M-1 Certificate...................................................13
      Class M-1 Principal Distribution Amount.................................13
      Class M-2 Certificate...................................................13
      Class M-2 Principal Distribution Amount.................................13
      Class M-3 Certificate...................................................14
      Class M-3 Principal Distribution Amount.................................14
      Class M-4 Certificate...................................................14
      Class M-4 Principal Distribution Amount.................................14
      Class M-5 Certificate...................................................15
      Class M-5 Principal Distribution Amount.................................15
      Class M-6 Certificate...................................................15
      Class M-6 Principal Distribution Amount.................................15
      Class M-7 Certificate...................................................16
      Class M-7 Principal Distribution Amount.................................16
      Class M-8 Certificate...................................................17
      Class M-8 Principal Distribution Amount.................................17
      Class M-9 Certificate...................................................17
      Class M-9 Principal Distribution Amount.................................17
      Class M-10 Certificate..................................................18
      Class M-10 Principal Distribution Amount................................18
      Class M-11 Certificate..................................................19
      Class M-11 Principal Distribution Amount................................19
      Class P Certificate.....................................................20
      Class R Certificates....................................................20
      Class R-I Interest......................................................20
      Class R-II Interest.....................................................20
      Closing Date............................................................20
      Code....................................................................20


                                       ii
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      Collection Account......................................................20
      Commission..............................................................20
      Corporate Trust Office..................................................20
      Corresponding Certificate...............................................21
      Credit Enhancement Percentage...........................................21
      Credit Risk Management Agreements.......................................21
      Credit Risk Management Fee..............................................21
      Credit Risk Management Fee Rate.........................................21
      Credit Risk Manager.....................................................21
      Custodial Agreement.....................................................21
      Custodial Accounts......................................................22
      Custodian...............................................................22
      Cut-off Date............................................................22
      Debt Service Reduction..................................................22
      Deficient Valuation.....................................................22
      Definitive Certificates.................................................22
      Deleted Mortgage Loan...................................................22
      Delinquency Percentage..................................................22
      Depositor...............................................................22
      Depository..............................................................22
      Depository Institution..................................................22
      Depository Participant..................................................23
      Determination Date......................................................23
      Directly Operate........................................................23
      Disqualified Organization...............................................23
      Distribution Account....................................................23
      Distribution Date.......................................................24
      Due Date................................................................24
      Due Period..............................................................24
      Eligible Account........................................................24
      ERISA...................................................................24
      Estate in Real Property.................................................24
      Excess Liquidation Proceeds.............................................24
      Expense Adjusted Mortgage Rate..........................................24
      Extraordinary Trust Fund Expense........................................24
      Extra Principal Distribution Amount.....................................24
      Fannie Mae..............................................................25
      FDIC....................................................................25
      Final Maturity Date.....................................................25
      Final Recovery Determination............................................25
      Freddie Mac.............................................................25
      Gross Margin............................................................25
      Group I Interest Remittance Amount......................................25
      Group I Mortgage Loans..................................................25
      Group I Principal Distribution Amount...................................25


                                       iii
<PAGE>


      Group I Principal Remittance Amount.....................................26
      Group II Interest Remittance Amount.....................................26
      Group II Mortgage Loans.................................................26
      Group II Principal Distribution Amount..................................26
      Group II Principal Remittance Amount....................................26
      Independent.............................................................26
      Independent Contractor..................................................27
      Index...................................................................27
      Institutional Accredited Investor.......................................27
      Insurance Proceeds......................................................27
      Interest Accrual Period.................................................27
      Interest Carry Forward Amount...........................................27
      Interest Determination Date.............................................28
      Interest Distribution Amount............................................28
      Interest Remittance Amount..............................................28
      Interim Servicer........................................................28
      Last Scheduled Distribution Date........................................28
      Late Collections........................................................28
      Liquidation Event.......................................................28
      Liquidation Proceeds....................................................28
      Loan-to-Value Ratio.....................................................29
      London Business Day.....................................................29
      Loss Severity Percentage................................................29
      Marker Rate.............................................................29
      Master Servicer.........................................................29
      Master Servicer Certification...........................................29
      Master Servicer Event of Default........................................30
      Master Servicer Fee Rate................................................30
      Master Servicing Fee....................................................30
      Maximum I-LTZZ Uncertificated Interest Deferral Amount..................30
      Maximum Mortgage Rate...................................................30
      MERS....................................................................30
      MERS(R) System..........................................................30
      Mezzanine Certificate...................................................31
      MIN.....................................................................31
      Minimum Mortgage Rate...................................................31
      MOM Loan................................................................31
      Monthly Payment.........................................................31
      Moody's.................................................................31
      Mortgage................................................................31
      Mortgage File...........................................................31
      Mortgage Loan...........................................................31
      Mortgage Loan Documents.................................................31
      Mortgage Loan Purchase Agreement........................................31
      Mortgage Loan Schedule..................................................31


                                       iv
<PAGE>


      Mortgage Note...........................................................34
      Mortgage Rate...........................................................34
      Mortgaged Property......................................................34
      Mortgagor...............................................................34
      Net Monthly Excess Cashflow.............................................34
      Net Mortgage Rate.......................................................34
      Net WAC Pass-Through Rate...............................................35
      Net WAC Rate Carryover Amount...........................................36
      New Lease...............................................................36
      Nonrecoverable P&I Advance..............................................36
      Nonrecoverable Servicing Advance........................................36
      Non-United States Person................................................36
      Notional Amount.........................................................36
      Ocwen...................................................................36
      Ocwen Assignment Agreement..............................................37
      Ocwen Servicing Agreement...............................................37
      Offered Certificates....................................................37
      Officer's Certificate...................................................37
      One-Month LIBOR.........................................................37
      One-Month LIBOR Pass-Through Rate.......................................38
      Opinion of Counsel......................................................39
      Option One..............................................................39
      Option One Assignment Agreement.........................................39
      Option One Servicing Agreement..........................................39
      Optional Termination Date...............................................40
      Originators.............................................................40
      Overcollateralization Amount............................................40
      Overcollateralization Increase Amount...................................40
      Overcollateralization Reduction Amount..................................40
      Ownership Interest......................................................40
      P&I Advance.............................................................40
      Pass-Through Rate.......................................................40
      People's Choice.........................................................46
      People's Choice Assignment Agreement....................................46
      People's Choice Servicing Agreement.....................................46
      Percentage Interest.....................................................46
      Periodic Rate...........................................................47
      Permitted Investments...................................................47
      Permitted Transferee....................................................48
      Person..................................................................49
      Plan....................................................................49
      Prepayment Assumption...................................................49
      Prepayment Charge.......................................................49
      Prepayment Charge Schedule..............................................49
      Prepayment Interest Excess..............................................50


                                        v
<PAGE>


      Prepayment Interest Shortfall...........................................50
      Prepayment Period.......................................................50
      Principal Prepayment....................................................50
      Principal Distribution Amount...........................................50
      Principal Remittance Amount.............................................50
      Purchase Price..........................................................50
      QIB.....................................................................51
      Qualified Substitute Mortgage Loan......................................51
      Rate/Term Refinancing...................................................52
      Rating Agency or Rating Agencies........................................52
      Realized Loss...........................................................52
      Record Date.............................................................53
      Reference Banks.........................................................53
      Refinanced Mortgage Loan................................................54
      Regular Certificate.....................................................54
      Regular Interest........................................................54
      Regulation S Temporary Global Certificate...............................54
      Regulation S Permanent Global...........................................54
      Release Date............................................................54
      Relief Act..............................................................54
      Relief Act Interest Shortfall...........................................54
      REMIC...................................................................54
      REMIC I.................................................................54
      REMIC I Interest Loss Allocation Amount.................................54
      REMIC I Marker Allocation Percentage....................................55
      REMIC I Overcollateralization...........................................55
      REMIC I Principal Loss Allocation Amount................................55
      REMIC I Regular Interest................................................55
      REMIC I Regular Interest I-LTAA.........................................56
      REMIC I Regular Interest I-LTA1A........................................56
      REMIC I Regular Interest I-LTA1B........................................56
      REMIC I Regular Interest I-LTA2A........................................56
      REMIC I Regular Interest I-LTA2B........................................56
      REMIC I Regular Interest I-LTA2C........................................56
      REMIC I Regular Interest I-LTA2D........................................56
      REMIC I Regular Interest I-LTB..........................................57
      REMIC I Regular Interest I-LTM1.........................................57
      REMIC I Regular Interest I-LTM2.........................................57
      REMIC I Regular Interest I-LTM3.........................................57
      REMIC I Regular Interest I-LTM4.........................................57
      REMIC I Regular Interest I-LTM5.........................................57
      REMIC I Regular Interest I-LTM6.........................................57
      REMIC I Regular Interest I-LTM7.........................................58
      REMIC I Regular Interest I-LTM8.........................................58
      REMIC I Regular Interest I-LTM9.........................................58


                                       vi
<PAGE>


      REMIC I Regular Interest I-LTM10........................................58
      REMIC I Regular Interest I-LTM11........................................58
      REMIC I Regular Interest I-LTXX.........................................58
      REMIC I Regular Interest I-LTZZ.........................................58
      REMIC I Regular Interest I-LT1SUB.......................................59
      REMIC I Regular Interest I-LT1GRP.......................................59
      REMIC I Regular Interest I-LT2SUB.......................................59
      REMIC I Regular Interest I-LT2GRP.......................................59
      REMIC I Remittance Rate.................................................59
      REMIC I Sub WAC Allocation Percentage...................................60
      REMIC I Subordinated Balance Ratio......................................60
      REMIC I Required Overcollateralization..................................60
      REMIC II................................................................60
      REMIC II Certificate....................................................60
      REMIC II Certificateholder..............................................60
      REMIC Provisions........................................................60
      REMIC Regular Interest..................................................60
      REMIC Remittance Rate...................................................60
      Remittance Report.......................................................60
      Rents from Real Property................................................60
      REO Account.............................................................61
      REO Disposition.........................................................61
      REO Imputed Interest....................................................61
      REO Principal Amortization..............................................61
      REO Property............................................................61
      Required Overcollateralization..........................................61
      Reserve Fund............................................................61
      Reserve Interest Rate...................................................61
      Residential Dwelling....................................................62
      Residual Certificate....................................................62
      Residual Interest.......................................................62
      Responsible Officer.....................................................62
      Rule 144A...............................................................62
      S&P.....................................................................62
      Scheduled Principal Balance.............................................62
      Securities..............................................................63
      Securities Administrator................................................63
      Seller..................................................................63
      Senior Interest Distribution Amount.....................................63
      Servicer................................................................63
      Servicer Event of Default...............................................63
      Servicer Remittance Date................................................63
      Servicer Report.........................................................63
      Servicing Advance.......................................................63
      Servicing Agreement.....................................................63


                                       vii
<PAGE>


      Servicing Fee...........................................................64
      Servicing Fee Rate......................................................64
      Servicing Officer.......................................................64
      Servicing Transfer Date.................................................64
      Single Certificate......................................................64
      Startup Day.............................................................64
      Stated Principal Balance................................................64
      Stepdown Date...........................................................65
      Subordinate Certificates................................................65
      Subsequent Recoveries...................................................65
      Sub-Servicer............................................................65
      Sub-Servicing Agreement.................................................65
      Substitution Shortfall Amount...........................................65
      Tax Returns.............................................................65
      Telerate Page 3750......................................................65
      Termination Price.......................................................65
      Transfer................................................................66
      Transferee..............................................................66
      Transferor..............................................................66
      Trigger Event...........................................................66
      Trust...................................................................66
      Trust Fund..............................................................66
      Trust REMIC.............................................................66
      Trustee.................................................................66
      Uncertificated Balance..................................................66
      Uncertificated Interest.................................................67
      Uninsured Cause.........................................................67
      United States Person....................................................67
      Value...................................................................67
      Verification Report.....................................................68
      Voting Rights...........................................................68
      Wells Fargo.............................................................68
      Wells Fargo Servicing Fee Rate..........................................68


   SECTION 1.02.   Allocation of Certain Interest Shortfalls..................68

ARTICLE II CONVEYANCE OF MORTGAGE LOANS;......................................70

   SECTION 2.01.   Conveyance of the Mortgage Loans...........................70

   SECTION 2.02.   Acceptance of REMIC I by Trustee...........................71

   SECTION 2.03.   Repurchase or Substitution of Mortgage Loans...............71

   SECTION 2.04.   Representations and Warranties of the Master Servicer......74

   SECTION 2.05.   Representations, Warranties and Covenants of the Servicer..75


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   SECTION 2.06.   Issuance of the REMIC I Regular Interests and the
                   Class R-I Interest.........................................77

   SECTION 2.07.   Conveyance of the REMIC I Regular Interests; Acceptance
                   of REMIC I by the Trustee..................................77

   SECTION 2.08.   Issuance of Residual Certificates..........................78

   SECTION 2.09.   Establishment of the Trust.................................78

ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS......79

   SECTION 3.01.   The Servicer to Act as a Servicer..........................79

   SECTION 3.02.   Sub-Servicing Agreements Between the Servicer and
                   Sub-Servicers..............................................81

   SECTION 3.03.   Successor Sub-Servicers....................................82

   SECTION 3.04.   No Contractual Relationship Between Sub-Servicer,
                   Trustee or the Certificateholders..........................82

   SECTION 3.05.   Assumption or Termination of Sub-Servicing Agreement by
                   Successor Servicer.........................................82

   SECTION 3.06.   Collection of Certain Mortgage Loan Payments...............83

   SECTION 3.07.   Collection of Taxes, Assessments and Similar Items;
                   Servicing Accounts.........................................83

   SECTION 3.08.   Collection Account and Distribution Account................84

   SECTION 3.09.   Withdrawals from the Collection Account and
                   Distribution Account.......................................86

   SECTION 3.10.   Investment of Funds in the Investment Accounts.............88

   SECTION 3.11.   Maintenance of Hazard Insurance, Errors and Omissions
                   and Fidelity Coverage and Primary Mortgage Insurance.......90

   SECTION 3.12.   Enforcement of Due-on-Sale Clauses; Assumption Agreements..91

   SECTION 3.13.   Realization Upon Defaulted Mortgage Loans..................92

   SECTION 3.14.   Trustee to Cooperate; Release of Mortgage Files............94

   SECTION 3.15.   Servicing Compensation.....................................95

   SECTION 3.16.   Reserved...................................................96

   SECTION 3.17.   Statement as to Compliance.................................96

   SECTION 3.18.   Independent Public Accountants' Servicing Report...........96

   SECTION 3.19.   Annual Certification.......................................97

   SECTION 3.20.   Access to Certain Documentation............................97

   SECTION 3.21.   Title, Management and Disposition of REO Property..........98

   SECTION 3.22.   Obligations of the Servicer in Respect of Prepayment
                   Interest Shortfalls; Relief Act Interest Shortfalls.......101

   SECTION 3.23.   Obligations of the Servicer in Respect of Mortgage
                   Rates and Monthly Payments................................101


                                       ix
<PAGE>


   SECTION 3.24.   Reserve Fund..............................................101

   SECTION 3.25.   Advance Facility..........................................103

   SECTION 3.26.   The Servicer Indemnification..............................105

ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS
            BY THE MASTER SERVICER...........................................106

   SECTION 4.01.   Master Servicer...........................................106

   SECTION 4.02.   REMIC-Related Covenants...................................107

   SECTION 4.03.   Monitoring of Servicer....................................107

   SECTION 4.04.   Fidelity Bond.............................................108

   SECTION 4.05.   Power to Act; Procedures..................................108

   SECTION 4.06.   Due-on-Sale Clauses; Assumption Agreements................109

   SECTION 4.07.   Documents, Records and Funds in Possession of
                   Master Servicer To Be Held for Trustee....................110

   SECTION 4.08.   Standard Hazard Insurance and Flood Insurance Policies....110

   SECTION 4.09.   Presentment of Claims and Collection of Proceeds..........110

   SECTION 4.10.   Maintenance of Primary Mortgage Insurance Policies........111

   SECTION 4.11.   Trustee to Retain Possession of Certain Insurance
                   Policies and Documents....................................111

   SECTION 4.12.   Realization Upon Defaulted Mortgage Loans.................111

   SECTION 4.13.   Compensation for the Master Servicer......................112

   SECTION 4.14.   REO Property..............................................112

   SECTION 4.15.   Annual Officer's Certificate as to Compliance.............112

   SECTION 4.16.   Annual Independent Accountant's Servicing Report..........113

   SECTION 4.17.   UCC.......................................................113

   SECTION 4.18.   Obligation of the Master Servicer in Respect of
                   Prepayment Interest Shortfalls............................114

   SECTION 4.19.   Prepayment Penalty Verification...........................114

ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS.....................................116

   SECTION 5.01.   Distributions.............................................116

   SECTION 5.02.   Statements to Certificateholders..........................132

   SECTION 5.03.   Servicer Reports; P&I Advances............................135

   SECTION 5.04.   Allocation of Realized Losses.............................137

   SECTION 5.05.   Compliance with Withholding Requirements..................140

   SECTION 5.06.   Reports Filed with Securities and Exchange Commission.....140


                                        x
<PAGE>


ARTICLE VI THE CERTIFICATES..................................................142

   SECTION 6.01.   The Certificates..........................................142

   SECTION 6.02.   Registration of Transfer and Exchange of Certificates.....144

   SECTION 6.03.   Mutilated, Destroyed, Lost or Stolen Certificates.........149

   SECTION 6.04.   Persons Deemed Owners.....................................150

   SECTION 6.05.   Certain Available Information.............................150

ARTICLE VII THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER..............151

   SECTION 7.01.   Liability of the Depositor, the Servicer and the
                   Master Servicer...........................................151

   SECTION 7.02.   Merger or Consolidation of the Depositor, the Servicer
                   or the Master Servicer....................................151

   SECTION 7.03.   Limitation on Liability of the Depositor, the Servicer,
                   the Master Servicer and Others............................151

   SECTION 7.04.   Limitation on Resignation of the Servicer.................152

   SECTION 7.05.   Limitation on Resignation of the Master Servicer..........153

   SECTION 7.06.   Assignment of Master Servicing............................153

   SECTION 7.07.   Rights of the Depositor in Respect of the Servicer and
                   the Master Servicer.......................................154

   SECTION 7.08.   Duties of the Credit Risk Manager.........................155

   SECTION 7.09.   Limitation Upon Liability of the Credit Risk Manager......155

   SECTION 7.10.   Removal of the Credit Risk Manager........................155

ARTICLE VIII DEFAULT.........................................................156

   SECTION 8.01.   Servicer Events of Default................................156

   SECTION 8.02.   Master Servicer to Act; Appointment of Successor..........159

   SECTION 8.03.   Notification to Certificateholders........................161

   SECTION 8.04.   Waiver of Servicer Events of Default......................161

ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES
                  ADMINISTRATOR..............................................162

   SECTION 9.01.   Duties of Trustee and Securities Administrator............162

   SECTION 9.02.   Certain Matters Affecting Trustee and Securities
                   Administrator.............................................163

   SECTION 9.03.   Trustee and Securities Administrator not Liable for
                   Certificates or Mortgage Loans............................165

   SECTION 9.04.   Trustee and Securities Administrator May Own
                   Certificates..............................................165

   SECTION 9.05.   Fees and Expenses of Trustee and Securities
                   Administrator.............................................166

   SECTION 9.06.   Eligibility Requirements for Trustee and Securities
                   Administrator.............................................166


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<PAGE>


   SECTION 9.07.   Resignation and Removal of Trustee and Securities
                   Administrator.............................................167

   SECTION 9.08.   Successor Trustee or Securities Administrator.............168

   SECTION 9.09.   Merger or Consolidation of Trustee or Securities
                   Administrator.............................................168

   SECTION 9.10.   Appointment of Co-Trustee or Separate Trustee.............169

   SECTION 9.11.   Appointment of Office or Agency...........................170

   SECTION 9.12.   Representations and Warranties............................170

ARTICLE X TERMINATION........................................................171

   SECTION 10.01.  Termination Upon Repurchase or Liquidation of All
                   Mortgage Loans............................................171

   SECTION 10.02.  Additional Termination Requirements.......................173

ARTICLE XI REMIC PROVISIONS..................................................174

   SECTION 11.01.  REMIC Administration......................................174

   SECTION 11.02.  Prohibited Transactions and Activities....................176

   SECTION 11.03.  Indemnification...........................................177

ARTICLE XII MISCELLANEOUS PROVISIONS.........................................178

   SECTION 12.01.  Amendment.................................................178

   SECTION 12.02.  Recordation of Agreement; Counterparts....................179

   SECTION 12.03.  Limitation on Rights of Certificateholders................179

   SECTION 12.04.  Governing Law.............................................180

   SECTION 12.05.  Notices...................................................180

   SECTION 12.06.  Severability of Provisions................................181

   SECTION 12.07.  Notice to Rating Agencies.................................181

   SECTION 12.08.  Article and Section References............................182

   SECTION 12.09.  Grant of Security Interest................................182

   SECTION 12.10.  Survival of Indemnification...............................183


                                       xii
<PAGE>


Exhibits
--------

Exhibit A-1      Form of Class A Certificate
Exhibit A-2      Form of Class M Certificate
Exhibit A-3      Form of Class B Certificate
Exhibit A-4      Form of Class CE[-1][-2] Certificate
Exhibit A-5      Form of Class P Certificate
Exhibit A-6      Form of Class R Certificate
Exhibit B-1      Form of Transferor Representation Letter and Form of
                 Transferee Representation Letter in Connection with Transfer
                 of the Class B Certificates, Class P Certificates, Class CE-1
                 Certificates, Class CE-2 Certificates and Residual
                 Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit B-2      Form of Transferor Representation Letter and Form of
                 Transferee Representation Letter in Connection with Transfer
                 of the Class B Certificates, Class P Certificates, Class CE-1
                 Certificates, Class CE-2 Certificates and Residual
                 Certificates Pursuant to Rule 501 (a) Under the 1933 Act
Exhibit B-3      Form of Transfer Affidavit and Agreement and Form of Transferor
                 Affidavit in Connection with Transfer of Residual Certificates
                 Exhibit C Form of Servicer Certification
Exhibit D        Form of Power of Attorney
Schedule 1       Mortgage Loan Schedule
Schedule 2       Prepayment Charge Schedule
Schedule 3       Reserved.
Schedule 4       Standard File Layout - Delinquency Reporting
Schedule 5       Standard File Layout - Scheduled/Scheduled


                                      xiii
<PAGE>


         This Pooling and Servicing Agreement, is dated and effective as of
October 1, 2004, among ACE SECURITIES CORP., as Depositor, WELLS FARGO BANK,
N.A., as Master Servicer, Servicer and Securities Administrator and HSBC BANK
USA, NATIONAL ASSOCIATION, as Trustee.

                             PRELIMINARY STATEMENT:

         The Depositor intends to sell pass-through certificates to be issued
hereunder in multiple classes, which in the aggregate will evidence the entire
beneficial ownership interest of the Trust Fund created hereunder. The Trust
Fund will consist of a segregated pool of assets comprised of the Mortgage Loans
and certain other related assets subject to this Agreement.

                                     REMIC I
                                     -------

         As provided herein, the Trustee will elect to treat the segregated pool
of assets consisting of the Mortgage Loans and certain other related assets
subject to this Agreement (other than the Reserve Fund) as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC I". The Class R-I Interest will be the sole class of "residual interests"
in REMIC I for purposes of the REMIC Provisions (as defined herein). The
following table irrevocably sets forth the designation, the REMIC I Remittance
Rate, the initial Uncertificated Balance and, solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for each of the REMIC I Regular Interests (as defined herein). None of the
REMIC I Regular Interests will be certificated.

<PAGE>


                     REMIC I              INITIAL
                   REMITTANCE           UNCERTIFICATED         LATEST POSSIBLE
DESIGNATION           RATE                 BALANCE            MATURITY DATE (1)
-----------        -----------         ---------------        ------------------
I-LTAA             Variable(2)         $541,742,361.44        November 25, 2034
I-LTA1A            Variable(2)           $2,321,170.00        November 25, 2034
I-LTA1B            Variable(2)             $257,910.00        November 25, 2034
I-LTA2A            Variable(2)             $500,000.00        November 25, 2034
I-LTA2B            Variable(2)             $835,595.00        November 25, 2034
I-LTA2C            Variable(2)             $297,665.00        November 25, 2034
I-LTA2D            Variable(2)             $251,500.00        November 25, 2034
I-LTM1             Variable(2)             $182,425.00        November 25, 2034
I-LTM2             Variable(2)             $168,605.00        November 25, 2034
I-LTM3             Variable(2)             $105,030.00        November 25, 2034
I-LTM4             Variable(2)              $93,975.00        November 25, 2034
I-LTM5             Variable(2)              $82,920.00        November 25, 2034
I-LTM6             Variable(2)              $74,630.00        November 25, 2034
I-LTM7             Variable(2)              $66,335.00        November 25, 2034
I-LTM8             Variable(2)              $55,280.00        November 25, 2034
I-LTM9             Variable(2)              $46,990.00        November 25, 2034
I-LTM10            Variable(2)              $32,500.00        November 25, 2034
I-LTM11            Variable(2)              $78,065.00        November 25, 2034
I-LTB              Variable(2)              $49,750.00        November 25, 2034
I-LTZZ             Variable(2)           $5,555,621.56        November 25, 2034
I-LTP              Variable(2)                 $100.00        November 25, 2034
I-LT1SUB           Variable(2)              $12,296.56        November 25, 2034
I-LT1GRP           Variable(2)              $63,878.17        November 25, 2034
I-LT2SUB           Variable(2)               $8,986.31        November 25, 2034
I-LT2GRP           Variable(2)              $46,681.51        November 25, 2034
I-LTXX             Variable(2)         $552,666,485.46        November 25, 2034

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


                                    REMIC II
                                    --------

         As provided herein, the Trustee will elect to treat the segregated pool
of assets consisting of the REMIC I Regular Interests as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC II." The Class R-II Interest will evidence the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions. The following table
irrevocably sets forth the designation, the Pass-Through Rate, the initial
aggregate Certificate Principal Balance and, solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for the indicated Classes of Certificates.


                                       2
<PAGE>


                                   INITIAL AGGREGATE
                 PASS-THROUGH         CERTIFICATE              LATEST POSSIBLE
DESIGNATION          RATE          PRINCIPAL BALANCE           MATURITY DATE (1)
-----------      ------------      -----------------           -----------------
Class A-1A       Variable(2)        $464,234,000.00           November 25, 2034
Class A-1B       Variable(2)         $51,582,000.00           November 25, 2034
Class A-2A       Variable(2)        $100,000,000.00           November 25, 2034
Class A-2B       Variable(2)        $167,119,000.00           November 25, 2034
Class A-2C       Variable(2)         $59,533,000.00           November 25, 2034
Class A-2D       Variable(2)         $50,300,000.00           November 25, 2034
Class M-1        Variable(2)         $36,485,000.00           November 25, 2034
Class M-2        Variable(2)         $33,721,000.00           November 25, 2034
Class M-3        Variable(2)         $21,006,000.00           November 25, 2034
Class M-4        Variable(2)         $18,795,000.00           November 25, 2034
Class M-5        Variable(2)         $16,584,000.00           November 25, 2034
Class M-6        Variable(2)         $14,926,000.00           November 25, 2034
Class M-7        Variable(2)         $13,267,000.00           November 25, 2034
Class M-8        Variable(2)         $11,056,000.00           November 25, 2034
Class M-9        Variable(2)          $9,398,000.00           November 25, 2034
Class M-10       Variable(2)          $6,500,000.00           November 25, 2034
Class M-11       Variable(2)         $15,613,000.00           November 25, 2034
Class B          Variable(2)          $9,950,000.00           November 25, 2034
Class P            N/A(3)                   $100.00           November 25, 2034
Class CE-1         N/A(4)            $5,527,656.00            November 25, 2034
Class CE-2         N/A(5)               N/A(5)                November 25, 2034

-----------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date immediately following the maturity
         date for the Mortgage Loan with the latest maturity date has been
         designated as the "latest possible maturity date" for each Class of
         Certificates.
(2)      Calculated in accordance with the definition of "Pass-Through Rate"
         herein. (3) The Class P Certificates will not accrue interest.
(4)      The Class CE-1 Certificates will accrue interest at their variable
         Pass-Through Rate on the Notional Amount of the Class CE-1 Certificates
         outstanding from time to time which shall equal the Uncertificated
         Balance of the REMIC I Regular Interests (other than REMIC I Regular
         Interest I-LTP). The Class CE-1 Certificates will not accrue interest
         on their Certificate Principal Balance.
(5)      The Class CE-2 Certificates will accrue interest at their variable
         Pass-Through Rate on the Notional Amount of the Class CE-2 Certificates
         which shall equal the Uncertificated Balance of the REMIC I Regular
         Interests. The Class CE-2 Certificates will not have a Certificate
         Principal Balance.

         As of the Cut-off Date, the Group I Mortgage Loans had an aggregate
Scheduled Principal Balance equal to approximately $638,781,694 and the Group II
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
approximately $466,815,062.

         In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee agree as follows:


                                       3
<PAGE>


                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01 Defined Terms.

         Whenever used in this Agreement, including, without limitation, in the
Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.

         "Accepted Master Servicing Practices": With respect to any Mortgage
Loan, as applicable, either (x) those customary mortgage master servicing
practices of prudent mortgage servicing institutions that master service
mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Master Servicer, or (y) as provided in Section 3.01 hereof,
but in no event below the standard set forth in clause (x).

         "Accepted Servicing Practices": As defined in Section 3.01.

         "Account": The Collection Account and the Distribution Account as the
context may require.

         "Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate, Class B Certificate, Class CE-1 Certificate
or Class CE-2 Certificate and each Distribution Date, interest accrued during
the related Interest Accrual Period at the Pass-Through Rate for such
Certificate for such Distribution Date on the Certificate Principal Balance, in
the case of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates, or on the Notional Amount in the case of the Class CE-1
Certificates and Class CE-2 Certificates, of such Certificate immediately prior
to such Distribution Date. The Class P Certificates are not entitled to
distributions in respect of interest and, accordingly, will not accrue interest.
All distributions of interest on the Class A Certificates, the Mezzanine
Certificates and the Class B Certificates will be calculated on the basis of a
360-day year and the actual number of days in the applicable Interest Accrual
Period. All distributions of interest on the Class CE-1 Certificates and Class
CE-2 Certificates will be based on a 360-day year consisting of twelve 30-day
months. Accrued Certificate Interest with respect to each Distribution Date, as
to any Class A Certificate, Mezzanine Certificate, Class B Certificate or Class
CE-1 Certificate shall be reduced by an amount equal to the portion allocable to
such Certificate pursuant to Section 1.02 hereof, if any, of the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.22 or Section 4.18 of
this Agreement and (b) the aggregate amount of any Relief Act Interest
Shortfall, if any, for such Distribution Date. In addition, Accrued Certificate
Interest with respect to each Distribution Date, as to any Class CE-1
Certificate, shall be reduced by an amount equal to the portion allocable to
such Class CE-1 Certificate of Realized Losses, if any, pursuant to Section 1.02
and Section 5.04 hereof.

         "Adjustable Rate Mortgage Loan": Each of the Mortgage Loans identified
in the Mortgage Loan Schedule as having a Mortgage Rate that is subject to
adjustment.


                                       4
<PAGE>


         "Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
the first day of the month in which the Mortgage Rate of an Adjustable Rate
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the Cut-off Date as to each Adjustable Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.

         "Administration Fees": The sum of (i) the Servicing Fee, (ii) the
Master Servicing Fee and (iii) the Credit Risk Management Fee.

         "Administration Fee Rate": The sum of (i) the Servicing Fee Rate, (ii)
the Master Servicer Fee Rate and (iii) the Credit Risk Management Fee Rate.

         "Advance Facility": As defined in Section 3.25(a).

         "Advance Financing Person": As defined in Section 3.25(a).

         "Advance Reimbursement Amounts": As defined in Section 3.25(b).

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

         "Aggregate Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred on any Mortgage Loans from the
Cut-off Date to the last day of the preceding calendar month and the denominator
of which is the aggregate principal balance of such Mortgage Loans immediately
prior to the liquidation of such Mortgage Loans.

         "Agreement": This Pooling and Servicing Agreement, including all
exhibits and schedules hereto and all amendments hereof and supplements hereto.

         "Allocated Realized Loss Amount": With respect to any Class of
Mezzanine Certificates or Class B Certificates and any Distribution Date, an
amount equal to the sum of any Realized Loss allocated to that Class of
Certificates on the Distribution Date and any Allocated Realized Loss Amount for
that Class remaining unpaid from the previous Distribution Date.

         "Amounts Held for Future Distribution": As to any Distribution Date,
the aggregate amount held in the Custodial Accounts and the Collection Account
at the close of business on the immediately preceding Determination Date on
account of (i) all Monthly Payments or portions thereof received in respect of
the Mortgage Loans due after the related Due Period and (ii) Principal
Prepayments and Liquidation Proceeds received in respect of such Mortgage Loans
after the last day of the related Prepayment Period.

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


                                       5
<PAGE>


blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same county, if permitted by law.

         "Assignment Agreement": Shall mean, collectively, the Ocwen Assignment
Agreement, the Option One Assignment Agreement and the People's Choice
Assignment Agreement.

         "Available Distribution Amount": With respect to any Distribution Date,
an amount equal to (1) the sum of (a) the aggregate of the amounts on deposit in
the Custodial Accounts, the Collection Account and Distribution Account as of
the close of business on the related Servicer Remittance Date, (b) the aggregate
of any amounts deposited in the Distribution Account by the Servicer or the
Master Servicer in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.22 or Section 4.18 of this Agreement or
by an Interim Servicer pursuant to the related Servicing Agreement, (c) the
aggregate of any P&I Advances for such Distribution Date made by the Servicer
pursuant to Section 5.03 of this Agreement or by an Interim Servicer pursuant to
the related Servicing Agreement and (d) the aggregate of any P&I Advances made
by a successor Servicer for such Distribution Date pursuant to Section 8.02,
reduced (to not less than zero) by (2) the portion of the amount described in
clause (1)(a) above that represents (i) Amounts Held for Future Distribution,
(ii) Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Servicer, the Trustee, the
Master Servicer, the Securities Administrator or the Custodian pursuant to
Section 3.09 or 9.05 of this Agreement or otherwise payable in respect of
Extraordinary Trust Fund Expenses or reimbursable or payable to an Interim
Servicer under the related Servicing Agreement, (v) the Credit Risk Management
Fee, (vi) amounts deposited in a Custodial Account, the Collection Account or
the Distribution Account in error, (vii) the amount of any Prepayment Charges
collected by the Servicer or an Interim Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans and (viii) amounts
reimbursable to a successor Servicer pursuant to Section 8.02.

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

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

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

         "Book-Entry Certificates": The Offered Certificates for so long as the
Certificates of such Class shall be registered in the name of the Depository or
its nominee.

         "Book-Entry Custodian": The custodian appointed pursuant to Section
6.01.


                                       6
<PAGE>


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

         "Cap Contracts": Shall mean (i) the Cap Contract between the Trustee
and the counterparty named thereunder, for the benefit of the Holders of the
Class A-1 Certificates, the Mezzanine Certificates and the Class B Certificates
(the "Group I Cap Contract") and (ii) the Cap Contract between the Trustee and
the counterparty thereunder, for the benefit of the Class A-2 Certificates, the
Mezzanine Certificates and the Class B Certificates (the "Group II Cap
Contract").

         "Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which are more than a nominal amount in excess of the principal balance of any
existing first mortgage plus any subordinate mortgage on the related Mortgaged
Property and related closing costs.

         "Certificate": Any one of ACE Securities Corp., Asset Backed
Pass-Through Certificates, Series 2004-HE3, Class A-1A, Class A-1B, Class A-2A,
Class A-2B, Class A-2C, Class A-2D, Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11,
Class B, Class P, Class CE-1, Class CE-2 and Class R issued under this
Agreement.

         "Certificate Factor": With respect to any Class of Certificates (other
than the Residual Certificates) as of any Distribution Date, a fraction,
expressed as a decimal carried to six places, the numerator of which is the
aggregate Certificate Principal Balance (or Notional Amount, in the case of the
Class CE-1 Certificates and Class CE-2 Certificates ) of such Class of
Certificates on such Distribution Date (after giving effect to any distributions
of principal and allocations of Realized Losses resulting in reduction of the
Certificate Principal Balance (or Notional Amount, in the case of the Class CE-1
Certificates and Class CE-2 Certificates ) of such Class of Certificates to be
made on such Distribution Date), and the denominator of which is the initial
aggregate Certificate Principal Balance (or Notional Amount, in the case of the
Class CE-1 Certificates and Class CE-2 Certificates ) of such Class of
Certificates as of the Closing Date.

         "Certificate Margin": With respect to the Class A-1A Certificates and,
for purposes of the definition of "Marker Rate", REMIC I Regular Interest
I-LTA1A, 0.350% in the case of each Distribution Date through and including the
Optional Termination Date and 0.700% in the case of each Distribution Date
thereafter.

         With respect to the Class A-1B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA1B, 0.450% in the
case of each Distribution Date through and including the Optional Termination
Date and 0.900% in the case of each Distribution Date thereafter.

         With respect to the Class A-2A Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2A, 0.370% in the
case of each Distribution Date through and including the Optional Termination
Date and 0.740% in the case of each Distribution Date thereafter.


                                       7
<PAGE>


         With respect to the Class A-2B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2B, 0.180% in the
case of each Distribution Date through and including the Optional Termination
Date and 0.360% in the case of each Distribution Date thereafter.

         With respect to the Class A-2C Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2C, 0.340% in the
case of each Distribution Date through and including the Optional Termination
Date and 0.680% in the case of each Distribution Date thereafter.

         With respect to the Class A-2D Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2D, 0.540% in the
case of each Distribution Date through and including the Optional Termination
Date and 1.080% in the case of each Distribution Date thereafter.

         With respect to the Class M-1 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM1, 0.620% in the case
of each Distribution Date through and including the Optional Termination Date
and 0.930% in the case of each Distribution Date thereafter.

         With respect to the Class M-2 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM2, 0.670% in the case
of each Distribution Date through and including the Optional Termination Date
and 1.005% in the case of each Distribution Date thereafter.

         With respect to the Class M-3 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM3, 0.720% in the case
of each Distribution Date through and including the Optional Termination Date
and 1.080% in the case of each Distribution Date thereafter.

         With respect to the Class M-4 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM4, 1.000% in the case
of each Distribution Date through and including the Optional Termination Date
and 1.500% in the case of each Distribution Date thereafter.

         With respect to the Class M-5 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM5, 1.100% in the case
of each Distribution Date through and including the Optional Termination Date
and 1.650% in the case of each Distribution Date thereafter.

         With respect to the Class M-6 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM6, 1.300% in the case
of each Distribution Date through and including the Optional Termination Date
and 1.950% in the case of each Distribution Date thereafter.

         With respect to the Class M-7 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM7, 1.850% in the case
of each Distribution Date through and including the Optional Termination Date
and 2.775% in the case of each Distribution Date thereafter.


                                       8
<PAGE>


         With respect to the Class M-8 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM8, 2.000% in the case
of each Distribution Date through and including the Optional Termination Date
and 3.000% in the case of each Distribution Date thereafter.

         With respect to the Class M-9 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM9, 2.350% in the case
of each Distribution Date through and including the Optional Termination Date
and 3.525% in the case of each Distribution Date thereafter.

         With respect to the Class M-10 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM10, 3.500% in the
case of each Distribution Date through and including the Optional Termination
Date and 5.250% in the case of each Distribution Date thereafter.

         With respect to the Class M-11 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM11, 3.500% in the
case of each Distribution Date through and including the Optional Termination
Date and 5.250% in the case of each Distribution Date thereafter.

         With respect to the Class B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTB, 3,500% in the case
of each Distribution Date through and including the Optional Termination Date
and 5.250% in the case of each Distribution Date thereafter.

         "Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that a Disqualified
Organization or a Non-United States Person shall not be a Holder of a Residual
Certificate for any purposes hereof, and solely for the purposes of giving any
consent pursuant to this Agreement, any Certificate registered in the name of or
beneficially owned by the Depositor, the Seller, the Servicer, the Master
Servicer, the Securities Administrator, the Trustee or any Affiliate thereof
shall be deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee and the
Securities Administrator may conclusively rely upon a certificate of the
Depositor, the Seller, the Master Servicer, the Securities Administrator or the
Servicer in determining whether a Certificate is held by an Affiliate thereof.
All references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Securities Administrator
shall be required to recognize as a "Holder" or "Certificateholder" only the
Person in whose name a Certificate is registered in the Certificate Register.

         "Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant or on the books of
an indirect participating brokerage firm for which a Depository Participant acts
as agent.


                                       9
<PAGE>


         "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate, Class B Certificate or Class P Certificate
as of any date of determination, the Certificate Principal Balance of such
Certificate on the Distribution Date immediately prior to such date of
determination plus any Subsequent Recoveries added to the Certificate Principal
Balance of such Certificate pursuant to Section 5.04, minus all distributions
allocable to principal made thereon and Realized Losses allocated thereto, if
any, on such immediately prior Distribution Date (or, in the case of any date of
determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE-1 Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC I Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates, the Class B Certificates and the Class P Certificates then
outstanding. The aggregate initial Certificate Principal Balance of each Class
of Regular Certificates is set forth in the Preliminary Statement hereto.

         "Certificate Register": The register maintained pursuant to Section
6.02.

         "Class": Collectively, all of the Certificates bearing the same class
designation.

         "Class A Certificate": Any Class A-1 or Class A-2 Certificate.

         "Class A Principal Distribution Amount": The Class A Principal
Distribution Amount is an amount equal to the sum of: (i) the Class A-1
Principal Distribution Amount and (ii) the Class A-2 Principal Distribution
Amount.

         "Class A-1 Allocation Percentage": With respect to any Distribution
Date is the percentage equivalent of a fraction, the numerator of which is (x)
the Group I Principal Remittance Amount for such Distribution Date and the
denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.

         "Class A-1 Certificate": Any Class A-1A Certificate or Class A-1B
Certificate.

         "Class A-1A Certificate": Any one of the Class A-1A Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-1B Certificate": Any one of the Class A-1B Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of the Certificate Principal Balances
of the Class A-1A Certificates and Class A-1B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 61.50% and
(ii) the aggregate Stated Principal Balance of the Group I Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due


                                       10
<PAGE>


during the related Due Period, to the extent received or advanced and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group I 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) minus the product of (i) 0.50% and (ii) the
aggregate principal balance of the Group I Mortgage Loans as of the Cut-off
Date.

         "Class A-2 Allocation Percentage": With respect to any Distribution
Date is the percentage equivalent of a fraction, the numerator of which is (x)
the Group II Principal Remittance Amount for such Distribution Date and the
denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.

         "Class A-2 Certificate": Any Class A-2A, Class A-2B, Class A-2C or
Class A-2D Certificate.

         "Class A-2A Certificate": Any one of the Class A-2A Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-2B Certificate": Any one of the Class A-2B Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-2C Certificate": Any one of the Class A-2C Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-2D Certificate": Any one of the Class A-2D Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of the Certificate Principal Balances
of the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 61.50% and (ii) the aggregate Stated Principal Balance of the
Group II 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 (B) the aggregate
Stated Principal Balance of the Group II 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) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Group II Mortgage Loans as of the Cut-off Date.


                                       11
<PAGE>


         "Class B Certificate": Any one of the Class B Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class B Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7 Principal Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8 Certificates (after taking into account the payment of the Class M-8
Principal Distribution Amount on such Distribution Date), (x) the Certificate
Principal Balance of the Class M-9 Certificates (after taking into account the
payment of the Class M-9 Principal Distribution Amount on such Distribution
Date), (xi) the Certificate Principal Balance of the Class M-10 Certificates
(after taking into account the payment of the Class M-10 Principal Distribution
Amount on such Distribution Date), (xii) the Certificate Principal Balance of
the Class M-11 Certificates (after taking into account the payment of the Class
M-11 Principal Distribution Amount on such Distribution Date) and (xiii) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 99.00% and
(ii) 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 (B) 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) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class CE-1 Certificate": Any one of the Class CE-1 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-4 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.


                                       12
<PAGE>


         "Class CE-2 Certificate": Any one of the Class CE-2 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-4 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M Certificates": The Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11
Certificates.

         "Class M-1 Certificate": Any one of the Class M-1 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 68.10% and (ii) 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 (B) 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) minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.

         "Class M-2 Certificate": Any one of the Class M-2 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (iii) the Certificate Principal Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 74.20% and (ii) 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 (B) 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


                                       13
<PAGE>


unscheduled collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.

         "Class M-3 Certificate": Any one of the Class M-3 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 78.00% and
(ii) 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 (B) 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) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class M-4 Certificate": Any one of the Class M-4 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date) and (v) the Certificate Principal Balance of the Class M-4 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 81.40% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related


                                       14
<PAGE>


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 (B)
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) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.

         "Class M-5 Certificate": Any one of the Class M-5 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class M-5 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date) and (vi) the Certificate Principal Balance of
the Class M-5 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 84.40% and (ii) 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 (B)
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) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.

         "Class M-6 Certificate": Any one of the Class M-6 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-6 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such


                                       15
<PAGE>


Distribution Date), (v) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates (after taking into account the payment of
the Class M-5 Principal Distribution Amount on such Distribution Date) and (vii)
the Certificate Principal Balance of the Class M-6 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
87.10% and (ii) 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 (B) 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) minus the product of (i) 0.50% and (ii)
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class M-7 Certificate": Any one of the Class M-7 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-7 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution
Date) and (viii) the Certificate Principal Balance of the Class M-7 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 89.50% and (ii) 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 (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled


                                       16
<PAGE>


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) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class M-8 Certificate": Any one of the Class M-8 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-8 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7 Principal Distribution
Amount on such Distribution Date) and (ix) the Certificate Principal Balance of
the Class M-8 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 91.50% and (ii) 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 (B)
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) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.

         "Class M-9 Certificate": Any one of the Class M-9 Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-9 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after


                                       17
<PAGE>


taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate Principal Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on such
Distribution Date), (v) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal
Balance of the Class M-5 Certificates (after taking into account the payment of
the Class M-5 Principal Distribution Amount on such Distribution Date), (vii)
the Certificate Principal Balance of the Class M-6 Certificates (after taking
into account the payment of the Class M-6 Principal Distribution Amount on such
Distribution Date), (viii) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account the payment of the Class M-7 Principal
Distribution Amount on such Distribution Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates (after taking into account the payment of
the Class M-8 Principal Distribution Amount on such Distribution Date) and (x)
the Certificate Principal Balance of the Class M-9 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
93.20% and (ii) 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 (B) 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) minus the product of (i) 0.50% and (ii)
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class M-10 Certificate": Any one of the Class M-10 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-10 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such


                                       18
<PAGE>


Distribution Date), (vii) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date), (viii) the Certificate Principal
Balance of the Class M-7 Certificates (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date), (ix) the
Certificate Principal Balance of the Class M-8 Certificates (after taking into
account the payment of the Class M-8 Principal Distribution Amount on such
Distribution Date), (x) the Certificate Principal Balance of the Class M-9
Certificates (after taking into account the payment of the Class M-9 Principal
Distribution Amount on such Distribution Date) and (xi) the Certificate
Principal Balance of the Class M-10 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 94.38% and (ii)
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 (B) 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) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

         "Class M-11 Certificate": Any one of the Class M-11 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC III for purposes of the REMIC Provisions.

         "Class M-11 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution
Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7 Principal Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8 Certificates (after taking into account the payment of the Class M-8
Principal Distribution Amount on such Distribution Date), (x) the Certificate
Principal Balance of the Class M-9 Certificates (after taking into account the
payment of the Class M-9 Principal Distribution Amount on such Distribution
Date), (xi) the Certificate Principal Balance of the Class M-10 Certificates
(after


                                       19
<PAGE>


taking into account the payment of the Class M-10 Principal Distribution
Amount on such Distribution Date) and (xii) the Certificate Principal Balance of
the Class M-11 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 97.20% and (ii) 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 (B)
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) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.

         "Class P Certificate": Any one of the Class P Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-5 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

         "Class R Certificates": Any one of the Class R Certificates executed
and authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-6, and evidencing the
Class R-I Interest and the Class R-II Interest.

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

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

         "Closing Date": October 29, 2004.

         "Code": The Internal Revenue Code of 1986 as amended from time to time.

         "Collection Account": The account or accounts created and maintained,
or caused to be created and maintained, by the Servicer pursuant to Section
3.08(a), which shall be entitled "Wells Fargo Bank, N.A., as Servicer for HSBC
Bank USA, National Association as Trustee, in trust for the registered holders
of ACE Securities Corp., Home Equity Loan Trust, Series 2004-HE3, Asset Backed
Pass-Through Certificates". The Collection Account must be an Eligible Account.

         "Commission": The Securities and Exchange Commission.

         "Corporate Trust Office": The principal corporate trust office of the
Trustee which office at the date of the execution of this instrument is located
at 452 Fifth Avenue, New York, New York 10018, Attention: ACE Securities Corp.,
2004-HE3, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Master Servicer,
the Securities Administrator and the Servicer. The office of the Securities
Administrator, which for purposes of Certificate transfers and surrender is
located at Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention: Corporate Trust (ACE 2004-HE3), and for
all other purposes is located at Wells Fargo Bank, N.A., P.O. Box 98, Columbia,
Maryland 21046, Attention: Corporate Trust (ACE 2004-HE3) (or


                                       20
<PAGE>


for overnight deliveries, at 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Corporate Trust (ACE 2004-HE3)).

         "Corresponding Certificate": With respect to each REMIC I Regular
Interest, as follows:


                             REMIC I Regular Interest           Class
                             ------------------------           -----
                      REMIC I Regular Interest I-LTA1A          A-1A
                      REMIC I Regular Interest I-LTA1B          A-1B
                      REMIC I Regular Interest I-LTA2A          A-2A
                      REMIC I Regular Interest I-LTA2B          A-2B
                      REMIC I Regular Interest I-LTA2C          A-2C
                      REMIC I Regular Interest I-LTA2D          A-2D
                      REMIC I Regular Interest I-LTM1            M-1
                      REMIC I Regular Interest I-LTM2            M-2
                      REMIC I Regular Interest I-LTM3            M-3
                      REMIC I Regular Interest I-LTM4            M-4
                      REMIC I Regular Interest I-LTM5            M-5
                      REMIC I Regular Interest I-LTM6            M-6
                      REMIC I Regular Interest I-LTM7            M-7
                      REMIC I Regular Interest I-LTM8            M-8
                      REMIC I Regular Interest I-LTM9            M-9
                      REMIC I Regular Interest I-LTM10          M-10
                      REMIC I Regular Interest I-LTM11          M-11
                      REMIC I Regular Interest I-LTB              B
                      REMIC I Regular Interest I-LTP              P


         "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate Certificate Principal Balances of the Mezzanine Certificates, the
Class B Certificates and the Class CE-1 Certificates, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans,
calculated after taking into account distributions of principal on the Mortgage
Loans and distribution of the Principal Distribution Amount to the Certificates
then entitled to distributions of principal on such Distribution Date.

         "Credit Risk Management Agreements": The agreements between the Credit
Risk Manager and the Servicer and/or Master Servicer, regarding the loss
mitigation and advisory services to be provided by the Credit Risk Manager.

         "Credit Risk Management Fee": The amount payable to the Credit Risk
Manager on each Distribution Date as compensation for all services rendered by
it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreements, which amount
shall equal one twelfth of the product of (i) the Credit Risk Management Fee
Rate multiplied by (ii) the Stated Principal Balance of the Mortgage Loans and
any related REO Properties as of the first day of the related Due Period.

         "Credit Risk Management Fee Rate": 0.015% per annum.

         "Credit Risk Manager": The Murrayhill Company, a Colorado corporation,
and its successors and assigns.

         "Custodial Agreement": The Custodial Agreement dated as of October 1,
2004, among the Trustee, the Custodian and the Servicer as such agreement may be
amended or


                                       21
<PAGE>


supplemented from time to time, or any other custodial agreement entered into
after the date hereof with respect to any Mortgage Loan subject to this
Agreement.

         "Custodial Accounts": Shall mean the accounts maintained by the Interim
Servicers under the Assignment Agreements.

         "Custodian": Wells Fargo or any other custodian appointed under any
custodial agreement entered into after the date of this Agreement.

         "Cut-off Date": With respect to each Mortgage Loan, October 1, 2004.
With respect to all Qualified Substitute Mortgage Loans, their respective dates
of substitution. References herein to the "Cut-off Date," when used with respect
to more than one Mortgage Loan, shall be to the respective Cut-off Dates for
such Mortgage Loans.

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

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

         "Definitive Certificates": As defined in Section 6.01(b).

         "Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Substitute Mortgage Loan.

         "Delinquency Percentage": As of the last day of the related Due Period,
the percentage equivalent of a fraction, the numerator of which is the aggregate
Stated Principal Balance of all Mortgage Loans that, as of the last day of the
previous calendar month, are 60 or more days delinquent, are in foreclosure,
have been converted to REO Properties or have been discharged by reason of
bankruptcy, and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties as of the last day of the
previous calendar month.

         "Depositor": ACE Securities Corp., a Delaware corporation, or its
successor in interest.

         "Depository": The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry Certificates, is CEDE &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.

         "Depository Institution": Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State


                                       22
<PAGE>


thereof, (b) is subject to supervision and examination by federal or state
banking authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other short-term unsecured debt
obligations) that are rated at least A-1+ by S&P, F-1+ by Fitch and P-1 by
Moody's (or, if such Rating Agencies are no longer rating the Offered
Certificates, comparable ratings by any other nationally recognized statistical
rating agency then rating the Offered Certificates).

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

         "Determination Date": With respect to the Servicer and each
Distribution Date, the Business Day immediately preceding the applicable
Servicer Remittance Date. With respect to each Interim Servicer, the date
specified in the related Servicing Agreement.

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

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

         "Distribution Account": The trust account or accounts created and
maintained by the Securities Administrator pursuant to Section 3.08(b) in the
name of the Securities Administrator for the benefit of the Certificateholders
and designated "Wells Fargo Bank, N.A., in trust for registered holders of ACE
Securities Corp. Home Equity Loan Trust, Series 2004-


                                       23
<PAGE>


HE3". Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement. The
Distribution Account must be an Eligible Account.

         "Distribution Date": The 25th day of any month, or if such 25th day is
not a Business Day, the Business Day immediately following such 25th day,
commencing in November 2004.

         "Due Date": With respect to each Distribution Date, the day of the
month on which the Monthly Payment is due on a Mortgage Loan during the related
Due Period, exclusive of any days of grace.

         "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.

         "Eligible Account": Any of (i) an account or accounts maintained with a
Depository Institution, (ii) an account or accounts the deposits in which are
fully insured by the FDIC or (iii) a trust account or accounts maintained with a
federal depository institution or state chartered depository institution acting
in its fiduciary capacity. Eligible Accounts may bear interest.

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

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

         "Excess Liquidation Proceeds": To the extent that such amount is not
required by law to be paid to the related mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed the
sum of (i) the outstanding principal balance of such Mortgage Loan and accrued
but unpaid interest at the related Net Mortgage Rate through the last day of the
month in which the related Liquidation Event occurs, plus (ii) related
liquidation expenses or other amounts to which the Servicer or the Interim
Servicer is entitled to be reimbursed from Liquidation Proceeds with respect to
such liquidated Mortgage Loan pursuant to Section 3.09 of this Agreement or
pursuant to the related Servicing Agreement.

         "Expense Adjusted Mortgage Rate": With respect to any Mortgage Loan or
REO Property, the then applicable Mortgage Rate thereon minus the Administration
Fee Rate.

         "Extraordinary Trust Fund Expense": Any amounts payable or reimbursable
to the Trustee, the Master Servicer, the Securities Administrator, the Custodian
or any director, officer, employee or agent of any such Person from the Trust
Fund pursuant to the terms of this Agreement and any amounts payable from the
Distribution Account in respect of taxes pursuant to Section 11.01(g)(v).

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


                                       24
<PAGE>


         "Fannie Mae": Fannie Mae, formerly known as the Federal National
Mortgage Association, or any successor thereto.

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

         "Final Maturity Date": The Distribution Date occurring in November
2034.

         "Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by an Originator, the Seller or the Master Servicer pursuant to or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the Servicer or the related Interim Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer or the
related Interim Servicer, in its reasonable good faith judgment, expects to be
finally recoverable in respect thereof have been so recovered, which
determination shall be evidenced by a certificate of a Servicing Officer
delivered to the Master Servicer and maintained in its records.

         "Freddie Mac": Freddie Mac, formerly known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.

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

         "Group I Interest Remittance Amount": With respect to any Distribution
Date is that portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Group I Mortgage Loans
(net of the Administration Fees and any Prepayment Charges and after taking into
account amounts payable or reimbursable to the Trustee, the Custodian, the
Securities Administrator, the Master Servicer or the Servicer pursuant to this
Agreement or the Custodial Agreement or the Interim Servicer pursuant to the
related Servicing Agreement).

         "Group I Mortgage Loans": Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage Loans.

         "Group I Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group I Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group I Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group I Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator, the Servicer or the related
Interim Servicer and (iv) the Class A-1 Allocation Percentage of the amount of
any Overcollateralization Increase Amount for such Distribution


                                       25
<PAGE>


Date MINUS (v) the Class A-1 Allocation Percentage of the amount of any
Overcollateralization Reduction Amount for such Distribution Date.

         "Group I Principal Remittance Amount": With respect to any Distribution
Date will be the sum of the amounts described in clauses (i) through (iii) of
the definition of Group I Principal Distribution Amount.

         "Group II Interest Remittance Amount": With respect to any Distribution
Date is that portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Group II Mortgage
Loans (net of the Administration Fees and any Prepayment Charges and after
taking into account amounts payable or reimbursable to the Trustee, the
Custodian, the Securities Administrator, the Master Servicer or the Servicer
pursuant to this Agreement or the Custodial Agreement or payable or reimbursable
to the Interim Servicer pursuant to the related Servicing Agreement).

         "Group II Mortgage Loans": Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage Loans.

         "Group II Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group II Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group II Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator, the Servicer or the related
Interim Servicer and (iv) the Class A-2 Allocation Percentage of the amount of
any Overcollateralization Increase Amount for such Distribution Date MINUS (v)
the Class A-2 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.

         "Group II Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Group II Principal Distribution Amount.

         "Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer, the
Securities Administrator, the Servicer, the Seller, any Originator and their
respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor, the Master Servicer, the
Securities Administrator, the Servicer, the Seller, any Originator or any
Affiliate thereof, and (c) is not connected with the Depositor, the Master
Servicer, the Securities Administrator, the Servicer, the Seller, any Originator
or any Affiliate thereof as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Depositor, the
Master Servicer, the Securities Administrator, the Servicer, the Seller, any
Originator or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of


                                       26
<PAGE>


securities issued by the Depositor, the Master Servicer, the Securities
Administrator, the Servicer, the Seller, any Originator or any Affiliate
thereof, as the case may be.

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

         "Index": As of any Adjustment Date, the index applicable to the
determination of the Mortgage Rate on each Adjustable Rate Mortgage Loan will
generally be the average of the interbank offered rates for six-month United
States dollar deposits in the London market as published in THE WALL STREET
JOURNAL and as most recently available either (a) as of the first Business Day
45 days prior to such Adjustment Date or (b) as of the first Business Day of the
month preceding the month of such Adjustment Date, as specified in the related
Mortgage Note.

         "Institutional Accredited Investor": As defined in Section 6.01(c).

         "Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy, covering a Mortgage Loan or the related Mortgaged
Property, to the extent such proceeds are not to be applied to the restoration
of the related Mortgaged Property or released to the Mortgagor or a senior
lienholder in accordance with Accepted Servicing Practices, subject to the terms
and conditions of the related Mortgage Note and Mortgage.

         "Interest Accrual Period": With respect to any Distribution Date and
the Class A Certificates, the Mezzanine Certificate and the Class B
Certificates, the period commencing on the Distribution Date of the month
immediately preceding the month in which such Distribution Date occurs (or, in
the case of the first Distribution Date, commencing on the Closing Date) and
ending on the day preceding such Distribution Date. With respect to any
Distribution Date and the Class CE-1 Certificates, Class CE-2 Certificates and
the REMIC I Regular Interests, the one-month period ending on the last day of
the calendar month immediately preceding the month in which such Distribution
Date occurs.

         "Interest Carry Forward Amount": With respect to any Distribution Date
and any Class A Certificate, Mezzanine Certificate or Class B Certificate, the
sum of (i) the amount, if any, by which (a) the Interest Distribution Amount for
such Class as of the immediately preceding Distribution Date exceeded (b) the
actual amount distributed on such Class in respect of interest on such
immediately preceding Distribution Date and (ii) the amount of any Interest
Carry Forward Amount for such Class remaining unpaid from the previous
Distribution Date,


                                       27
<PAGE>


plus accrued interest on such sum calculated at the related Pass-Through Rate
for the most recently ended Interest Accrual Period.

         "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates, REMIC I
Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular
Interest I LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA2C, REMIC I Regular Interest I-LTA2D, REMIC I Regular Interest I-LTM1,
REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular Interest
I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC
I Regular Interest I-LTM11, REMIC I Regular Interest I-LTB and any Interest
Accrual Period therefor, the second London Business Day preceding the
commencement of such Interest Accrual Period.

         "Interest Distribution Amount": With respect to any Distribution Date
and any Class A Certificates, any Mezzanine Certificates, any Class B
Certificates and any Class CE-1 Certificates, the aggregate Accrued Certificate
Interest on the Certificates of such Class for such Distribution Date.

         "Interest Remittance Amount": With respect to any Distribution Date,
the sum of: (i) the Group I Interest Remittance Amount and (ii) the Group II
Interest Remittance Amount.

         "Interim Servicer": Any of Ocwen, Option One or People's Choice.

         "Last Scheduled Distribution Date": November 25, 2034.

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

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

         "Liquidation Proceeds": The amount (other than Insurance Proceeds,
amounts received in respect of the rental of any REO Property prior to REO
Disposition, or required to be released to a Mortgagor or a senior lienholder in
accordance with applicable law or the terms of the related Mortgage Loan
Documents) received by the Servicer or the related Interim Servicer in
connection with (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation (other than amounts
required to be released to the


                                       28
<PAGE>


Mortgagor or a senior lienholder), (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.13(c), Section 3.21 or Section
10.01 of this Agreement or (iv) any Subsequent Recoveries.

         "Loan-to-Value Ratio": As of any date of determination, the fraction,
expressed as a percentage, the numerator of which is the principal balance of
the related Mortgage Loan at such date and the denominator of which is the Value
of the related Mortgaged Property.

         "London Business Day": Any day on which banks in the Cities of London
and New York are open and conducting transactions in United States dollars.

         "Loss Severity Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
principal balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.

         "Marker Rate": With respect to the Class CE-1 Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the REMIC I Remittance Rate for each of REMIC I Regular Interest I-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular
Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular
Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest
I-LTM9, REMIC I Regular Interest I-LTM10, REMIC I Regular Interest I-LTM11,
REMIC I Regular Interest I-LTB and REMIC I Regular Interest I-LTZZ, with the
rate on each such REMIC I Regular Interest (other than REMIC I Regular Interest
I-LTZZ) subject to a cap equal to the lesser of (i) the related One-Month LIBOR
Pass-Through Rate and (ii) the related Net WAC Pass-Through Rate for the
corresponding Certificate for the purpose of this calculation for such
Distribution Date and with the rate on REMIC I Regular Interest I-LTZZ subject
to a cap of zero for the purpose of this calculation; provided however, each
such cap for each REMIC I Regular Interest shall be multiplied by a fraction the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 30.

         "Master Servicer": As of the Closing Date, Wells Fargo Bank, N.A. and
thereafter, its respective successors in interest who meet the qualifications of
this Agreement. The Master Servicer and the Securities Administrator shall at
all times be the same Person.

         "Master Servicer Certification": A written certification covering
servicing of the Mortgage Loans by a Servicer and signed by an officer of the
Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superseded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time


                                       29
<PAGE>


pursuant to the Sarbanes-Oxley Act of 2002, which in any such case affects the
form or substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Depositor and the Seller following a negotiation in good
faith to determine how to comply with any such new requirements.

         "Master Servicer Event of Default": One or more of the events described
in Section 8.01(b).

         "Master Servicer Fee Rate": 0.003% per annum.

         "Master Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one twelfth of the product of the Master
Servicer Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month.

         "Maximum I-LTZZ Uncertificated Interest Deferral Amount": With respect
to any Distribution Date, the excess of (i) accrued interest at the REMIC I
Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on REMIC I
Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular
Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA2C, REMIC I Regular Interest I-LTA2D, REMIC I Regular Interest I-LTM1,
REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular Interest
I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC
I Regular Interest I-LTM11 and REMIC I Regular Interest I-LTB, for such
Distribution Date, with the rate on each such REMIC I Regular Interest subject
to a cap equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net WAC Pass-Through Rate for the corresponding
Certificate for the purpose of this calculation for such Distribution Date;
provided however, each such cap for each REMIC I Regular Interest shall be
multiplied by a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 30.

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

         "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.

         "Mezzanine Certificate": Any Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 or Class
M-11 Certificate.


                                       30
<PAGE>


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

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

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

         "Moody's": Moody's Investors Service, Inc. or any successor interest.

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

         "Mortgage File": The Mortgage Loan Documents pertaining to a particular
Mortgage Loan.

         "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee and the Mortgage Loan Documents for which have been delivered to the
Custodian pursuant to Section 2.01 of this Agreement and pursuant to the
Custodial Agreement, as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.

         "Mortgage Loan Documents": The documents evidencing or relating to each
Mortgage Loan delivered to the Custodian under the Custodial Agreement on behalf
of the Trustee.

         "Mortgage Loan Purchase Agreement": Shall mean the Mortgage Loan
Purchase Agreement dated as of October 29, 2004, between the Depositor and the
Seller.

         "Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC I on such date, separately identifying the Group I Mortgage
Loans and the Group II Mortgage Loans, attached hereto as Schedule 1. The
Depositor shall deliver or cause the delivery of the initial Mortgage Loan
Schedule to the Servicer, the Master Servicer, the Custodian and the Trustee on
the Closing Date. The Mortgage Loan Schedule shall set forth the following
information with respect to each Mortgage Loan:


                                       31
<PAGE>


         (i)      the Mortgage Loan identifying number;

         (ii)     the Mortgagor's first and last name;

         (iii)    the street address of the Mortgaged Property including the
state and zip code;

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

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

         (vi)     the original months to maturity;

         (vii)    the original date of the Mortgage Loan and the remaining
months to maturity from the Cut-off Date, based on the original amortization
schedule;

         (viii)   the Loan-to-Value Ratio at origination;

         (ix)     the Mortgage Rate in effect immediately following the Cut-off
Date;

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

         (xi)     the stated maturity date;

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

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

         (xiv)    the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;

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

         (xvi)    the Stated Principal Balance of the Mortgage Loan as of the
close of business on the Cut-off Date;

         (xvii)   with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date;

         (xviii)  with respect to each Adjustable Rate Mortgage Loan, the Gross
Margin;

         (xix)    a code indicating the purpose of the loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);


                                       32
<PAGE>


         (xx)     with respect to each Adjustable Rate Mortgage Loan, the
Maximum Mortgage Rate under the terms of the Mortgage Note;

         (xxi)    with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate under the terms of the Mortgage Note;

         (xxii)   the Mortgage Rate at origination;

         (xxiii)  with respect to each Adjustable Rate Mortgage Loan, the
Periodic Rate Cap;

         (xxiv)   with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date immediately following the Cut-off Date;

         (xxv)    with respect to each Adjustable Rate Mortgage Loan, the Index;

         (xxvi)   the date on which the first Monthly Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect, such Due Date;

         (xxvii)  a code indicating whether the Mortgage Loan is an Adjustable
Rate Mortgage Loan or a fixed rate Mortgage Loan;

         (xxviii) a code indicating the documentation style (i.e., full, stated
or limited);

         (xxix)   a code indicating if the Mortgage Loan is subject to a primary
insurance policy or lender paid mortgage insurance policy and the name of the
insurer;

         (xxx)    the Appraised Value of the Mortgaged Property;

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

         (xxxii)  a code indicating whether the Mortgage Loan is subject to a
Prepayment Charge, the term of such Prepayment Charge and the amount of such
Prepayment Charge;

         (xxxiii) the product type (e.g., 2/28, 15 year fixed, 30 year fixed,
15/30 balloon, etc.);

         (xxxiv)  the Mortgagor's debt to income ratio;

         (xxxv)   the FICO score at origination; and

         (xxxvi)  the Interim Servicer.

         The Mortgage Loan Schedule shall set forth the following information
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the


                                       33
<PAGE>


Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to time by
the Depositor in accordance with the provisions of this Agreement. With respect
to any Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the
related Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.

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

         "Mortgage Rate": With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate with respect to
each Adjustable Rate Mortgage Loan (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth in
the Mortgage Loan Schedule as the Mortgage Rate in effect immediately following
the Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date equal to the sum, rounded to
the nearest 0.125% as provided in the Mortgage Note, of the Index, as most
recently available as of a date prior to the Adjustment Date as set forth in the
related Mortgage Note, plus the related Gross Margin; provided that the Mortgage
Rate on such Adjustable Rate Mortgage Loan on any Adjustment Date shall never be
more than the lesser of (i) the sum of the Mortgage Rate in effect immediately
prior to the Adjustment Date plus the related Periodic Rate Cap, if any, and
(ii) the related Maximum Mortgage Rate, and shall never be less than the greater
of (i) the Mortgage Rate in effect immediately prior to the Adjustment Date less
the Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

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

         "Mortgagor": The obligor on a Mortgage Note.

         "Net Monthly Excess Cashflow": With respect to any Distribution Date,
the sum of (i) any Overcollateralization Reduction Amount for such Distribution
Date and (ii) the excess of (x) the Available Distribution Amount for such
Distribution Date over (y) the sum for such Distribution Date of (A) the
aggregate Senior Interest Distribution Amounts payable to the Holders of the
Class A Certificates, (B) the aggregate Interest Distribution Amounts payable to
the holders of the Mezzanine Certificates and the Class B Certificates and (C)
the Principal Remittance Amount.

         "Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property) as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Administration Fee Rate.

         "Net WAC Pass-Through Rate": With respect to the Class A-1 Certificates
and any Distribution Date, a rate per annum equal to the product of (x) the
weighted average of the Expense Adjusted Mortgage Rates on the then outstanding
Group I Mortgage Loans, weighted based on their Stated Principal Balances as of
the first day of the calendar month preceding the


                                       34
<PAGE>


month in which the Distribution Date occurs and (y) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days elapsed in
the related Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
(adjusted for the actual number of days elapsed in the related Interest Accrual
Period) the REMIC I Remittance Rate on REMIC I Regular Interest I-LT1GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest, provided that for purposes of this definition, the REMIC I Remittance
Rate shall be calculated using a Servicing Fee Rate equal to 0.50%.

         With respect to the Class A-2 Certificates and any Distribution Date, a
rate per annum equal to the product of (x) the weighted average of the Expense
Adjusted Mortgage Rates on the then outstanding Group II Mortgage Loans,
weighted based on their Stated Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs and (y)
a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period. For
federal income tax purposes, the economic equivalent of such rate shall be
expressed as the weighted average of (adjusted for the actual number of days
elapsed in the related Interest Accrual Period) the REMIC I Remittance Rate on
REMIC I Regular Interest I-LT2GRP, weighted on the basis of the Uncertificated
Balance of such REMIC I Regular Interest, provided that for purposes of this
definition, the REMIC I Remittance Rate shall be calculated using a Servicing
Fee Rate equal to 0.50%.

         With respect to the Mezzanine Certificates and any Distribution Date, a
rate per annum (adjusted for the actual number of days elapsed in the related
Interest Accrual Period) equal to the weighted average of the Expense Adjusted
Mortgage Rates of (i) the Group I Mortgage Loans and (ii) the Group II Mortgage
Loans, weighted in proportion to the results of subtracting from the aggregate
Scheduled Principal Balance of each loan group the Certificate Principal Balance
of the related Class A Certificates. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
(adjusted for the actual number of days elapsed in the related Interest Accrual
Period) the REMIC I Remittance Rates on (a) REMIC I Regular Interest I-LT1SUB,
subject to a cap and a floor equal to the REMIC I Remittance Rate on REMIC I
Regular Interest I-LT1GRP, and (b) REMIC I Regular Interest I-LT2SUB, subject to
a cap and a floor equal to the REMIC I Remittance Rate on REMIC I Regular
Interest I-LT2GRP, weighted on the basis of the Uncertificated Balance of each
such REMIC I Regular Interest, provided that for purposes of this definition,
the REMIC I Remittance Rate shall be calculated using a Servicing Fee Rate equal
to 0.50%.

         With respect to the Class B Certificates and any Distribution Date, a
rate per annum (adjusted for the actual number of days elapsed in the related
Interest Accrual Period) equal to the weighted average of the Expense Adjusted
Mortgage Rates of (i) the Group I Mortgage Loans and (ii) the Group II Mortgage
Loans, weighted in proportion to the results of subtracting from the aggregate
Scheduled Principal Balance of each loan group the Certificate Principal Balance
of the related Class A Certificates. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
(adjusted for the actual number of days elapsed in the related Interest Accrual
Period) the REMIC I Remittance Rates on (a) REMIC I Regular Interest I-LT1SUB,
subject to a cap and a floor equal to the REMIC I Remittance Rate on REMIC I
Regular Interest I-LT1GRP, and (b) REMIC I Regular Interest I-LT2SUB, subject to
a cap and a floor equal to the REMIC I Remittance Rate on


                                       35
<PAGE>


REMIC I Regular Interest I-LT2GRP, weighted on the basis of the Uncertificated
Balance of each such REMIC I Regular Interest, provided that for purposes of
this definition, the REMIC I Remittance Rate shall be calculated using a
Servicing Fee Rate equal to 0.50%.

         "Net WAC Rate Carryover Amount" : With respect to any Class A
Certificate, Mezzanine Certificate or Class B Certificate and any Distribution
Date on which the Pass-Through Rate is limited to the applicable Net WAC
Pass-Through Rate, an amount equal to the sum of (i) the excess of (x) the
amount of interest such Class would have been entitled to receive on such
Distribution Date if the applicable Net WAC Pass-Through Rate would not have
been applicable to such Class on such Distribution Date over (y) the amount of
interest paid to such Class on such Distribution Date at the applicable Net WAC
Pass-Through Rate plus (ii) the related Net WAC Rate Carryover Amount for the
previous Distribution Date not previously distributed to such Class together
with interest thereon at a rate equal to the Pass-Through Rate for such Class
for the most recently ended Interest Accrual Period without taking into account
the applicable Net WAC Pass-Through Rate.

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

         "Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer or a successor to the Servicer
(including the Trustee) or an Interim Servicer will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.

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

         "Non-United States Person": Any Person other than a United States
Person.

         "Notional Amount" : With respect to the Class CE-1 Certificates and any
Distribution Date, the Uncertificated Balance of the REMIC I Regular Interests
(other than REMIC I Regular Interest I-LTP) for such Distribution Date. With
respect to the Class CE-2 Certificates and any Distribution Date, the
Uncertificated Balance of the REMIC I Regular Interests for such Distribution
Date.

         "Ocwen": Ocwen Federal Bank, FSB, and any successor thereto.

         "Ocwen Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of October 29, 2004, by and among the Seller,
the Depositor and Ocwen evidencing the assignment of the Ocwen Servicing
Agreement to the Depositor.


                                       36
<PAGE>


         "Ocwen Servicing Agreement": The Interim Servicing and Servicing Rights
Purchase Agreement, dated as of February 1, 2004, by and among the Seller, Ocwen
and Ocwen Financial Corporation, as modified by the Ocwen Assignment Agreement.

         "Offered Certificates" : The Class A Certificates and the Mezzanine
Certificates, collectively.

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

         "One-Month LIBOR" : With respect to the Class A Certificates, the
Mezzanine Certificates, the Class B Certificates, REMIC I Regular Interest
I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A,
REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I
Regular Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC
I Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular
Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC I Regular Interest
I-LTM11 and REMIC I Regular Interest I-LTB and any Interest Accrual Period
therefor, the rate determined by the Securities Administrator on the related
Interest Determination Date on the basis of the offered rate for one-month U.S.
dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on such Interest Determination Date; provided that if such rate
does not appear on Telerate Page 3750, the rate for such date will be determined
on the basis of the offered rates of the Reference Banks for one-month U.S.
dollar deposits, as of 11:00 a.m. (London time) on such Interest Determination
Date. In such event, the Securities Administrator will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If on such Interest Determination Date, two or more Reference Banks provide such
offered quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16). If on such Interest
Determination Date, fewer than two Reference Banks provide such offered
quotations, One-Month LIBOR for the related Interest Accrual Period shall be the
higher of (i) LIBOR as determined on the previous Interest Determination Date
and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the
priorities described above, LIBOR for an Interest Determination Date would be
based on LIBOR for the previous Interest Determination Date for the third
consecutive Interest Determination Date, the Securities Administrator shall
select an alternative comparable index (over which the Securities Administrator
has no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
The establishment of One-Month LIBOR by the Securities Administrator and the
Securities Administrator's subsequent calculation of the One-Month LIBOR
Pass-Through Rates for the relevant Interest Accrual Period, shall, in the
absence of manifest error, be final and binding.

         "One-Month LIBOR Pass-Through Rate": With respect to the Class A-1A
Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1A, a per annum rate equal to One-Month LIBOR plus the
related Certificate Margin.


                                       37
<PAGE>


         With respect to the Class A-1B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA1B, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class A-2A Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2A, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class A-2B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2B, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class A-2C Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2C, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class A-2D Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2D, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-1 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM1, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-2 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM2, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-3 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM3, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-4 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM4, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-5 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM5, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-6 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM6, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-7 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM7, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.


                                       38
<PAGE>


         With respect to the Class M-8 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM8, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-9 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM9, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-10 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM10, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class M-11 Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM11, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         With respect to the Class B Certificates and, for purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTB, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

         "Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor, the Servicer, the Securities
Administrator or the Master Servicer, acceptable to the Trustee, except that any
opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or
(b) compliance with the REMIC Provisions must be an opinion of Independent
counsel, provided however, with respect to Wells Fargo, in its capacity as
Servicer, any Opinion of Counsel provided pursuant to clause (b) above may be
provided by internal counsel, provided that, the delivery of such Opinion of
Counsel shall not release Wells Fargo from any of its obligations hereunder and
Wells Fargo shall be responsible for such contemplated actions or inaction, as
the case may be, to the extent it conflicts with the terms of this Agreement..

         "Option One": Option One Mortgage Corporation, and any successor
thereto.

         "Option One Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of October 29, 2004, by and among the Seller,
the Depositor and Option One evidencing the assignment of the Option One
Servicing Agreement to the Depositor.

         "Option One Servicing Agreement": The Master Mortgage Loan Purchase and
Servicing Agreement, dated as of November 1, 2003, by and among the Seller,
Option One, Option One Seller Trust 2001-A, Option One Seller Trust 2001-1B,
Option One Seller Trust 2001-2, Option One Seller Trust 2002-3, Option One
Seller Trust 2003-4 and Option One Seller Trust 2003-5, as modified by the
Option One Assignment Agreement.

         "Optional Termination Date": The Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired in
respect thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date.


                                       39
<PAGE>


         "Originators": WMC Mortgage Corp., People's Choice Home Loan, Inc. and
various other originators (each, an "Originator").

         "Overcollateralization Amount": With respect to any Distribution Date,
the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
P Certificates as of such Distribution Date (after taking into account the
payment of the Principal Remittance Amount on such Distribution Date).

         "Overcollateralization Increase Amount": With respect to the Class A
Certificates, the Mezzanine Certificates and the Class B Certificates and any
Distribution Date is any amount of Net Monthly Excess Cashflow actually applied
as an accelerated payment of principal to the extent the Required
Overcollateralization Amount exceeds the Overcollateralization Amount.

         "Overcollateralization Reduction Amount": With respect to any
Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal zero.

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

         "P&I Advance": As to any Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any Determination Date pursuant to Section
5.03 of this Agreement, an Advance Financing Person pursuant to Section 3.25 of
this Agreement, in respect of any Distribution Date by a successor Servicer
pursuant to Section 8.02 of this Agreement or an Interim Servicer pursuant to
the applicable Servicing Agreement (which advances shall not include principal
or interest shortfalls due to bankruptcy proceedings or application of the
Relief Act or similar state or local laws.)

         "Pass-Through Rate": With respect to the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates, and any Distribution Date,
a rate per annum equal to the lesser of (i) the related One-Month LIBOR
Pass-Through Rate for such Distribution Date and (ii) the related Net WAC
Pass-Through Rate for such Distribution Date.

         With respect to the Class CE-1 Certificates and any Distribution Date,
a rate per annum equal to the percentage equivalent of a fraction, the numerator
of which is the sum of the amounts calculated pursuant to clauses (i) through
(xxi) below, and the denominator of which is the aggregate Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular
Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular
Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest
I-LTM9, REMIC I Regular


                                       40
<PAGE>


Interest I-LTM10, REMIC I Regular Interest I-LTM11, REMIC I Regular Interest
I-LTB and REMIC I Regular Interest I-LTZZ. For purposes of calculating the
Pass-Through Rate for the Class CE-1 Certificates, the numerator is equal to the
sum of the following components:

                  (i)      the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTAA minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTAA;

                  (ii)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTA1A minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA1A;

                  (iii)    the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTA1B minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA1B;

                  (iv)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTA2A minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA2A;

                  (v)      REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTA2B minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTA2B;

                  (vi)     REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTA2C minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTA2C;

                  (vii)    REMIC I Remittance Rate for REMIC I Regular Interest
         I-LTA2D minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTA2D;

                  (viii)   the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM1 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM1;

                  (ix)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM2 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM2;

                  (x)      the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM3 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM3;

                  (xi)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM4 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM4;


                                       41
<PAGE>


                  (xii)    the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM5 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM5;

                  (xiii)   the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM6 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM6;

                  (xiv)    the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM7 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM7;

                  (xv)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM8 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM8;

                  (xvi)    the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM9 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM9;

                  (xvii)   the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM10 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM10;

                  (xviii)  the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTM11 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM11;

                  (xix)    the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTB minus the Marker Rate, applied to an amount equal to the
         Uncertificated Balance of REMIC I Regular Interest I-LTB;

                  (xx)     the REMIC I Remittance Rate for REMIC I Regular
         Interest I-LTZZ minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and

                  (xxi)    100% of the interest on REMIC I Regular Interest
         I-LTP.

         With respect to the Class CE-2 Certificates and any Distribution Date,
a rate per annum equal to the percentage equivalent of a fraction, the numerator
of which is the sum of the amounts calculated pursuant to clauses (i) through
(xxvi) below, and the denominator of which is the aggregate Uncertificated
Balances of the REMIC I Regular Interests. For purposes of calculating the
Pass-Through Rate for the Class CE-2 Certificates, the numerator is equal to the
sum of the following components:

         (i)      the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTAA over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTAA (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied


                                       42
<PAGE>


                  to an amount equal to the Uncertificated Balance of REMIC I
                  Regular Interest I-LTAA;

         (ii)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA1A over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA1A (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA1A;

         (iii)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA1B over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA1B (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA1B;

         (iv)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA2A over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA2A (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA2A;

         (v)      the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA2B over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA2B (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA2B;

         (vi)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA2C over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA2C (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA2C;

         (vii)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTA2D over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTA2D (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTA2D;

         (viii)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM1 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM1 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied


                                       43
<PAGE>


                  to an amount equal to the Uncertificated Balance of REMIC I
                  Regular Interest I-LTM1;

         (ix)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM2 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM2 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM2;

         (x)      the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM3 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM3 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM3;

         (xi)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM4 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM4 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM4;

         (xii)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM5 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM5 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM5;

         (xiii)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM6 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM6 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM6;

         (xiv)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM7 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM7 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM7;

         (xv)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM8 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM8 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied


                                       44
<PAGE>


                  to an amount equal to the Uncertificated Balance of REMIC I
                  Regular Interest I-LTM8;

         (xvi)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM9 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM9 (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM9;

         (xvii)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM10 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM10 (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM10;

         (xviii)  the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTM11 over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTM11 (calculated for purposes
                  of clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTM11;

         (xix)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTB over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTB (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTB;

         (xx)     the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTZZ over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTZZ (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTZZ;

         (xxi)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTP over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTP (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTP;

         (xxii)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LT1SUB over (ii) the REMIC I Remittance
                  Rate on REMIC I Regular Interest I-LT1SUB (calculated for
                  purposes of clause (ii) of this definition using a Servicing
                  Fee Rate equal to 0.50% per annum), applied


                                       45
<PAGE>


                  to an amount equal to the Uncertificated Balance of REMIC I
                  Regular Interest I-LT1SUB;

         (xxiii)  the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LT1GRP over (ii) the REMIC I Remittance
                  Rate on REMIC I Regular Interest I-LT1GRP (calculated for
                  purposes of clause (ii) of this definition using a Servicing
                  Fee Rate equal to 0.50% per annum), applied to an amount equal
                  to the Uncertificated Balance of REMIC I Regular Interest
                  I-LT1GRP;

         (xxiv)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LT2SUB over (ii) the REMIC I Remittance
                  Rate on REMIC I Regular Interest I-LT2SUB (calculated for
                  purposes of clause (ii) of this definition using a Servicing
                  Fee Rate equal to 0.50% per annum), applied to an amount equal
                  to the Uncertificated Balance of REMIC I Regular Interest
                  I-LT2SUB;

         (xxv)    the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LT2GRP over (ii) the REMIC I Remittance
                  Rate on REMIC I Regular Interest I-LT2GRP (calculated for
                  purposes of clause (ii) of this definition using a Servicing
                  Fee Rate equal to 0.50% per annum), applied to an amount equal
                  to the Uncertificated Balance of REMIC I Regular Interest
                  I-LT2GRP; and

         (xxvi)   the excess of (i) the REMIC I Remittance Rate for REMIC I
                  Regular Interest I-LTXX over (ii) the REMIC I Remittance Rate
                  on REMIC I Regular Interest I-LTXX (calculated for purposes of
                  clause (ii) of this definition using a Servicing Fee Rate
                  equal to 0.50% per annum), applied to an amount equal to the
                  Uncertificated Balance of REMIC I Regular Interest I-LTXX;

         "People's Choice": People's Choice Home Loan, Inc., and any successor
thereto.

         "People's Choice Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of October 29, 2004, by and among the Seller,
the Depositor and People's Choice evidencing the assignment of the People's
Choice Servicing Agreement to the Depositor.

         "People's Choice Servicing Agreement": The Second Amended and Restated
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of
September 1, 2002, by and between the Seller and People's Choice, as modified by
the People's Choice Assignment Agreement.

         "Percentage Interest": With respect to any Class of Certificates (other
than the Residual Certificates), the undivided percentage ownership in such
Class evidenced by such Certificate, expressed as a percentage, the numerator of
which is the initial Certificate Principal Balance represented by such
Certificate and the denominator of which is the aggregate initial Certificate
Principal Balance or Notional Amount of all of the Certificates of such Class.
The Class A Certificates, the Mezzanine Certificates and the Class B
Certificates are issuable only in


                                       46
<PAGE>


minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $25,000 and integral multiples of $1.00 in excess thereof.
The Class P Certificates are issuable only in Percentage Interests corresponding
to initial Certificate Principal Balances of $20 and integral multiples thereof.
The Class CE-1 Certificates and Class CE-2 Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Notional Balances
of $10,000 and integral multiples of $1.00 in excess thereof; provided, however,
that a single Certificate of each such Class of Certificates may be issued
having a Percentage Interest corresponding to the remainder of the aggregate
initial Notional Balance of such Class or to an otherwise authorized
denomination for such Class plus such remainder. With respect to any Residual
Certificate, the undivided percentage ownership in such Class evidenced by such
Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and integral multiples
of 5% in excess thereof.

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

         "Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued by the Depositor, the Servicer, the Master Servicer, the
Trustee or any of their respective Affiliates:

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

                  (ii)     (A) demand and time deposits in, certificates of
         deposit of, bankers' acceptances issued by or federal funds sold by any
         depository institution or trust company (including the Trustee or its
         agent acting in their respective commercial capacities) incorporated
         under the laws of the United States of America or any state thereof and
         subject to supervision and examination by federal and/or state
         authorities, so long as, at the time of such investment or contractual
         commitment providing for such investment, such depository institution
         or trust company (or, if the only Rating Agency is S&P, in the case of
         the principal depository institution in a depository institution
         holding company, debt obligations of the depository institution holding
         company) or its ultimate parent has a short-term uninsured debt rating
         in the highest available rating category of Moody's, Fitch and S&P and
         provided that each such investment has an original maturity of no more
         than 365 days; and provided further that, if the only Rating Agency is
         S&P and if the depository or trust company is a principal subsidiary of
         a bank holding company and the debt obligations of such subsidiary are
         not separately rated, the applicable rating shall be that of the bank
         holding company; and, provided further that, if the original maturity
         of such short-term obligations of a domestic branch of a foreign
         depository institution or trust company shall exceed 30 days, the
         short-term rating of such institution shall be A-1+ in the case of S&P
         if S&P is the Rating Agency; and (B) any other demand or time deposit
         or deposit which is fully insured by the FDIC;


                                       47
<PAGE>


                  (iii)    repurchase obligations with a term not to exceed 30
         days with respect to any security described in clause (i) above and
         entered into with a depository institution or trust company (acting as
         principal) rated A-1+ or higher by S&P, F-1 or higher by Fitch and A2
         or higher by Moody's, provided, however, that collateral transferred
         pursuant to such repurchase obligation must be of the type described in
         clause (i) above and must (A) be valued daily at current market prices
         plus accrued interest, (B) pursuant to such valuation, be equal, at all
         times, to 105% of the cash transferred by a party in exchange for such
         collateral and (C) be delivered to such party or, if such party is
         supplying the collateral, an agent for such party, 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
         that are issued by any corporation incorporated under the laws of the
         United States of America or any state thereof and that are rated by
         each Rating Agency that rates such securities in its highest long-term
         unsecured rating categories at the time of such investment or
         contractual commitment providing for such investment;

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

                  (vi)     units of money market funds that have been rated
         "AAA" by Fitch (if rated by Fitch), "AAAm" by S&P or "Aaa" by Moody's
         including any such money market fund managed or advised by the Master
         Servicer, the Trustee or any of their Affiliates; and

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

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

         "Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization or Non-United States Person.

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

         "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


                                       48
<PAGE>


plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.

         "Prepayment Assumption": A prepayment rate for the Adjustable Rate
Mortgage Loans of 28% CPR and a prepayment rate of 100% PPC for the fixed rate
Mortgage Loans. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool. A 100% PPC
represents (i) a per annum prepayment rate of 4% of the then outstanding
principal balance of the fixed rate Mortgage Loans in the first month of the
life of such Mortgage Loans, (ii) an additional 1.72727% per annum in each month
thereafter through the eleventh month and (iii) a constant prepayment rate of
23% per annum beginning in the twelfth month and in each month thereafter during
the life of the fixed rate Mortgage Loans.

         "Prepayment Charge": With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note.

         "Prepayment Charge Schedule": As of any date, the list of Mortgage
Loans providing for a Prepayment Charge included in the Trust Fund on such date,
attached hereto as Schedule 2 (including the prepayment charge summary attached
thereto). The Depositor shall deliver or cause the delivery of the Prepayment
Charge Schedule to the Servicer, the Master Servicer and the Trustee on the
Closing Date. The Prepayment Charge Schedule shall set forth the following
information with respect to each Prepayment Charge:

                  (i)      the Mortgage Loan identifying number;

                  (ii)     a code indicating the type of Prepayment Charge;

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

                  (iv)     the term of the related Prepayment Charge;

                  (v)      the original Stated Principal Balance of the related
         Mortgage Loan; and

                  (vi)     the Stated Principal Balance of the related Mortgage
         Loan as of the Cut-off Date.

         "Prepayment Interest Excess": With respect to each Mortgage Loan that
was the subject of a Principal Prepayment in full during the portion of the
related Prepayment Period occurring between the first day of the calendar month
in which such Distribution Date occurs and the Determination Date of the
calendar month in which such Distribution Date occurs, an amount equal to
interest (to the extent received) at the applicable Net Mortgage Rate on the
amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Distribution Date occurs and
ending on the last date through


                                       49
<PAGE>


which interest is collected from the related Mortgagor. The Servicer may
withdraw such Prepayment Interest Excess from the Collection Account in
accordance with Section 3.09(a)(x).

         "Prepayment Interest Shortfall": With respect to any Distribution Date,
for each such Mortgage Loan that was the subject of a Principal Prepayment in
full or in part during the portion of the related Prepayment Period occurring
between the first day of the related Prepayment Period and the last day of the
calendar month preceding the month in which such Distribution Date occurs that
was applied by the Servicer or Interim Servicer to reduce the outstanding
principal balance of such Mortgage Loan on a date preceding the Due Date in the
succeeding Prepayment Period, an amount equal to interest at the applicable Net
Mortgage Rate on the amount of such Principal Prepayment for the number of days
commencing on the date on which the prepayment is applied and ending on the last
day of the calendar month preceding such Distribution Date. The obligations of
the Servicer and the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.22 and Section 4.18, respectively of this
Agreement. The obligations of the Interim Servicers in respect of any Prepayment
Interest Shortfalls are set forth in the Servicing Agreements.

         "Prepayment Period": With respect to the Servicer and any Distribution
Date, the period commencing on the 15th day of the month prior to the month in
which the related Distribution Date occurs (or, on the Cut-off Date, in
connection with the first Prepayment Period) and ending on the 14th day of the
month in which such Distribution Date occurs. With respect to the Interim
Servicers, as set forth in the Servicing Agreements.

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

         "Principal Distribution Amount": With respect to any Distribution Date
is the sum of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount.

         "Principal Remittance Amount": With respect to any Distribution Date is
the sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.

         "Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, Section 3.13(c) or
Section 10.01, and as confirmed by a certification of a Servicing Officer to the
Trustee, an amount equal to the sum of (i) 100% of the Stated Principal Balance
thereof as of the date of purchase (or such other price as provided in Section
10.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on such Stated
Principal Balance at the applicable Net Mortgage Rate in effect from time to
time from the Due Date as to which interest was last covered by a payment by the
Mortgagor or a P&I Advance by the Servicer or the related Interim Servicer,
which payment or P&I Advance had as of the date of purchase been distributed
pursuant to Section 5.01, through the end of the calendar month in which the
purchase is to be effected and (y) an REO Property, the sum of (1) accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or a P&I Advance by the Servicer or the related
Interim Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired,


                                       50
<PAGE>


plus (2) REO Imputed Interest for such REO Property for each calendar month
commencing with the calendar month in which such REO Property was acquired and
ending with the calendar month in which such purchase is to be effected, net of
the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and
P&I Advances that as of the date of purchase had been distributed as or to cover
REO Imputed Interest pursuant to Section 5.01, (iii) any unreimbursed Servicing
Advances and P&I Advances (including Nonrecoverable P&I Advances and
Nonrecoverable Servicing Advances) and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account pursuant to Section 3.09(a)(ix) and Section 3.13(b) and
(v) in the case of a Mortgage Loan required to be purchased pursuant to Section
2.03, expenses reasonably incurred or to be incurred by the related Interim
Servicer, the Servicer or the Trustee in respect of the breach or defect giving
rise to the purchase obligation and any costs and damages incurred by the Trust
Fund and the Trustee in connection with any violation by any such Mortgage Loan
of any predatory or abusive lending law.

         "QIB": As defined in Section 6.01(c).

         "Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Scheduled Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Rate not less than
(and not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) if the mortgage loan is an Adjustable Rate Mortgage
Loan, have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on
the Deleted Mortgage Loan, (iv) if the mortgage loan is an Adjustable Rate
Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum Mortgage
Rate of the Deleted Mortgage Loan, (v) if the mortgage loan is an Adjustable
Rate Mortgage Loan, have a Gross Margin equal to the Gross Margin of the Deleted
Mortgage Loan, (vi) if the mortgage loan is an Adjustable Rate Mortgage Loan,
have a next Adjustment Date not more than two months later than the next
Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (viii) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (x) be secured by the same lien priority on the
related Mortgaged Property as the Deleted Loan, (xi) have a credit grade at
least equal to the credit grading assigned on the Deleted Mortgage Loan, (xii)
be a "qualified mortgage" as defined in the REMIC Provisions and (xiii) conform
to each representation and warranty set forth in Section 6 of the Mortgage Loan
Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Deleted Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage Rates,
the terms described in clause (vii) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios described
in clause (ix) hereof shall be satisfied as to each such mortgage loan, the
credit grades described in clause (x) hereof shall be satisfied as to each such
mortgage loan and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xii)


                                       51
<PAGE>


hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.

         "Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds of
which are not more than a nominal amount in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

         "Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicer.

         "Realized Loss": With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero), as
reported by the Servicer to the Master Servicer (in substantially the form of
Schedule 4 hereto) or by the related Interim Servicer to the Master Servicer
equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b), minus (iv)
the proceeds, if any, received in respect of such Mortgage Loan during the
calendar month in which such Final Recovery Determination was made, net of
amounts that are payable therefrom to the Servicer with respect to such Mortgage
Loan pursuant to Section 3.09(a)(iii) of this Agreement.

         With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b) of
this Agreement, minus (v) the aggregate of all P&I Advances and Servicing
Advances (in the case of Servicing Advances, without duplication of amounts
netted out of the rental


                                       52
<PAGE>


income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the Servicer or the related Interim Servicer in respect of such
REO Property or the related Mortgage Loan for which the Servicer or the related
Interim Servicer has been or, in connection with such Final Recovery
Determination, will be reimbursed pursuant to Section 3.21 of this Agreement or
pursuant to the related Servicing Agreement out of rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property,
minus (vi) the total of all net rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property that has been, or
in connection with such Final Recovery Determination, will be transferred to the
Distribution Account pursuant to Section 3.21 of this Agreement.

         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 subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.

         To the extent the Servicer or the related Interim Servicer receives
Subsequent Recoveries, with respect to any Mortgage Loan, the amount of Realized
Loss with respect to that Mortgage Loan will be reduced to the extent such
recoveries are applied to reduce the Certificate Principal Balance of any Class
on any Distribution Date.

         "Record Date": With respect to each Distribution Date and the Class A
Certificates, the Mezzanine Certificates and the Class B Certificates, the
Business Day immediately preceding such Distribution Date for so long as such
Certificates are Book-Entry Certificates. With respect to each Distribution Date
and any other Class of Certificates, including any Definitive Certificates, the
last day of the calendar month immediately preceding the month in which such
Distribution Date occurs.

         "Reference Banks": Barclay's Bank PLC, The Tokyo Mitsubishi Bank and
National Westminster Bank PLC and their successors in interest; provided,
however, that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Securities Administrator
which are engaged in transactions in Eurodollar deposits in the International
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Depositor
or any Affiliate thereof and (iii) which have been designated as such by the
Securities Administrator.

         "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.

         "Regular Certificate": Any Class A Certificate, Mezzanine Certificate,
Class B Certificate, Class CE-1 Certificate, Class CE-2 Certificate or Class P
Certificate.

         "Regular Interest": A "regular interest" in a REMIC within the meaning
of Section 860G(a)(1) of the Code.


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<PAGE>


         "Regulation S Temporary Global Certificate": As defined in Section
6.01(c).

         "Regulation S Permanent Global Certificate": As defined in Section
6.01(c).

         "Release Date": The 40th day after the later of (i) commencement of the
offering of the Class B Certificates and (ii) the Closing Date.

         "Relief Act": The Servicemembers Civil Relief Act, as amended, or
similar state or local laws.

         "Relief Act Interest Shortfall" : With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Relief Act "REMIC": A "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code.

         "REMIC I": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a REMIC election is to be made, consisting of: (i) such Mortgage Loans
and Prepayment Charges as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto, and together with all
collections thereon and proceeds thereof; (ii) any REO Property, together with
all collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), the Assignment Agreements and the Servicing
Agreements and (v) the Custodial Accounts, the Collection Account, the
Distribution Account and any REO Account, and such assets that are deposited
therein from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, REMIC I specifically excludes (i) all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date and all Prepayment Charges payable in connection with Principal
Prepayments made before the Cut-off Date; (ii) the Reserve Fund and any amounts
on deposit therein from time to time and any proceeds thereof and (iii) the Cap
Contracts.

         "REMIC I Interest Loss Allocation Amount" : With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, divided by (b) 12.

         "REMIC I Marker Allocation Percentage": 0.50% of any amount payable or
loss attributable from the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1A, REMIC I Regular
Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest
I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular Interest I-LTA2D,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest
I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I Regular Interest I-LTM10, REMIC I Regular Interest I-LTM11, REMIC I Regular
Interest I-LTB, REMIC I Regular Interest I-LTZZ and REMIC I Regular Interest
I-LTP.


                                       54
<PAGE>


         "REMIC I Overcollateralization Amount": With respect to any date of
determination, (i) 0.50% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC I Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I
Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular
Interest I-LTA2C, REMIC I Regular Interest I-LTA2D, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular Interest
I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC
I Regular Interest I-LTM11, REMIC I Regular Interest I-LTB and REMIC I Regular
Interest I-LTP, in each case as of such date of determination.

         "REMIC I Principal Loss Allocation Amount" : With respect to any
Distribution Date, an amount equal to (a) the product of (i) 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular
Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular
Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest
I-LTM9, REMIC I Regular Interest I-LTM10, REMIC I Regular Interest I-LTM11 and
REMIC I Regular Interest I-LTB and the denominator of which is the aggregate of
the Uncertificated Balances of REMIC I Regular Interest I-LTA1A, REMIC I Regular
Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest
I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular Interest I-LTA2D,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest
I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I Regular Interest I-LTM10, REMIC I Regular Interest I-LTM11, REMIC I Regular
Interest I-LTB and REMIC I Regular Interest I-LTZZ.

         "REMIC I Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.

         "REMIC I Regular Interest I-LTAA": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTAA shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.


                                       55
<PAGE>


         "REMIC I Regular Interest I-LTA1A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTA1B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTA2A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTA2B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTA2C": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2C
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTA2D": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2D
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTB": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTB shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.


                                       56
<PAGE>


         "REMIC I Regular Interest I-LTM1": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM2": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM3": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM4": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM5": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM5 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM6": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM6 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM7": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM7 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.


                                       57
<PAGE>


         "REMIC I Regular Interest I-LTM8": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM8 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM9": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTM9 shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM10": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM10
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTM11": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM11
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTXX": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTXX shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LTZZ": One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest I-LTZZ shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LT1SUB": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1SUB
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.


                                       58
<PAGE>


         "REMIC I Regular Interest I-LT1GRP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1GRP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LT2SUB": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2SUB
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Regular Interest I-LT2GRP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2GRP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

         "REMIC I Remittance Rate": With respect to REMIC I Regular Interest
I-LTAA, REMIC I Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA2C, REMIC I Regular Interest I-LTA2D, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular
Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular Interest
I-LTM10, REMIC I Regular Interest I-LTM11, REMIC I Regular Interest I-LTB, REMIC
I Regular Interest I-LTZZ, REMIC I Regular Interest I-LTP, REMIC I Regular
Interest I-LT1SUB, REMIC I Regular Interest I-LT2SUB and REMIC I Regular
Interest I-LTXX, the weighted average of the Expense Adjusted Mortgage Rates of
the Mortgage Loans, provided that for purposes of this definition, the Expense
Adjusted Net Mortgage Rate shall be calculated using a Servicing Fee Rate equal
to the Wells Fargo Servicing Fee Rate for as long as Wells Fargo acts as
Servicer. With respect to REMIC I Regular Interest I-LT1GRP, the weighted
average of the Expense Adjusted Mortgage Rates of the Group I Mortgage Loans,
provided that for purposes of this definition, the Expense Adjusted Net Mortgage
Rate shall be calculated using a Servicing Fee Rate equal to the Wells Fargo
Servicing Fee Rate for as long as Wells Fargo acts as Servicer. With respect to
REMIC I Regular Interest I-LT2GRP, the weighted average of the Expense Adjusted
Mortgage Rates of the Group II Mortgage Loans, provided that for purposes of
this definition, the Expense Adjusted Net Mortgage Rate shall be calculated
using a Servicing Fee Rate equal to the Wells Fargo Servicing Fee Rate for as
long as Wells Fargo acts as Servicer.

         "REMIC I Sub WAC Allocation Percentage": 0.50% of any amount payable or
loss attributable from the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest I-LT1SUB, REMIC I Regular Interest I-LT1GRP, REMIC I Regular
Interest I-LT2SUB, REMIC I Regular Interest I-LT2GRP and REMIC I Regular
Interest I-LTXX.


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<PAGE>


         "REMIC I Subordinated Balance Ratio": The ratio among the
Uncertificated Balances of each REMIC I Regular Interest ending with the
designation "SUB,", equal to the ratio between, with respect to each such REMIC
I Regular Interest, the excess of (x) the aggregate Stated Principal Balance of
the Group I Mortgage Loans or Group II Mortgage Loans, as applicable over (y)
the current Certificate Principal Balance of related Class A Certificates.

         "REMIC I Required Overcollateralization Amount": 1% of the Required
Overcollateralization Amount.

         "REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit of
the REMIC II Certificateholders pursuant to Section 2.07, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

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

         "REMIC II Certificateholder": The Holder of any REMIC II Certificate.

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

         "REMIC Regular Interest": Any REMIC I Regular Interest.

         "REMIC Remittance Rate": The REMIC I Remittance Rate.

         "Remittance Report": A report by the Servicer pursuant to Section
5.03(a) of this Agreement or by the related Interim Servicer pursuant to the
Servicing Agreements.

         "Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

         "REO Account": The account or accounts maintained, or caused to be
maintained, by the Servicer in respect of an REO Property pursuant to Section
3.21 of this Agreement or by the related Interim Servicer pursuant to the
Servicing Agreements.

         "REO Disposition": The sale or other disposition of an REO Property on
behalf of REMIC I.

         "REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of REMIC I, one month's
interest at the applicable Net Mortgage Rate on the Stated Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.


                                       60
<PAGE>


         "REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 of this Agreement or pursuant
to the Servicing Agreements that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable in respect of the
proper operation, management and maintenance of such REO Property or (ii)
payable or reimbursable to the Servicer pursuant to Section 3.21(d) of this
Agreement or the related Interim Servicer pursuant to the Servicing Agreements
for unpaid Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and P&I Advances in respect of such REO Property
or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of
such REO Property for such calendar month.

         "REO Property": A Mortgaged Property acquired by the Servicer or its
nominee on behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.21 of this Agreement or the related Interim Servicer
pursuant to the Servicing Agreements.

         "Required Overcollateralization Amount" : With respect to any
Distribution Date (i) prior to the Stepdown Date, the product of (A) 0.50% and
(B) the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, (ii) on or after the Stepdown Date provided a Trigger Event is not in
effect, the greater of (x) 1.00% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (y) an
amount equal to the product of (A) 0.50% and (B) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date, and (iii) on or after the Stepdown
Date and a Trigger Event is in effect, the Required Overcollateralization Amount
for the immediately preceding Distribution Date.

         "Reserve Fund": A fund created pursuant to Section 3.24 which shall be
an asset of the Trust Fund but which shall not be an asset of any Trust REMIC.

         "Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Securities Administrator determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the one-month U.S. dollar lending rates which New
York City banks selected by the Securities Administrator, after consultation
with the Depositor, 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 Securities Administrator can determine no such
arithmetic mean, the lowest one-month U.S. dollar lending rate which New York
City banks selected by the Securities Administrator are quoting on such Interest
Determination Date to leading European banks.

         "Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Fannie Mae eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.

         "Residual Certificate": Any one of the Class R Certificates.

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


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<PAGE>


         "Responsible Officer": When used with respect to the Trustee, any
officer of the Trustee having direct responsibility for the administration of
this Agreement and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

         "Rule 144A": As defined in Section 6.01(c).

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

         "Scheduled Principal Balance": With respect to any Mortgage Loan: (a)
as of the Cut-off Date, the outstanding principal balance of such Mortgage Loan
as of such date, net of the principal portion of all unpaid Monthly Payments, if
any, due on or before such date; (b) as of any Due Date subsequent to the
Cut-off Date up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such Mortgage Loan, the Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the Cut-off Date, whether or not received, (ii) all Principal
Prepayments received before such Due Date but after the Cut-off Date, (iii) the
principal portion of all Liquidation Proceeds and Insurance Proceeds received
before such Due Date but after the Cut-off Date, net of any portion thereof that
represents principal due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) on a Due Date occurring on or before the
date on which such proceeds were received and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation occurring before such
Due Date, but only to the extent such Realized Loss represents a reduction in
the portion of principal of such Mortgage Loan not yet due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With respect to any REO Property: (a) as of any Due Date subsequent to the date
of its acquisition on behalf of the Trust Fund up to and including the Due Date
in the calendar month in which a Liquidation Event occurs with respect to such
REO Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of REO Property for all previously
ended calendar months; and (b) as of any Due Date subsequent to the occurrence
of a Liquidation Event with respect to such REO Property, zero.

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

         "Securities Administrator": As of the Closing Date, Wells Fargo Bank,
N.A. and thereafter, its respective successors in interest that meet the
qualifications of this Agreement. The Securities Administrator and the Master
Servicer shall at all times be the same Person.

         "Seller": DB Structured Products, Inc. or its successor in interest, in
its capacity as seller under the Mortgage Loan Purchase Agreement.

         "Senior Interest Distribution Amount": With respect to any Distribution
Date, an amount equal to the sum of (i) the Interest Distribution Amount for
such Distribution Date for the Class A Certificates and (ii) the Interest Carry
Forward Amount, if any, for such Distribution Date for the Class A Certificates.


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<PAGE>


         "Servicer": Wells Fargo Bank, N.A. or any successor thereto appointed
hereunder in connection with the servicing and administration of the Mortgage
Loans.

         "Servicer Event of Default": One or more of the events described in
Section 8.01(a).

         "Servicer Remittance Date": With respect to any Distribution Date,
three Business Days immediately preceding the related Distribution Date.

         "Servicer Report": A report (substantially in the form of Schedule 5
hereto) or otherwise in form and substance acceptable to the Master Servicer and
Securities Administrator on an electronic data file or tape prepared by the
Servicer pursuant to Section 5.03(a) of this Agreement with such additions,
deletions and modifications as agreed to by the Master Servicer, the Securities
Administrator and the Servicer.

         "Servicing Advances": The customary and reasonable "out-of-pocket"
costs and expenses incurred prior to, or on or after, the Cut-off Date by the
Servicer in connection with a default, delinquency or other unanticipated event
by the Servicer in the performance of its servicing obligations, including, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
but not limited to foreclosures, in respect of a particular Mortgage Loan,
including any expenses incurred in relation to any such proceedings that result
from the Mortgage Loan being registered on the MERS(R) System, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Section
3.01, Section 3.07, Section 3.11, Section 3.13 and Section 3.21 of this
Agreement. Servicing Advances also include any reasonable "out-of-pocket" cost
and expenses (including legal fees) incurred by the Servicer in connection with
executing and recording instruments of satisfaction, deeds of reconveyance or
Assignments to the extent not recovered from the Mortgagor or otherwise payable
under this Agreement. The Servicer shall not be required to make any
Nonrecoverable Servicing Advances.

         "Servicing Agreement": The Ocwen Servicing Agreement, Option One
Servicing Agreement or People's Choice Servicing Agreement, as applicable.

         "Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one-twelfth of the product of the Servicing
Fee Rate (or the Wells Fargo Servicing Fee Rate for so long as Wells Fargo acts
as the Servicer) multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month. The Servicing Fee is
payable solely from collections of interest on the Mortgage Loans.

         "Servicing Fee Rate": 0.50% per annum.

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

         "Servicing Transfer Date": December 1, 2004.


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<PAGE>


         "Single Certificate": With respect to any Class of Certificates (other
than the Residual Certificates), a hypothetical Certificate of such Class
evidencing a Percentage Interest for such Class corresponding to an initial
Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.

         "Startup Day": With respect to each Trust REMIC, the day designated as
such pursuant to Section 11.01(b) hereof.

         "Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the Scheduled Principal Balance of such Mortgage Loan
as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or advanced by
the Servicer, a successor to the Servicer or the related Interim Servicer and
distributed pursuant to Section 5.01 of this Agreement on or before such date of
determination, (ii) all Principal Prepayments received after the Cut-off Date,
to the extent distributed pursuant to Section 5.01 of this Agreement on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the Servicer or the related Interim Servicer as recoveries
of principal in accordance with the provisions of Section 3.13 of this Agreement
or pursuant to the related Servicing Agreement, to the extent distributed
pursuant to Section 5.01 of this Agreement on or before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Prepayment Period
for the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Servicer, a successor to the Servicer or the related Interim
Servicer and distributed pursuant to Section 5.01 of this Agreement, on or
before such date of determination and (ii) the aggregate amount of REO Principal
Amortization in respect of such REO Property for all previously ended calendar
months, to the extent distributed pursuant to Section 4.01 of this Agreement on
or before such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such REO Property would be
distributed, zero.

         "Stepdown Date": The earlier to occur of (i) the later to occur of (a)
the Distribution Date occurring in November 2007 and (b) the first Distribution
Date on which the Credit Enhancement Percentage (calculated for this purpose
only after taking into account distributions of principal on the Mortgage Loans
but prior to any distribution of the Principal Distribution Amount to the
Certificates then entitled to distributions of principal on such


                                       64
<PAGE>


Distribution Date) is equal to or greater than 38.50% and (ii) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero.

         "Subordinate Certificates" : Collectively, the Mezzanine Certificates,
the Class B Certificates and the Class CE-1 Certificates.

         "Subsequent Recoveries": As of any Distribution Date, amounts received
during the related Prepayment Period by the Servicer or the related Interim
Servicer specifically related to a defaulted Mortgage Loan or disposition of an
REO Property prior to the related Prepayment Period that resulted in a Realized
Loss, after the liquidation or disposition of such defaulted Mortgage Loan.

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

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

         "Substitution Shortfall Amount": As defined in Section 2.03.

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

         "Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).

         "Termination Price": As defined in Section 10.01.

         "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.

         "Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.

         "Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.

         "Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if either (x) the Delinquency Percentage exceeds 40.00% of the
Credit Enhancement Percentage with respect to such Distribution Date or (y) the
aggregate amount of Realized Losses incurred since the Cut-off Date through the
last day of the related Due Period divided by the aggregate


                                       65
<PAGE>


principal balance of the Mortgage Loans as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:


DISTRIBUTION DATE            PERCENTAGE
-----------------            ----------
November 2007 to             3.50%, plus 1/12 of 1.75% for each month thereafter
October 2008
November 2008 to             5.25%, plus 1/12 of 1.50% for each month thereafter
October 2009
November 2009 to             6.75%, plus 1/12 of 0.25% for each month thereafter
October 2010
November 2010 and            7.00%
thereafter


         "Trust": ACE Securities Corp., Home Equity Loan Trust, Series 2004-HE3,
the trust created hereunder.

         "Trust Fund": Collectively, all of the assets of REMIC I, REMIC II and
the Reserve Fund and any amounts on deposit therein and any proceeds thereof and
the Cap Contracts.

         "Trust REMIC": REMIC I or REMIC II.

         "Trustee": HSBC Bank USA, National Association a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.

         "Uncertificated Balance": The amount of the REMIC I Regular Interests
outstanding as of any date of determination. As of the Closing Date, the
Uncertificated Balance of each REMIC I Regular Interest shall equal the amount
set forth in the Preliminary Statement hereto as its initial uncertificated
balance. On each Distribution Date, the Uncertificated Balance of the REMIC I
Regular Interest shall be reduced by all distributions of principal made on such
REMIC I Regular Interest on such Distribution Date pursuant to Section 5.01 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 5.04 and the
Uncertificated Balance of REMIC I Regular Interest I-LTZZ shall be increased by
interest deferrals as provided in Section 5.01(a)(1)(i). The Uncertificated
Balance of each REMIC I Regular Interest shall never be less than zero.

         "Uncertificated Interest": With respect to any REMIC I Regular Interest
for any Distribution Date, one month's interest at the REMIC I Remittance Rate
applicable to such REMIC I Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of the REMIC I Regular Interests shall
accrue on the basis of a 360-day year consisting of twelve 30-day months.
Uncertificated Interest with respect to each Distribution Date, as to any REMIC
I Regular Interest, shall be reduced by an amount equal to the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.22 or Section 4.18 of
this Agreement or pursuant to the related Servicing Agreement and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any allocated, in each
case, to such REMIC I Regular Interest or REMIC I Regular Interest pursuant to
Section 1.02. In addition, Uncertificated Interest with respect to each
Distribution Date, as to any Uncertificated REMIC Regular Interest, shall be
reduced by Realized Losses, if any,


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<PAGE>


allocated to such Uncertificated REMIC Regular Interest pursuant to Section 1.02
and Section 5.04.

         "Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.11.

         "United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof (except, in the
case of a partnership, to the extent provided in regulations) provided that, for
purposes solely of the restrictions on the transfer of any Class R Certificate,
no partnership or other entity treated as a partnership for United States
federal income tax purposes shall be treated as a United States Person unless
all persons that own an interest in such partnership either directly or through
any entity that is not a corporation for United States federal income tax
purposes are required to be United States Persons, or an estate whose income is
subject to United States federal income tax regardless of its source, or a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, a trust which was in
existence on August 20, 1996 (other than a trust treated as owned by the grantor
under subpart E of part I of subchapter J of chapter I of the Code), and which
was treated as a United States person on August 20, 1996 may elect to continue
to be treated as a United States person notwithstanding the previous sentence.
The term "United States" shall have the meaning set forth in Section 7701 of the
Code.

         "Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
related Originator of the Mortgage Loan at the time of origination of the
Mortgage Loan by an appraiser who met the minimum requirements of Fannie Mae and
Freddie Mac and (b) the value thereof as determined by a review appraisal
conducted by the related Originator of the Mortgage Loan in accordance with the
related Originator's underwriting guidelines, and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the related Originator of the Mortgage
Loan of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by an appraiser who met the minimum requirements of
Fannie Mae and Freddie Mac and (2) the value thereof as determined by a review
appraisal conducted by the related Originator of the Mortgage Loan in accordance
with the related Originator's underwriting guidelines, and (B) in the case of a
Mortgage Loan originated in connection with a "lease-option purchase," such
value of the Mortgaged Property is based on the lower of the value determined by
an appraisal made for the Originator of such Mortgage Loan at the time of
origination or the sale price of such Mortgaged Property if the "lease option
purchase price" was set less than 12 months prior to origination, and is based
on the value determined by an appraisal made for the related Originator of such
Mortgage Loan at the time of origination if the "lease option purchase price"
was set 12 months or more prior to origination.

         "Verification Report": As defined in Section 4.19.


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<PAGE>


         "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any such Certificate. With respect to any
date of determination, 98% of all Voting Rights will be allocated among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class
CE-1 Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated among the holders of the Class P Certificates and 1% of all Voting
Rights will be allocated among the holders of the Class R Certificates. The
Voting Rights allocated to each Class of Certificate shall be allocated among
Holders of each such Class in accordance with their respective Percentage
Interests as of the most recent Record Date.

         "Wells Fargo": Wells Fargo Bank, N.A. or any successor thereto.

         "Wells Fargo Servicing Fee Rate": 0.185%.

         SECTION 1.02. Allocation of Certain Interest Shortfalls.

         For purposes of calculating the amount of Accrued Certificate Interest
and the amount of the Interest Distribution Amount for the Class A Certificates,
the Mezzanine Certificates, the Class B Certificates and the Class CE-1
Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
Servicer pursuant to Section 3.22 of this Agreement, by the Master Servicer
pursuant to Section 4.18 of this Agreement or by the related Interim Servicer
pursuant to the applicable Servicing Agreement) and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to the Class CE-1 Certificates, second, to the Class B
Certificates, third, to the Class M-11 Certificates, fourth, to the Class M-10
Certificates, fifth, to the Class M-9 Certificates, sixth, to the Class M-8
Certificates, seventh, to the Class M-7 Certificates, eighth, to the Class M-6
Certificates, ninth, to the Class M-5 Certificates, tenth, to the Class M-4
Certificates, eleventh, to the Class M-3 Certificates, twelfth, to the Class M-2
Certificates, thirteenth, to the Class M-1 Certificates and fourteenth, to the
Class A Certificates, on a PRO RATA basis, in each case based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Certificate Principal Balance or Notional Amount, as
applicable, of each such Certificate and (2) the aggregate amount of any
Realized Losses allocated to the Class B Certificates, the Mezzanine
Certificates and Net WAC Rate Carryover Amounts paid to the Class A
Certificates, the Mezzanine Certificates and the Class B Certificates incurred
for any Distribution Date shall be allocated to the Class CE-1 Certificates on a
PRO RATA basis based on, and to the extent of, one month's interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount thereof, as applicable.

                  For purposes of calculating the amount of Uncertificated
         Interest for the REMIC I Regular Interests for any Distribution Date:

                  (A)      The REMIC I Marker Allocation Percentage of the
         aggregate amount of any Prepayment Interest Shortfalls (to the extent
         not covered by payments by the Servicer pursuant to Section 3.22 of
         this Agreement, the Master Servicer pursuant to Section 4.18 or by the
         related Interim Servicer pursuant to the applicable Servicing
         Agreement) and the REMIC I Marker Allocation Percentage of any Relief
         Act Interest Shortfalls incurred in respect of the Mortgage Loans for
         any Distribution Date shall be allocated among REMIC I


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<PAGE>


         Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1A, REMIC I
         Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
         Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I
         Regular Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I
         Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
         Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I
         Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I
         Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I
         Regular Interest I-LTM10, REMIC I Regular Interest I-LTM11, REMIC I
         Regular Interest I-LTB and REMIC I Regular Interest I-LTZZ PRO RATA
         based on, and to the extent of, one month's interest at the then
         applicable respective REMIC I Remittance Rate on the respective
         Uncertificated Balance of each such REMIC I Regular Interest; and

                  (B)      The REMIC I Sub WAC Allocation Percentage of the
         aggregate amount of any Prepayment Interest Shortfalls (to the extent
         not covered by payments by the Servicer pursuant to Section 3.22 of
         this Agreement, by the Master Servicer pursuant to Section 4.18 of this
         Agreement or by the related Interim Servicer pursuant to the applicable
         Servicing Agreement) and the REMIC I Sub WAC Allocation Percentage of
         any Relief Act Interest Shortfalls incurred in respect of the Mortgage
         Loans for any Distribution Date shall be allocated first, to
         Uncertificated Interest payable to REMIC I Regular Interest I-LT1SUB,
         REMIC I Regular Interest I-LT1GRP, REMIC I Regular Interest I-LT2SUB,
         REMIC I Regular Interest I-LT2GRP and REMIC I Regular Interest I-LTXX,
         PRO RATA based on, and to the extent of, one month's interest at the
         then applicable respective REMIC I Remittance Rate on the respective
         Uncertificated Balance of each such REMIC I Regular Interest.


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                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;

                        ORIGINAL ISSUANCE OF CERTIFICATES

         SECTION 2.01. Conveyance of the Mortgage Loans.

         The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee, on
behalf of the Trust, without recourse, for the benefit of the
Certificateholders, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement (including, without
limitation the right to enforce the obligations of the other parties thereto
thereunder), and all other assets included or to be included in REMIC I. Such
assignment includes all interest and principal received by the Depositor, the
Servicer or the Interim Servicers on or with respect to the Mortgage Loans
(other than payments of principal and interest due on such Mortgage Loans on or
before the Cut-off Date). The Depositor herewith delivers to (a) the Trustee and
the Servicer, an executed copy of the Mortgage Loan Purchase Agreement and (b)
to the Master Servicer and the Trustee, an executed copy of each Assignment
Agreement.

         In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement the documents with respect to each Mortgage Loan as described under
Section 2 of the Custodial Agreement (the "Mortgage Loan Documents"). In
connection with such delivery and as further described in the Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and deliver to the Trustee, the Depositor, the Servicer and the Seller
certifications (in the forms attached to the Custodial Agreement) with respect
to such review with exceptions noted thereon. In addition, under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan Documents for the related Mortgage Loans after the delivery
thereof by the Depositor to the Custodian as more particularly set forth
therein.

         Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files, including,
but not limited to certain insurance policies and documents contemplated by
Section 4.11, and preparation and delivery of the certifications shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.

         The Depositor shall deliver or cause the related Originator to deliver
to the Servicer copies of all trailing documents required to be included in the
Mortgage File at the same time the originals or certified copies thereof are
delivered to the Trustee or Custodian, such documents including the mortgagee
policy of title insurance and any Mortgage Loan Documents upon return from the
recording office. The Servicer shall not be responsible for any custodian fees
or other costs incurred in obtaining such documents and the Depositor shall
cause the Servicer to be reimbursed for any such costs the Servicer may incur in
connection with performing its obligations under this Agreement.


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<PAGE>


         The Mortgage Loans permitted by the terms of this Agreement to be
included in the Trust are limited to (i) Mortgage Loans (which the Depositor
acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among
other representations and warranties, a representation and warranty of the
Seller that no Mortgage Loan is a "High-Cost Home Loan" as defined in the New
Jersey Home Ownership Act effective November 27, 2003 or as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004) and (ii) Qualified
Substitute Mortgage Loans (which, by definition as set forth herein and referred
to in the Mortgage Loan Purchase Agreement, are required to conform to, among
other representations and warranties, the representation and warranty of the
Seller that no Qualified Substitute Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Act effective November 27, 2003 or as
defined in the New Mexico Home Loan Protection Act effective January 1, 2004.
The Depositor and the Trustee on behalf of the Trust understand and agree that
it is not intended that any mortgage loan be included in the Trust that is a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003 or as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004.

         SECTION 2.02. Acceptance of REMIC I by Trustee.

         The Trustee acknowledges receipt, subject to the provisions of Section
2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage Loan
Documents and all other assets included in the definition of "REMIC I" under
clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into the
Distribution Account) and declares that it holds (or the Custodian on its behalf
holds) and will hold such documents and the other documents delivered to it
constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.

         SECTION 2.03. Repurchase or Substitution of Mortgage Loans.

         (a)      Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall promptly notify the Seller and the
Servicer of such defect, missing document or breach and request that the Seller
deliver such missing document, cure such defect or breach within 60 days from
the date the Seller was notified of such missing document, defect or breach, and
if the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Trustee shall enforce
the obligations of the Seller under the Mortgage Loan Purchase Agreement to
repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90 days
after the date on which the Seller was notified of such missing document, defect
or breach, if and to the extent that the Seller is obligated to do so under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be remitted to the Servicer for deposit in the Collection
Account and the Trustee, upon receipt of written certification from the Servicer
of such deposit, shall release or cause the Custodian (upon receipt of a request
for release in the form attached to the Custodial Agreement) to release to the
Seller the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case


                                       71
<PAGE>


without recourse, representation or warranty, as the Seller shall furnish to it
and as shall be necessary to vest in the Seller any Mortgage Loan released
pursuant hereto, and the Trustee shall not have any further responsibility with
regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as
provided above, if so provided in the Mortgage Loan Purchase Agreement, the
Seller may cause such Mortgage Loan to be removed from REMIC I (in which case it
shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.03(b). It is understood and agreed that the obligation of the
Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to
which a document is missing, a material defect in a constituent document exists
or as to which such a breach has occurred and is continuing shall constitute the
sole remedy respecting such omission, defect or breach available to the Trustee
and the Certificateholders.

         In addition, promptly upon the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of the representation or
covenant of the Seller set forth in Section 5(xiv) of the Mortgage Loan Purchase
Agreement which materially and adversely affects the interests of the Holders of
the Class P Certificates in any Prepayment Charge, the Servicer shall promptly
notify the Seller and the Trustee of such breach. The Trustee shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to remedy
such breach to the extent and in the manner set forth in the Mortgage Loan
Purchase Agreement.

         (b)      Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the date which is two years after the Startup Day for REMIC I.

         As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller delivering to the Trustee or the Custodian on behalf of the
Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2 of the Custodial Agreement, as applicable, together with an Officers'
Certificate providing that each such Qualified Substitute Mortgage Loan
satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Custodian on behalf of the Trustee shall acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents and deliver to the Depositor, the Trustee and the
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, an
initial certification pursuant to the Custodial Agreement, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee
and the Servicer a final certification pursuant to the Custodial Agreement with
respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable
exceptions noted thereon. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution are not part of REMIC I
and will be retained by the Seller. For the month of substitution, distributions
to Certificateholders will reflect the Monthly Payment due on such Deleted
Mortgage Loan on or before the Due Date in the month of substitution, and the
Seller shall thereafter be entitled to retain all amounts subsequently received
in respect of such Deleted Mortgage Loan. The Depositor shall give or cause to
be given written notice to the Certificateholders that such substitution has
taken place, shall amend the Mortgage Loan Schedule to reflect the removal of


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<PAGE>


such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to the Trustee and the Servicer. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Trust Fund and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including all applicable
representations and warranties thereof included herein or in the Mortgage Loan
Purchase Agreement.

         For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (the "Substitution Shortfall Amount"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate of, as to each such Qualified Substitute Mortgage Loan, the
Scheduled Principal Balance thereof as of the date of substitution, together
with one month's interest on such Scheduled Principal Balance at the applicable
Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances
(including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances)
related thereto. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Shortfall Amount, if any, and the Trustee or
the Custodian on behalf of the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans, upon receipt of a request for release in the
form attached to the Custodial Agreement and certification by the Servicer of
such deposit, shall release to the Seller the related Mortgage File or Files and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.

         In addition, the Seller shall obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on any Trust REMIC, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code, or (b) any Trust REMIC to fail to qualify as a
REMIC at any time that any Certificate is outstanding.

         (c)      Upon discovery by the Depositor, the Seller, the Servicer or
the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall within two Business Days give written notice thereof to the other
parties. In connection therewith, the Seller shall repurchase or substitute one
or more Qualified Substitute Mortgage Loans for the affected Mortgage Loan
within 90 days of the earlier of discovery or receipt of such notice with
respect to such affected Mortgage Loan. Such repurchase or substitution shall be
made by (i) the Seller if the affected Mortgage Loan's status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Seller under the Mortgage Loan Purchase Agreement or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of no representation or warranty. Any such repurchase or substitution
shall be made in the same manner as set forth in Section 2.03(a). The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty.


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<PAGE>


         (d)      With respect to a breach of the representations made pursuant
to Section 5(xiv) of the Mortgage Loan Purchase Agreement that materially and
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Seller shall be required to take the actions set forth
in this Section 2.03.

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

         SECTION 2.04. Representations and Warranties of the Master Servicer.

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

                  (i)      The Master Servicer is a national banking association
         duly formed, validly existing and in good standing under the laws of
         the United States of America and is duly authorized and qualified to
         transact any and all business contemplated by this Agreement to be
         conducted by the Master Servicer;

                  (ii)     The Master Servicer has the full power and authority
         to conduct its business as presently conducted by it and to execute,
         deliver and perform, and to enter into and consummate, all transactions
         contemplated by this Agreement. The Master Servicer has duly authorized
         the execution, delivery and performance of this Agreement, has duly
         executed and delivered this Agreement, and this Agreement, assuming due
         authorization, execution and delivery by the other parties hereto,
         constitutes a legal, valid and binding obligation of the Master
         Servicer, enforceable against it in accordance with its terms except as
         the enforceability thereof may be limited by bankruptcy, insolvency,
         reorganization or similar laws affecting the enforcement of creditors'
         rights generally and by general principles of equity;

                  (iii)    The execution and delivery of this Agreement by the
         Master Servicer, the consummation by the Master Servicer of any other
         of the transactions herein contemplated, and the fulfillment of or
         compliance with the terms hereof are in the ordinary course of business
         of the Master Servicer and will not (A) result in a breach of any term
         or provision of charter and by-laws of the Master Servicer or (B)
         conflict with, result in a breach, violation or acceleration of, or
         result in a default under, the terms of any other material agreement or
         instrument to which the Master Servicer is a party or by which it may
         be bound, or any statute, order or regulation applicable to the Master
         Servicer of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over the Master Servicer; and the
         Master Servicer is not a party to, bound by, or in breach or violation
         of any indenture or other agreement or instrument, or subject to or in
         violation of any statute, order or regulation of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over it, which materially and adversely affects or, to the Master
         Servicer's knowledge, would in the future materially and adversely
         affect, (x) the ability of the Master Servicer to perform its


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<PAGE>


         obligations under this Agreement or (y) the business, operations,
         financial condition, properties or assets of the Master Servicer taken
         as a whole;

                  (iv)     The Master Servicer does not believe, nor does it
         have any reason or cause to believe, that it cannot perform each and
         every covenant made by it and contained in this Agreement;

                  (v)      No litigation is pending against the Master Servicer
         that would materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of the Master Servicer
         to perform any of its other obligations hereunder in accordance with
         the terms hereof,

                  (vi)     There are no actions or proceedings against, or
         investigations known to it of, the Master Servicer before any court,
         administrative or other tribunal (A) that might prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of the
         transactions contemplated by this Agreement or (C) that might prohibit
         or materially and adversely affect the performance by the Master
         Servicer of its obligations under, or validity or enforceability of,
         this Agreement; and

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

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.04 shall survive the resignation or
termination of the parties hereto and the termination of this Agreement and
shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders.

         SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.

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

                  (i)      The Servicer is a national banking association duly
         formed, validly existing and in good standing under the laws of the
         United States and is duly authorized and qualified to transact any and
         all business contemplated by this Agreement to be conducted by the
         Servicer in any state in which a Mortgaged Property is located or is
         otherwise not required under applicable law to effect such
         qualification and, in any event, is in compliance with the doing
         business laws of any such State, to the extent necessary to ensure its
         ability to enforce each Mortgage Loan and to service the Mortgage Loans
         in accordance with the terms of this Agreement;

                  (ii)     The Servicer has the full power and authority to
         conduct its business as presently conducted by it and to execute,
         deliver and perform, and to enter


                                       75
<PAGE>


         into and consummate, all transactions contemplated by this Agreement.
         The Servicer has duly authorized the execution, delivery and
         performance of this Agreement, has duly executed and delivered this
         Agreement, and this Agreement, assuming due authorization, execution
         and delivery by the other parties hereto, constitutes a legal, valid
         and binding obligation of the Servicer, enforceable against it in
         accordance with its terms, except as the enforceability thereof may be
         limited by insolvency, liquidation, conservatorship and other similar
         laws administered by the FDIC affecting the enforcement of contract
         obligations of insured banks;

                  (iii)    The execution and delivery of this Agreement by the
         Servicer, the servicing of the Mortgage Loans by the Servicer
         hereunder, the consummation by the Servicer of any other of the
         transactions herein contemplated, and the fulfillment of or compliance
         with the terms hereof are in the ordinary course of business of the
         Servicer and will not (A) result in a breach of any term or provision
         of the charter or by-laws of the Servicer or (B) conflict with, result
         in a breach, violation or acceleration of, or result in a default
         under, the terms of any other material agreement or instrument to which
         the Servicer is a party or by which it may be bound, or any statute,
         order or regulation applicable to the Servicer of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over the Servicer; and the Servicer is not a party to, bound by, or in
         breach or violation of any indenture or other agreement or instrument,
         or subject to or in violation of any statute, order or regulation of
         any court, regulatory body, administrative agency or governmental body
         having jurisdiction over it, which materially and adversely affects or,
         to the Servicer's knowledge, would in the future materially and
         adversely affect, (x) the ability of the Servicer to perform its
         obligations under this Agreement, (y) the business, operations,
         financial condition, properties or assets of the Servicer taken as a
         whole or (z) the legality, validity or enforceability of this
         Agreement;

                  (iv)     The Servicer does not believe, nor does it have any
         reason or cause to believe, that it cannot perform each and every
         covenant made by it and contained in this Agreement;

                  (v)      No litigation is pending against the Servicer that
         would materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of the Servicer to
         service the Mortgage Loans or to perform any of its other obligations
         hereunder in accordance with the terms hereof;

                  (vi)     There are no actions or proceedings against, or
         investigations known to it of, the Servicer before any court,
         administrative or other tribunal (A) that might prohibit its entering
         into this Agreement, (B) seeking to prevent the consummation of the
         transactions contemplated by this Agreement or (C) that might prohibit
         or materially and adversely affect the performance by the Servicer of
         its obligations under, or the validity or enforceability of, this
         Agreement;

                  (vii)    No consent, approval, authorization or order of any
         court or governmental agency or body is required for the execution,
         delivery and performance by the Servicer of, or compliance by the
         Servicer with, this Agreement or the consummation by it of the
         transactions contemplated by this Agreement, except for such consents,


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<PAGE>


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

                  (viii)   Reserved.

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive the resignation or
termination of the parties hereto, the termination of this Agreement and the
delivery of the Mortgage Files to the Custodian and shall inure to the benefit
of the Trustee, the Master Servicer, the Securities Administrator, the Depositor
and the Certificateholders. Upon discovery by any such Person or the Servicer of
a breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Charge or the interests therein of the Certificateholders, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the Trustee. Subject to Section 8.01,
unless such breach shall not be susceptible of cure within 90 days, the
obligation of the Servicer set forth in Section 2.03(e) to cure breaches shall
constitute the sole remedy against the Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.

         SECTION 2.06. Issuance of the REMIC I Regular Interests and the Class
R-I Interest.

         The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to the Custodian on its behalf of the Mortgage Loan Documents,
subject to the provisions of Section 2.01 and Section 2.02 hereof and Section 2
of the Custodial Agreement, together with the assignment to it of all other
assets included in REMIC I, the receipt of which is hereby acknowledged. The
interests evidenced by the Class R-I Interest, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I. The
rights of the Holders of the Class R-I Interest and REMIC I to receive
distributions from the proceeds of REMIC I in respect of the Class R-I Interest
and the REMIC I Regular Interests, respectively, and all ownership interests
evidenced or constituted by the Class R-I Interest and the REMIC I Regular
Interests, shall be as set forth in this Agreement.

         SECTION 2.07. Conveyance of the REMIC I Regular Interests; Acceptance
of REMIC I by the Trustee.

         The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Class R-II Interest and
REMIC II (as holder of the REMIC I Regular Interests). The Trustee acknowledges
receipt of the REMIC I Regular Interests and declares that it holds and will
hold the same in trust for the exclusive use and benefit of all present and
future Holders of the Class R-II Interest and REMIC II (as holder of the REMIC I
Regular Interests). The rights of the Holder of the Class R-II Interest and
REMIC II (as holder of the REMIC I Regular Interests) to receive distributions
from the proceeds of REMIC II in respect of the Class R-II Interest and Regular
Certificate, respectively, and all ownership interests evidenced or constituted
by the Class R-II Interest and the Regular Certificates, shall be as set forth
in this Agreement. The Class


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R-II Interest and the Regular Certificates shall constitute the entire
beneficial ownership interest in REMIC II.

         SECTION 2.08. Issuance of Residual Certificates.

         The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Securities Administrator has executed and authenticated and the Trustee has
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-I Interest and the Class R-II Interest.

         SECTION 2.09. Establishment of the Trust.

         The Depositor does hereby establish, pursuant to the further provisions
of this Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "ACE Securities Corp., Home Equity Loan Trust, Series
2004-HE3" and does hereby appoint HSBC Bank USA, National Association as Trustee
in accordance with the provisions of this Agreement.


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                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                         OF THE MORTGAGE LOANS; ACCOUNTS

         SECTION 3.01. The Servicer to Act as a Servicer.

         From and after the Closing Date until the day preceding the Servicing
Transfer Date, the Mortgage Loans will be serviced and administered by the
Interim Servicers pursuant to the Servicing Agreements and the Servicer will
have no responsibility to service and administer the Mortgage Loans during this
period. On and after the Servicing Transfer Date, the Servicer shall service and
administer the Mortgage Loans on behalf of the Trust Fund and in the best
interests of and for the benefit of the Certificateholders (as determined by the
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the respective Mortgage Loans and all applicable law and
regulations and, to the extent consistent with such terms, in the same manner in
which it services and administers similar mortgage loans for its own portfolio,
giving due consideration to customary and usual standards of practice of prudent
mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:

                  (i)      any relationship that the Servicer or any Affiliate
         of the Servicer may have with the related Mortgagor;

                  (ii)     the ownership of any Certificate by the Servicer or
         any Affiliate of the Servicer;

                  (iii)    the Servicer's obligation to make P&I Advances or
         Servicing Advances; or

                  (iv)     the Servicer's right to receive compensation for its
         services hereunder.

                  (v)      To the extent consistent with the foregoing, the
         Servicer shall also seek to maximize the timely and complete recovery
         of principal and interest on the Mortgage Notes related to the Mortgage
         Loans and shall waive (or permit a Sub-Servicer to waive) a Prepayment
         Charge only under the following circumstances: (i) such waiver is
         standard and customary in servicing similar Mortgage Loans and such
         waiver is related to a default or reasonably foreseeable default and
         would, in the reasonable judgment of the Servicer, maximize recovery of
         total proceeds taking into account the value of such Prepayment Charge
         and the related Mortgage Loan and, if such waiver is made in connection
         with a refinancing of the related the Mortgage Loan, such refinancing
         is related to a default or a reasonably foreseeable default, (ii) such
         Prepayment Charge is unenforceable in accordance with applicable law or
         the collection of such related Prepayment Charge would otherwise
         violate applicable law or (iii) the collection of such Prepayment
         Charge would be considered "predatory" pursuant to written guidance
         published or issued by any applicable federal, state or local
         regulatory authority acting in its official capacity and having
         jurisdiction over such matters. If the Servicer waives any Prepayment
         Charge other than pursuant to the standard set forth in this Section
         3.01, the Servicer will pay the amount of such waived Prepayment
         Charge, from its own funds without any right of reimbursement, for the
         benefit of the Holders of the Class P


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         Certificates, by depositing such amount into the Collection Account
         within 90 days of the earlier of discovery by the Servicer or receipt
         of notice by the Servicer of such breach. Furthermore, notwithstanding
         any other provisions of this Agreement, any payments made by the
         Servicer in respect of any waived Prepayment Charges pursuant to this
         paragraph shall be deemed to be paid outside of the Trust Fund.

         Notwithstanding any provision in this Agreement to the contrary, in the
event the Prepayment Charge payable under the terms of the Mortgage Note related
to a Mortgage Loan is less than the amount of the Prepayment Charge set forth in
the Prepayment Charge Schedule or other information provided to the Servicer,
the Servicer shall not have any liability or obligation with respect to such
difference, and in addition shall not have any liability or obligation to pay
the amount of any uncollected Prepayment Charge if the failure to collect such
amount is the direct result of inaccurate or incomplete information on the
Prepayment Charge Schedule.

         Subject only to the above-described servicing standards (the "Accepted
Servicing Practices") and the terms of this Agreement and of the respective
Mortgage Loans, the Servicer shall have full power and authority, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable with the goal of
maximizing proceeds of the Mortgage Loan. Without limiting the generality of the
foregoing, the Servicer in its own name is hereby authorized and empowered by
the Trustee when the Servicer believes it appropriate in its best judgment, to
execute and deliver, on behalf of the Trust Fund, the Certificateholders and the
Trustee or any of them, and upon written notice to the Trustee, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge or subordination, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee, for the benefit of the Trust Fund and the
Certificateholders. The Servicer shall service and administer the Mortgage Loans
in accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.14, the Trustee shall execute, at the written request of
the Servicer, and furnish to the Servicer a power of attorney in the form of
Exhibit D hereto and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder and
furnished to the Trustee by the Servicer, and the Trustee shall not be liable
for the actions of the Servicer under such powers of attorney and shall be
indemnified by the Servicer for any cost, liability or expense incurred by the
Trustee in connection with the Servicer's use or misuse of any such power of
attorney.

         In accordance with Accepted Servicing Practices, the Servicer shall
make or cause to be made Servicing Advances as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties,
which Servicing Advances shall be reimbursable in the first instance from
related collections from the related Mortgagors pursuant to Section 3.07, and
further as provided in Section 3.09; provided, however, the Servicer shall only
make such Servicing Advance if the related Mortgagor has not made such payment
and if the failure to make such Servicing Advance would result in the loss of
the related Mortgaged Property due to a tax sale or foreclosure as result of a
tax lien. Any cost incurred by the Servicer in effecting the payment of taxes
and assessments on a Mortgaged Property shall not, for the purpose of


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calculating the Stated Principal Balance of such Mortgage Loan or distributions
to Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
The parties to this Agreement acknowledge that Servicing Advances shall be
reimbursable pursuant to Section 3.06 of this Agreement, and agree that no
Servicing Advance shall be rejected or disallowed by any party unless it has
been shown that such Servicing Advance was not made in accordance with the terms
of this Agreement.

         Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan and
the Servicer shall not permit any modification with respect to any related
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
principal balance (except for reductions resulting from actual payments of
principal) or change the final maturity date on such related Mortgage Loan
(unless, as provided in Section 3.06, the related Mortgagor is in default with
respect to the related Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) or any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and (B) cause
any Trust REMIC created hereunder to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions
after the startup date" under the REMIC Provisions.

         In the event that the Mortgage Loan Documents relating to any Mortgage
Loan contain provisions requiring the related Mortgagor to arbitrate disputes
(at the option of the Trustee, on behalf of the Trust), the Trustee hereby
authorizes the Servicer to waive the Trustee's right or option to arbitrate
disputes and to send written notice of such waiver to the Mortgagor, although
the Mortgagor may still require arbitration at its option.

         From and after the Servicing Transfer Date, the Servicer will fully
furnish, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company or their successors on a monthly basis.

         SECTION 3.02. Sub-Servicing Agreements Between the Servicer and
Sub-Servicers.

         The Servicer may arrange for the subservicing of any Mortgage Loan by a
Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that such
sub-servicing arrangement and the terms of the related Sub-Servicing Agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Each Sub-Servicer shall
be (i) authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement and (ii) a Freddie Mac or Fannie
Mae approved mortgage servicer. Notwithstanding the provisions of any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Sub-Servicer or reference
to actions taken through the Servicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement


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<PAGE>


without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
Every Sub-Servicing Agreement entered into by the Servicer shall contain a
provision giving the successor Servicer the option to terminate such agreement
in the event a successor Servicer is appointed. All actions of each Sub-Servicer
performed pursuant to the related Sub-Servicing Agreement shall be performed as
an agent of the Servicer with the same force and effect as if performed directly
by the Servicer.

         For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a Sub-Servicer regardless of whether such payments
are remitted by the Sub-Servicer to the Servicer.

         SECTION 3.03. Successor Sub-Servicers.

         Any Sub-Servicing Agreement shall provide that the Servicer shall be
entitled to terminate any Sub-Servicing Agreement and to either itself directly
service the related Mortgage Loans or enter into a Sub-Servicing Agreement with
a successor Sub-Servicer which qualifies under Section 3.02. Any Sub-Servicing
Agreement shall include the provision that such agreement may be immediately
terminated by any successor to the Servicer (which may be the Trustee) without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer (or any successor to the Servicer) shall, for any reason, no longer be
the Servicer of the Mortgage Loans (including termination due to a Servicer
Event of Default).

         SECTION 3.04. No Contractual Relationship Between Sub-Servicer, Trustee
or the Certificateholders.

         Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Master Servicer, Trustee
and the Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 3.05.

         SECTION 3.05. Assumption or Termination of Sub-Servicing Agreement by
Successor Servicer.

         In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
a successor Servicer (which may be the Trustee or the Master Servicer) pursuant
to Section 8.02, it is understood and agreed that the Servicer's rights and
obligations under any Sub-Servicing Agreement then in force between the Servicer
and a Sub-Servicer shall be assumed simultaneously by such successor Servicer
without act or deed on the part of such successor Servicer; provided, however,
that any successor Servicer may terminate the Sub-Servicer.

         The Servicer shall, upon the reasonable request of the Master Servicer,
but at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise


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<PAGE>


use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.

         The Servicing Fee payable to any such successor Servicer shall be
payable from payments received on the Mortgage Loans in the amount and in the
manner set forth in this Agreement.

         SECTION 3.06. Collection of Certain Mortgage Loan Payments.

         The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and Accepted
Servicing Practices, follow such collection procedures as it would follow with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Consistent with the foregoing, the Servicer may in its discretion (i)
waive any late payment charge or, if applicable, penalty interest or (ii) extend
the due dates for the Monthly Payments due on a Mortgage Note for a period of
not greater than 180 days; provided that any extension pursuant to this clause
shall not affect the amortization schedule of any Mortgage Loan for purposes of
any computation hereunder. Notwithstanding the foregoing, in the event that any
Mortgage Loan is in default or, in the judgment of the Servicer, such default is
reasonably foreseeable, the Servicer, consistent with Accepted Servicing
Practices may waive, modify or vary any term of such Mortgage Loan (including
modifications that change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Certificateholders (taking into account any estimated Realized
Loss that might result absent such action).

         SECTION 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.

         To the extent the terms of a Mortgage provide for Escrow Payments, the
Servicer shall establish and maintain one or more accounts (the "Servicing
Accounts"), into which all collections from the Mortgagors (or related advances
from Sub-Servicers) for the payment of taxes, assessments, fire, flood, and
hazard insurance premiums, and comparable items for the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the Servicing
Accounts on a daily basis and in no event later than the second Business Day
after receipt, and retain therein, all Escrow Payments collected on account of
the Mortgage Loans, for the purpose of effecting the timely payment of any such
items as required under the terms of this Agreement. Withdrawals of amounts from
a Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, fire, flood, and hazard insurance premiums, and comparable items;
(ii) reimburse itself out of related collections for any Servicing Advances made
pursuant to Section 3.01 (with respect to taxes and assessments) and Section
3.11 (with respect to fire, flood and hazard insurance); (iii) refund to
Mortgagors any sums as may be determined to be overages; (iv) pay interest, if
required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Servicer's obligations


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<PAGE>


and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. As part of its servicing duties, the Servicer shall
pay to the Mortgagors interest on funds in Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor. Notwithstanding the foregoing, the
Servicer shall not be obligated to collect Escrow Payments if the related
Mortgage Loan does not require such payments but the Servicer shall nevertheless
be obligated to make Servicing Advances as provided in Section 3.01 and Section
3.11. In the event the Servicer shall deposit in the Servicing Accounts any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Servicing Accounts, any provision to the contrary
notwithstanding.

         To the extent that a Mortgage does not provide for Escrow Payments, the
Servicer (i) shall determine whether any such payments are made by the Mortgagor
in a manner and at a time that is necessary to avoid the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien and (ii)
shall ensure that all insurance required to be maintained on the Mortgaged
Property pursuant to this Agreement is maintained. If any such payment has not
been made and the Servicer receives notice of a tax lien with respect to the
Mortgage Loan being imposed, the Servicer shall, promptly and to the extent
required to avoid loss of the Mortgaged Property, advance or cause to be
advanced funds necessary to discharge such lien on the Mortgaged Property unless
the Servicer determines the advance to be nonrecoverable. The Servicer assumes
full responsibility for the payment of all such bills and shall effect payments
of all such bills irrespective of the Mortgagor's faithful performance in the
payment of same or the making of the Escrow Payments and shall make Servicing
Advances to effect such payments subject to its determination of recoverability.

         SECTION 3.08. Collection Account and Distribution Account.

         (a)      On behalf of the Trust Fund, the Servicer shall establish and
maintain one or more "Collection Accounts", held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust Fund, the Servicer
shall deposit or cause to be deposited in the Collection Account on a daily
basis and in no event later than two Business Days after receipt, as and when
received or as otherwise required hereunder, the following payments and
collections received or made by it on or subsequent to the Cut-off Date other
than amounts attributable to a Due Date on or prior to the Cut-off Date:

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

                  (ii)     all payments on account of interest (net of the
         related Servicing Fee and any Prepayment Interest Excess) on each
         Mortgage Loan;

                  (iii)    all Insurance Proceeds and Liquidation Proceeds
         (other than proceeds collected in respect of any particular REO
         Property) and all Subsequent Recoveries;

                  (iv)     any amounts required to be deposited by the Servicer
         pursuant to Section 3.10 in connection with any losses realized on
         Permitted Investments with respect to funds held in the Collection
         Account;


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<PAGE>


                  (v)      any amounts required to be deposited by the Servicer
         pursuant to the second paragraph of Section 3.11(a) in respect of any
         blanket policy deductibles;

                  (vi)     any Purchase Price or Substitution Shortfall Amount
         delivered to the Servicer and all proceeds (net of amounts payable or
         reimbursable to the Servicer, the Master Servicer, the Trustee, the
         Custodian or the Securities Administrator) of Mortgage Loans purchased
         in accordance with Section 2.03, Section 3.13 or Section 10.01; and

                  (vii)    any Prepayment Charges collected by the Servicer in
         connection with the Principal Prepayment of any of the Mortgage Loans
         or amounts required to be deposited by the Servicer in connection with
         a breach of its obligations under Section 2.05.

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

         (b)      On behalf of the Trust Fund, the Securities Administrator
shall establish and maintain one or more accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the Trustee, the Trust
Fund and the Certificateholders. On behalf of the Trust Fund, the Servicer shall
deliver to the Securities Administrator in immediately available funds for
deposit in the Distribution Account on the Servicer Remittance Date, that
portion of the Available Distribution Amount (calculated without regard to the
references in clause (2) of the definition thereof to amounts that may be
withdrawn from the Distribution Account) for the related Distribution Date then
on deposit in the Collection Account and the amount of all Prepayment Charges
collected by the Servicer in connection with the Principal Prepayment of any of
the Mortgage Loans then on deposit in the Collection Account and the amount of
any funds reimbursable to an Advance Financing Person pursuant to Section 3.25.
If the balance on deposit in the Collection Account exceeds $100,000 as of the
commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Servicer shall, on or before 5:00 p.m. New York time
on such Business Day, withdraw from the Collection Account any and all amounts
payable or reimbursable to the Depositor, the Servicer, the Trustee, the Master
Servicer, the Securities Administrator or the Seller pursuant to Section 3.09
and shall pay such amounts to the Persons entitled thereto.

         With respect to any remittance received by the Securities Administrator
on or after the first Business Day following the Business Day on which such
payment was due, the Securities Administrator shall send written notice thereof
to the Servicer. The Servicer shall pay to the Securities Administrator interest
on any such late payment by the Servicer at an annual rate equal to Prime Rate
(as defined in The Wall Street Journal) plus one percentage point, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to the Securities Administrator on the date such
late payment is made and shall cover the period commencing with the day such
payment was due and ending with the


                                       85
<PAGE>


Business Day on which such payment is made, both inclusive. The payment by the
Servicer of any such interest, or the failure of the Securities Administrator to
notify the Servicer of such interest, shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Servicer.

         (c)      Funds in the Collection Account and the Distribution Account
may be invested in Permitted Investments in accordance with the provisions set
forth in Section 3.10. The Servicer shall give notice to the Trustee, the
Securities Administrator and the Master Servicer of the location of the
Collection Account maintained by it when established and prior to any change
thereof. The Securities Administrator shall give notice to the Servicer and the
Depositor of the location of the Distribution Account when established and prior
to any change thereof.

         (d)      Funds held in the Collection Account at any time may be
delivered by the Servicer in immediately available funds to the Securities
Administrator for deposit in the Distribution Account. In the event the Servicer
shall deliver to the Securities Administrator for deposit in the Distribution
Account any amount not required to be deposited therein, it may at any time
request that the Securities Administrator withdraw such amount from the
Distribution Account and remit to it any such amount, any provision herein to
the contrary notwithstanding. In no event shall the Securities Administrator
incur liability as a result of withdrawals from the Distribution Account at the
direction of the Servicer in accordance with the immediately preceding sentence.
In addition, the Servicer shall deliver to the Securities Administrator no later
than the Servicer Remittance Date the amounts set forth in clauses (i) through
(iv) below:

                  (i)      any P&I Advances, as required pursuant to Section
         5.03;

                  (ii)     any amounts required to be deposited pursuant to
         Section 3.21(d) or 3.21(f) in connection with any REO Property;

                  (iii)    any amounts to be paid in connection with a purchase
         of Mortgage Loans and REO Properties pursuant to Section 10.01; and

                  (iv)     any amounts required to be deposited pursuant to
         Section 3.22 in connection with any Prepayment Interest Shortfalls.

         SECTION 3.09. Withdrawals from the Collection Account and Distribution
Account.

         (a)      The Servicer shall, from time to time, make withdrawals from
the Collection Account for any of the following purposes or as described in
Section 5.03:

                  (i)      to remit to the Securities Administrator for deposit
         in the Distribution Account the amounts required to be so remitted
         pursuant to Section 3.08(b) or permitted to be so remitted pursuant to
         the first sentence of Section 3.08(d);

                  (ii)     subject to Section 3.13(d), to reimburse the Servicer
         (including any successor Servicer) for P&I Advances made by it, but
         only to the extent of amounts received which represent Late Collections
         (net of the related Servicing Fees) of Monthly


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<PAGE>


         Payments on Mortgage Loans with respect to which such P&I Advances were
         made in accordance with the provisions of Section 5.03;

                  (iii)    subject to Section 3.13(d), to pay the Servicer any
         unpaid Servicing Fees and reimburse the Servicer any unreimbursed
         Servicing Advances with respect to each Mortgage Loan, but only to the
         extent of any Liquidation Proceeds and Insurance Proceeds received with
         respect to such Mortgage Loan;

                  (iv)     to pay to the Servicer as servicing compensation (in
         addition to the Servicing Fee) on the Servicer Remittance Date any
         interest or investment income earned on funds deposited in the
         Collection Account;

                  (v)      to pay to the Servicer or the Seller, as the case may
         be, with respect to each Mortgage Loan that has previously been
         purchased or replaced pursuant to Section 2.03 or Section 3.13(c) all
         amounts received thereon not included in the Purchase Price or the
         Substitution Shortfall Amount;

                  (vi)     to reimburse the Servicer (including any successor
         Servicer) for

                           (A) any P&I Advance or Servicing Advance previously
                           made by it which the Servicer has determined to be a
                           Nonrecoverable P&I Advance or a Nonrecoverable
                           Servicing Advance in accordance with the provisions
                           of Section 5.03; or

                           (B) any unpaid Servicing Fees to the extent not
                           recoverable from Liquidation Proceeds, Insurance
                           Proceeds or other amounts received with respect to
                           the related Mortgage Loan under Section 3.06(a)(iii);

                  (vii)    to reimburse the Servicer or the Depositor for
         expenses incurred by or reimbursable to the Servicer or the Depositor,
         as the case may be, pursuant to Section 3.01 or Section 7.03;

                  (viii)   to reimburse the Servicer or the Trustee, as the case
         may be, for expenses reasonably incurred in respect of the breach or
         defect giving rise to the purchase obligation under Section 2.03 of
         this Agreement that were included in the Purchase Price of the related
         Mortgage Loan, including any expenses arising out of the enforcement of
         the purchase obligation;

                  (ix)     to pay, or to reimburse the Servicer for advances in
         respect of, expenses incurred in connection with any Mortgage Loan
         pursuant to Section 3.13(b);

                  (x)      to pay to itself any Prepayment Interest Excess on
         the Mortgage Loans to the extent not retained pursuant to Section
         3.08(a)(ii)); and

                  (xi)     to clear and terminate the Collection Account
         pursuant to Section 10.01.


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<PAGE>


         The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x) above.

         (b)      The Securities Administrator shall, from time to time, make
withdrawals from the Distribution Account, for any of the following purposes,
without priority:

                  (i)      to make distributions to Certificateholders in
         accordance with Section 5.01;

                  (ii)     to pay to itself, the Custodian and the Master
         Servicer amounts to which it is entitled pursuant to Section 9.05 or
         any other provision of this Agreement and any Extraordinary Trust Fund
         Expenses;

                  (iii)    to reimburse itself or the Master Servicer pursuant
         to Section 8.02;

                  (iv)     to pay to an Advance Financing Person reimbursements
         for P&I Advances and/or Servicing Advances pursuant to Section 3.25;

                  (v)      to pay any amounts in respect of taxes pursuant to
         Section 11.01(g)(v);

                  (vi)     to pay the Master Servicing Fee to the Master
         Servicer;

                  (vii)    to pay the Credit Risk Management Fee to the Credit
         Risk Manager; and

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

         SECTION 3.10. Investment of Funds in the Investment Accounts.

         (a)      The Servicer may direct, by means of written directions (which
may be standing directions), any depository institution maintaining the
Collection Account to invest the funds in such Collection Account (for purposes
of this Section 3.10, an "Investment Account") in one or more Permitted
Investments bearing interest or sold at a discount, and maturing, unless payable
on demand, (i) no later than the Business Day immediately preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Securities Administrator is the obligor
thereon, and (ii) no later than the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if the Securities
Administrator is the obligor on such Permitted Investment. Amounts in the
Distribution Account may be invested in Permitted Investments as directed in
writing by the Master Servicer and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Securities Administrator is the obligor thereon, and (ii)
no later than the date on which such funds are required to be withdrawn from
such account pursuant to this Agreement, if the Securities


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Administrator is the obligor thereon. All such Permitted Investments shall be
held to maturity, unless payable on demand. Any investment of funds shall be
made in the name of the Trustee (in its capacity as such) or in the name of a
nominee of the Trustee. The Securities Administrator shall be entitled to sole
possession over each such investment in the Distribution Account and, subject to
subsection (b) below, the income thereon, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Securities Administrator or its agent, together with any document of transfer
necessary to transfer title to such investment to the Trustee or its nominee. In
the event amounts on deposit in the Collection Account are at any time invested
in a Permitted Investment payable on demand, the party with investment
discretion over such Investment Account shall:

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

                  (y)      demand payment of all amounts due thereunder promptly
         upon receipt by such party of written notice from the Servicer that
         such Permitted Investment would not constitute a Permitted Investment
         in respect of funds thereafter on deposit in the Investment Account.

         (b)      All income and gain realized from the investment of funds
deposited in the Collection Account, shall be for the benefit of the Servicer
and shall be subject to its withdrawal in accordance with Section 3.09. The
Servicer shall deposit in the Collection Account the amount of any loss incurred
in respect of any such Permitted Investment made with funds in such account
immediately upon realization of such loss. All earnings and gain realized from
the investment of funds deposited in the Distribution Account shall be for the
benefit of the Master Servicer. The Master Servicer shall remit from its own
funds for deposit into the Distribution Account the amount of any loss incurred
on Permitted Investments in the Distribution Account.

         (c)      Except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 9.01 and Section
9.02(a)(v), shall, at the written direction of the Servicer, take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.

         (d)      The Trustee, the Master Servicer or their respective
Affiliates are permitted to receive additional compensation that could be deemed
to be in the Trustee's or the Master Servicer's economic self-interest for (i)
serving as investment adviser, administrator, shareholder servicing agent,
custodian or sub-custodian with respect to certain of the Permitted Investments,
(ii) using Affiliates to effect transactions in certain Permitted Investments
and (iii) effecting transactions in certain Permitted Investments. Such
compensation shall not be considered an amount that is reimbursable or payable
to the Trustee or the Master Servicer pursuant to Section 3.09 or 3.10 or
otherwise payable in respect of Extraordinary Trust Fund Expenses. Such
additional compensation shall not be an expense of the Trust Fund.


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         SECTION 3.11. Maintenance of Hazard Insurance, Errors and Omissions and
Fidelity Coverage and Primary Mortgage Insurance.

         (a)      The terms of each Mortgage Note require the related Mortgagor
to maintain fire, flood and hazard insurance policies. To the extent such
policies are not maintained, the Servicer shall cause to be maintained for each
Mortgaged Property fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is at least equal to the lesser of the current principal balance of such
Mortgage Loan and the amount necessary to compensate fully for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is necessary to
avoid the application of any coinsurance clause contained in the related hazard
insurance policy. The Servicer shall also cause to be maintained fire and hazard
insurance on each REO Property with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements which
are a part of such property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property. The Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with Accepted
Servicing Practices, subject to the terms and conditions of the related Mortgage
and Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.09, if received in respect of a Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section 3.21, if
received in respect of an REO Property. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid principal
balance of the related Mortgage Loan and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).

         In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:VI or better in
Best's Key Rating Guide or otherwise acceptable to Fannie Mae or Freddie Mac
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations to cause fire and
hazard insurance to be maintained on the Mortgaged Properties, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property or REO Property a policy complying with the
first two sentences of this Section 3.11, and there shall have been one or more
losses which would have been covered by such policy, deposit to the Collection
Account from its own funds the amount not otherwise payable under the blanket


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policy because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee, the Trust Fund and the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.

         (b)      The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of its respective obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer, has obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The Servicer shall also maintain a fidelity bond
in the form and amount that would meet the requirements of Fannie Mae or Freddie
Mac, unless the Servicer, has obtained a waiver of such requirements from Fannie
Mae or Freddie Mac. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer, has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such errors
and omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days' prior written notice to the Trustee.

         (c)      The Servicer shall not take any action that would result in
noncoverage under any applicable primary mortgage insurance policy of any loss
which, but for the actions of the Servicer would have been covered thereunder.
The Servicer shall use its best efforts to keep in force and effect any
applicable primary mortgage insurance policy and, to the extent that the related
Mortgage Loan requires the Mortgagor to maintain such insurance, any other
primary mortgage insurance applicable to any Mortgage Loan. Except as required
by applicable law or the related Mortgage Loan Documents, the Servicer shall not
cancel or refuse to renew any such primary mortgage insurance policy that is in
effect at the date of the initial issuance of the related Mortgage Note and is
required to be kept in force hereunder.

         The Servicer agrees to present on behalf of the Trustee and the
Certificateholders claims to the applicable insurer under any primary mortgage
insurance policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any primary mortgage insurance policies
respecting defaulted Mortgage Loans. Pursuant to Section 3.08, any amounts
collected by the Servicer under any primary mortgage insurance policies shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.09. Notwithstanding any provision to the contrary, the Servicer shall not have
any responsibility with respect to a primary mortgage insurance policy unless
the Servicer has been made aware of such policy, as reflected on the Mortgage
Loan Schedule or otherwise and have been provided with adequate information to
administer such policy.

         SECTION 3.12. Enforcement of Due-on-Sale Clauses; Assumption Agreements

         The Servicer shall, to the extent it has knowledge of any conveyance of
any Mortgaged Property by any Mortgagor (whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause, if
any, applicable thereto; provided, however, that the Servicer shall not


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exercise any such rights if prohibited by law from doing so. If the Servicer
reasonably believes that it is unable under applicable law to enforce such
"due-on-sale" clause, or if any of the other conditions set forth in the proviso
to the preceding sentence apply, the Servicer shall enter into an assumption and
modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. The Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the then current underwriting criteria of the Servicer for mortgage
loans similar to the Mortgage Loans. In connection with any assumption or
substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption or substitution of liability agreement
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Servicer shall notify the Trustee (or the
Custodian) that any such substitution or assumption agreement has been completed
by forwarding to the Trustee the executed original of such substitution or
assumption agreement, which document shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.

         Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.12, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

         SECTION 3.13. Realization Upon Defaulted Mortgage Loans.

         (a)      The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.06. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.09 and 3.21.
The foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to expend its own funds toward the restoration of such property
unless it shall determine in its discretion that such restoration will


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increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.

         (b)      Notwithstanding the foregoing provisions of this Section 3.13
or any other provision of this Agreement, with respect to any Mortgage Loan as
to which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trust Fund, the Trustee or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:

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

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

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

         If the Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Sections
3.09(a)(iii) or 3.09(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.


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         (c)      The Servicer shall have the right to purchase from REMIC I any
defaulted Mortgage Loan that is 90 days or more delinquent, which the Servicer
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to the Servicer and the Trustee
prior to purchase), at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Servicer shall furnish and as shall be
necessary to vest in the Servicer title to any Mortgage Loan released pursuant
hereto.

         (d)      Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and P&I Advances,
pursuant to Section 3.09(a)(ii) or (a)(iii); second, to accrued and unpaid
interest on the Mortgage Loan, to the date of the Final Recovery Determination,
or to the Due Date prior to the Distribution Date on which such amounts are to
be distributed if not in connection with a Final Recovery Determination; and
third, as a recovery of principal of the Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer pursuant to Section 3.09(a)(iii). The portion of the recovery allocated
to interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Mortgage Loan shall be applied as follows: first,
to reimburse the Servicer for any related unreimbursed Servicing or P&I Advances
in accordance with Section 3.09(a)(ii) and any other amounts reimbursable to the
Servicer pursuant to Section 3.09, and second, as part of the amounts to be
transferred to the Distribution Account in accordance with Section 3.08(b).

         SECTION 3.14. Trustee to Cooperate; Release of Mortgage Files.

         (a)      Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will promptly
furnish to the Custodian, on behalf of the Trustee, two copies of a request for
release substantially in the form attached to the Custodial Agreement signed by
a Servicing Officer or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Custodian, on
behalf of the Trustee, shall within five (5) Business Days release the related
Mortgage File to the Servicer and the Trustee and Custodian shall have no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, the Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage


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without recourse) regarding the Mortgaged Property subject to the Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Collection Account.

         (b)      From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of the Servicer, and delivery to the Custodian, on behalf of the
Trustee, of two copies of a request for release signed by a Servicing Officer
substantially in the form attached to the Custodial Agreement (or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer), release within five (5) Business Days the
related Mortgage File held in its possession or control to the Servicer. Such
trust receipt shall obligate the Servicer to return the Mortgage File to the
Custodian on behalf of the Trustee, when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the Mortgage File shall be released by the Custodian, on behalf of
the Trustee, to the Servicer.

         Notwithstanding the foregoing, in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the related Mortgage File from the Custodian, in accordance with the
provisions of the Custodial Agreement, in the event the Servicer fails to do so.

         Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer, any court pleadings, requests for trustee's
sale or other documents prepared and delivered to the Trustee and reasonably
acceptable to it and necessary to the foreclosure or trustee's sale in respect
of a Mortgaged Property or to any legal action brought to obtain judgment
against any Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Mortgage
Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale. So long as no Servicer Event of Default shall have occurred and
be continuing, the Servicer shall have the right to execute any and all such
court pleadings, requests and other documents as attorney-in-fact for, and on
behalf of the Trustee.

         SECTION 3.15. Servicing Compensation.

         As compensation for the activities of the Servicer, hereunder, the
Servicer shall be entitled to the Servicing Fee with respect to each Mortgage
Loan payable solely from payments of interest in respect of such Mortgage Loan,
subject to Section 3.22. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the
extent permitted by Section 3.09(a)(iii) and out of amounts derived from the


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operation and sale of an REO Property to the extent permitted by Section 3.21.
The right to receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement to the extent permitted
herein.

         Additional servicing compensation in the form of assumption fees, late
payment charges and other miscellaneous fees (other than Prepayment Charges)
shall be retained by the Servicer only to the extent such fees or charges are
received by the Servicer. The Servicer shall also be entitled pursuant to
Section 3.09(a)(iv) to withdraw from the Collection Account and pursuant to
Section 3.21(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.10. In addition, the Servicer shall be entitled to retain or withdraw
from the Collection Account, pursuant to Section 3.09(a)(x), any Prepayment
Interest Excess as additional servicing compensation. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided herein.

         SECTION 3.16. Reserved.

         SECTION 3.17. Statement as to Compliance.

         Not later than March 15th of each calendar year commencing in 2005, the
Servicer shall deliver to the Master Servicer an Officers' Certificate in a form
acceptable for filing with the Securities and Exchange Commission as an exhibit
to Form 10-K or other required form (upon which the Master Servicer can
conclusively rely in connection with its obligations under Section 5.06)
stating, as to each signatory thereof, that (i) a review of the activities of
the Servicer during the preceding year and of performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. Copies of any such
statement shall be provided by the Trustee to any Certificateholder, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.

         SECTION 3.18. Independent Public Accountants' Servicing Report.

         Not later than March 15th of each calendar year commencing in 2005, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report in
a form acceptable for filing with the Securities and Exchange Commission as an
exhibit to Form 10-K or other required form stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in the Uniform
Single Attestation Program for Mortgage Bankers established by the Mortgage
Bankers Association of America, with respect to the servicing of residential
mortgage loans during the most recently completed fiscal year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
representation is fairly stated and such firm has determined that the Servicer
has complied in all


                                       96
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material respects, subject to such exceptions and other qualifications that may
be appropriate. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Master Servicer, the Trustee and each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.

         SECTION 3.19. Annual Certification.

         (a)      The Servicer shall deliver to the Master Servicer, on or
before March 15th of each calendar year beginning in 2005 (or, if any such day
is not a Business Day, the immediately preceding Business Day) or such
alternative date reasonably specified by the Master Servicer which shall occur
not later than 15 days prior to the date any Form 10-K is required to be filed
with the Commission in connection with the transactions contemplated by this
Agreement, a certification in the form attached hereto as Exhibit C. Such
certification shall be signed by the senior officer in charge of servicing of
the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Master
Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended, pursuant to Section 5.06 hereof.

         (b)      The Servicer shall indemnify and hold harmless the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and their
respective officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.19 or the Servicer's
negligence, bad faith or willful misconduct in connection therewith. Such
indemnity shall survive the termination or resignation of the parties hereto or
the termination of this Agreement. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Master Servicer, the Securities
Administrator, the Trustee and the Depositor, then the Servicer agrees that it
shall contribute to the amount paid or payable by the Master Servicer, the
Securities Administrator, the Trustee and the Depositor as a result of the
losses, claims, damages or liabilities of the Master Servicer, the Securities
Administrator, the Trustee and the Depositor in such proportion as is
appropriate to reflect the relative fault of the Master Servicer, the Securities
Administrator, the Trustee and the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.19.

         SECTION 3.20. Access to Certain Documentation.

         The Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificate Owner, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it. Nothing in this Section 3.20 shall limit the
obligation of the Servicer to comply with any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. Nothing in this
Section 3.20 shall require the Servicer to


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collect, create, collate or otherwise generate any information that it does not
generate in its usual course of business. The Servicer shall not be required to
make copies of or ship documents to any Person unless provisions have been made
for the reimbursement of the costs thereof.

         SECTION 3.21. Title, Management and Disposition of REO Property.

         (a)      The deed or certificate of sale of any REO Property shall be
taken in the name of the Trustee, or its nominee, on behalf of the Trust Fund
and for the benefit of the Certificateholders. The Servicer, on behalf of REMIC
I, shall either sell any REO Property by the close of the third calendar year
following the calendar year in which REMIC I acquires ownership of such REO
Property for purposes of Section 860(a)(8) of the Code or request from the
Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire an extension of the three-year
grace period, unless the Servicer had delivered to the Trustee an Opinion of
Counsel, addressed to the Trustee and the Depositor, to the effect that the
holding by REMIC I of such REO Property subsequent to three years after its
acquisition will not result in the imposition on any Trust REMIC created
hereunder of taxes on "prohibited transactions" thereof, as defined in Section
860F of the Code, or cause any Trust REMIC hereunder to fail to qualify as a
REMIC under Federal law at any time that any Certificates are outstanding. The
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any Trust REMIC created hereunder of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions.

         (b)      The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall establish and maintain with
respect to REO Properties an account held in trust for the Trustee, on behalf of
the Trust Fund and for the benefit of the Certificateholders (the "REO
Account"), which shall be an Eligible Account. The Servicer shall be permitted
to allow the Collection Account to serve as the REO Account, subject to the
maintenance of separate ledgers for each REO Property. The Servicer shall be
entitled to retain or withdraw any interest income paid on funds deposited in
the REO Account.

         (c)      The Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Property as are consistent with the manner
in which the Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited, on a daily
basis in the REO Account all revenues received by it with respect to an REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:

                  (i)      all insurance premiums due and payable in respect of
         such REO Property;


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                  (ii)     all real estate taxes and assessments in respect of
         such REO Property that may result in the imposition of a lien thereon;
         and

                  (iii)    all costs and expenses necessary to maintain such REO
         Property.

         To the extent that amounts on deposit in the REO Account with respect
to an REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Servicer shall
advance from its own funds such amount as is necessary for such purposes if, but
only if, the Servicer would make such advances if the Servicer owned the REO
Property and if in the Servicer's judgment, the payment of such amounts will be
recoverable from the rental or sale of the REO Property.

         Subject to compliance with applicable laws and regulations as shall at
any time be in force, and notwithstanding the foregoing, the Servicer, on behalf
of the Trust Fund, shall not:

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

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

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

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

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

         The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:

                  (i)      the terms and conditions of any such contract shall
         not be inconsistent herewith;

                  (ii)     any such contract shall require, or shall be
         administered to require, that the Independent Contractor pay all costs
         and expenses incurred in connection with the operation and management
         of such REO Property, including those listed above and remit all
         related revenues (net of such costs and expenses) to the Servicer as
         soon as practicable, but in no event later than thirty days following
         the receipt thereof by such Independent Contractor;


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                  (iii)    none of the provisions of this Section 3.21(c)
         relating to any such contract or to actions taken through any such
         Independent Contractor shall be deemed to relieve the Servicer of any
         of its duties and obligations to the Trustee on behalf of the Trust
         Fund and for the benefit of the Certificateholders with respect to the
         operation and management of any such REO Property; and

                  (iv)     the Servicer shall be obligated with respect thereto
         to the same extent as if it alone were performing all duties and
         obligations in connection with the operation and management of such REO
         Property.

         The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.15 is sufficient to pay such fees. Any such
agreement shall include a provision that such agreement may be immediately
terminated by the Trustee (as successor Servicer) or any other successor
Servicer without fee, in the event the Servicer shall for any reason, no longer
be the Servicer of the Mortgage Loans (including termination due to a Servicer
Event of Default).

         (d)      In addition to the withdrawals permitted under Section
3.21(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself unpaid Servicing Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and Advances made in respect of such REO
Property or the related Mortgage Loan. On the Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.08(d)(ii), for
distribution on the related Distribution Date in accordance with Section 5.01,
the income from the related REO Property received during the prior calendar
month, net of any withdrawals made pursuant to Section 3.21(c) or this Section
3.21(d).

         (e)      Subject to the time constraints set forth in Section 3.21(a),
each REO Disposition shall be carried out by the Servicer at such price and upon
such terms and conditions as the Servicer shall deem necessary or advisable, as
shall be normal and usual in accordance with Accepted Servicing Practices.

         (f)      The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Servicer as provided above, shall
be deposited in the Distribution Account in accordance with Section 3.08(d)(ii)
on the Servicer Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with Section 5.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).

         (g)      The Servicer shall file information returns (and shall provide
a certification of a Servicing Officer to the Master Servicer that such filings
have been made) with respect to the receipt of mortgage interest received in a
trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and cancellation of indebtedness income with


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respect to any Mortgaged Property as required by Sections 6050H, 6050J and 6050P
of the Code, respectively. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.

         SECTION 3.22. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls; Relief Act Interest Shortfalls.

         The Servicer shall deliver to the Securities Administrator for deposit
into the Distribution Account on the Servicer Remittance Date from its own funds
an amount equal to the lesser of (i) the aggregate amount of the Prepayment
Interest Shortfalls attributable to prepayments in full on the Mortgage Loans
for the related Distribution Date resulting solely from voluntary Principal
Prepayments received by the Servicer during the related Prepayment Period and
(ii) the aggregate amount of the related Servicing Fees payable to the Servicer
on such Distribution Date with respect to the Mortgage Loans. The Servicer shall
not have the right to reimbursement for any amounts remitted to the Securities
Administrator in respect of this Section 3.22. The Servicer shall not be
obligated to pay the amounts set forth in this Section 3.22 with respect to
shortfalls resulting from the application of the Relief Act.

         SECTION 3.23. Obligations of the Servicer in Respect of Mortgage Rates
and Monthly Payments.

         In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Servicer in a manner not consistent with the terms of the related Mortgage
Note and this Agreement, the Servicer, upon discovery or receipt of notice
thereof, immediately shall deliver to the Securities Administrator for deposit
in the Distribution Account from its own funds the amount of any such shortfall
and shall indemnify and hold harmless the Trust Fund, the Trustee, the
Securities Administrator and the Master Servicer, the Depositor and any
successor Servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement. Notwithstanding the
foregoing, this Section 3.23 shall not limit the ability of the Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note and Mortgage, to the extent permitted by applicable law.

         SECTION 3.24. Reserve Fund.

         (a)      No later than the Closing Date, the Securities Administrator
shall establish and maintain a separate, segregated trust account entitled,
"Reserve Fund, Wells Fargo Bank, N.A., in trust for the registered holders of
ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3, Asset Backed
Pass-Through Certificates." On the Closing Date, the Depositor will deposit, or
cause to be deposited, into the Reserve Fund $1,000. In addition, the amount
deposited in the Reserve Fund shall be increased by any payments received by the
Securities Administrator under the Group I Cap Contract and deposited into
Reserve Fund for the benefit of the Class A-1 Certificates, Mezzanine
Certificates and the Class B Certificates and under the Group II Cap Contract
and deposited in the Reserve Fund for the benefit of the Class A-2 Certificates,
the Mezzanine Certificates and the Class B Certificates.

         (b)      On each Distribution Date, the Securities Administrator shall
deposit into the Reserve Fund the amounts described in Section 5.01(a)(7)(vi),
rather than distributing such


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amounts to the Class CE-1 Certificateholders, and Section 5.01(a)(7)(vii). On
each such Distribution Date, the Securities Administrator shall hold all such
amounts for the benefit of the Holders of the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates and will distribute such
amounts to the Holders of the Class A Certificates, the Mezzanine Certificates
and the Class B Certificates, in the amounts and priorities set forth in Section
5.01(a). If no Net WAC Rate Carryover Amounts are payable on a Distribution
Date, the Securities Administrator shall deposit, into the Reserve Fund on
behalf of the Class CE-1 Certificateholders, from amounts otherwise
distributable to the Class CE-1 Certificateholders, an amount such that when
added to other amounts already on deposit in the Reserve Fund, the aggregate
amount on deposit therein is equal to $1,000.

         (c)      For federal and state income tax purposes, the Class CE-1
Certificateholders will be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) and any amounts paid to the Reserve Fund from the Cap Contracts shall
be treated as amounts distributed by REMIC II to the Holders of the Class CE-1
Certificates. Upon the termination of the Trust Fund, or the payment in full of
the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates, all amounts remaining on deposit in the Reserve Fund will be
released by the Trust Fund and distributed to the Class CE-1 Certificateholders
or their designees. The Reserve Fund will be part of the Trust Fund but not part
of any REMIC and any payments to the Holders of the Class A Certificates, the
Mezzanine Certificates or the Class B Certificates of Net WAC Rate Carryover
Amounts will not be payments with respect to a "regular interest" in a REMIC
within the meaning of Code Section 860(G)(a)(1).

         (d)      By accepting a Class CE-1 Certificate, each Class CE-1
Certificateholder hereby agrees that the Securities Administrator will deposit
into the Reserve Fund the amounts described above on each Distribution Date
rather than distributing such amounts to the Class CE-1 Certificateholders. By
accepting a Class CE-1 Certificate, each Class CE-1 Certificateholder further
agrees that its agreement to such action by the Securities Administrator is
given for good and valuable consideration, the receipt and sufficiency of which
is acknowledged by such acceptance.

         (e)      At the direction of the Holders of a majority in Percentage
Interest in the Class CE-1 Certificates, the Securities Administrator shall
direct any depository institution maintaining the Reserve Fund to invest the
funds in such account in one or more Permitted Investments bearing interest or
sold at a discount, and maturing, unless payable on demand, (i) no later than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if a Person other
than the Securities Administrator or an Affiliate manages or advises such
investment, and (ii) no later than the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the Securities
Administrator or an Affiliate manages or advises such investment. All income and
gain earned upon such investment shall be deposited into the Reserve Fund. In no
event shall the Securities Administrator be liable for any investments made
pursuant to this clause (e). If the Holders of a majority in Percentage Interest
in the Class CE-1 Certificates fail to provide investment instructions, funds on
deposit in the Reserve Fund shall be held uninvested by the Securities
Administrator without liability for interest or compensation.


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         (f)      For federal tax return and information reporting, the right of
the Class A Certificateholders, the Mezzanine Certificateholders and Class B
Certificateholders to receive payments from the Reserve Fund in respect of any
Net WAC Rate Carryover Amount shall be assigned a value of $172,000 with respect
to Certificates covered by the Group I Cap Contract and $102,500 with respect to
Certificates covered by the Group II Cap Contract.

         SECTION 3.25. Advance Facility.

         (a)      Notwithstanding anything to the contrary contained herein, (i)
the Servicer is hereby authorized to enter into an advance facility ("Advance
Facility") but no more than two Advance Facilities without the prior written
consent of the Trustee, which consent shall not be unreasonably withheld, under
which (A) the Servicer sells, assigns or pledges to an advancing person (an
"Advance Financing Person") the Servicer's rights under this Agreement to be
reimbursed for any P&I Advances or Servicing Advances and/or (B) an Advance
Financing Person agrees to finance some or all P&I Advances or Servicing
Advances required to be made by the Servicer pursuant to this Agreement and (ii)
the Servicer is hereby authorized to assign its rights to the Servicing Fee
(which rights shall terminate upon the resignation, termination or removal of
the Servicer pursuant to the terms of this Agreement); it being understood that
neither the Trust Fund nor any party hereto shall have a right or claim
(including without limitation any right of offset) to any amounts for
reimbursement of P&I Advances or Servicing Advances so assigned or to the
portion of the Servicing Fee so assigned. Subject to the provisions of the first
sentence of this Section 3.25(a), no consent of the Depositor, Trustee, Master
Servicer, Certificateholders or any other party is required before the Servicer
may enter into an Advance Facility, but the Servicer shall provide notice to the
Depositor, Master Servicer and the Trustee of the existence of any such Advance
Facility promptly upon the consummation thereof stating (a) the identity of the
Advance Financing Person and (b) the identity of any Person ("Servicer's
Assignee") who has the right to receive amounts in reimbursement of previously
unreimbursed P&I Advances or Servicing Advances. Notwithstanding the existence
of any Advance Facility under which an advancing person agrees to finance P&I
Advances and/or Servicing Advances on the Servicer's behalf, the Servicer shall
remain obligated pursuant to this Agreement to make P&I Advances and Servicing
Advances pursuant to and as required by this Agreement, and shall not be
relieved of such obligations by virtue of such Advance Facility.

         (b)      Reimbursement amounts ("Advance Reimbursement Amounts") shall
consist solely of amounts in respect of P&I Advances and/or Servicing Advances
made with respect to the Mortgage Loans for which the Servicer would be
permitted to reimburse itself in accordance with this Agreement, assuming the
Servicer had made the related P&I Advance(s) and/or Servicing Advance(s).

         (c)      The Servicer shall maintain and provide to any successor
Servicer (with, upon request, a copy to the Trustee) a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any advancing person. The successor Servicer shall be entitled to
rely on any such information provided by the predecessor Servicer, and the
successor Servicer shall not be liable for any errors in such information.

         (d)      Reimbursement amounts distributed with respect to each
Mortgage Loan shall be allocated to outstanding unreimbursed P&I Advances or
Servicing Advances (as the case may be) made with respect to that Mortgage Loan
on a "first-in, first out" (FIFO) basis. The


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documentation establishing any Advance Facility shall require the Servicer to
provide to the related advancing person or its designee loan-by-loan information
with respect to each such reimbursement amount distributed to such advancing
person or Advance Facility trustee on each Distribution Date, to enable the
advancing person or Advance Facility trustee to make the FIFO allocation of each
such reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the advancing person or Advance Facility
trustee for all P&I Advances and Servicing Advances funded by the Servicer to
the extent the related rights to be reimbursed therefor have not been sold,
assigned or pledged to an advancing person.

         (e)      Any amendment to this Section 3.25 or to any other provision
of this Agreement that may be necessary or appropriate to effect the terms of an
Advance Facility as described generally in this Section 3.25, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Depositor, and the Servicer without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement,
provided, that the Trustee has been provided an Opinion of Counsel that such
amendment is authorized hereunder and has no material adverse effect on the
Certificateholders, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the Trust
Fund; provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders if the
Person requesting the amendment obtains a letter from each Rating Agency
(instead of obtaining an Opinion of Counsel to such effect) stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Certificates; it being understood and agreed that
any such rating letter in and of itself will not represent a determination as to
the materiality of any such amendment and will represent a determination only as
to the credit issues affecting any such rating. Prior to entering into an
Advance Facility, the Servicer shall notify the lender under such facility in
writing that: (a) the P&I Advances and/or Servicing Advances financed by and/or
pledged to the lender are obligations owed to the Servicer on a non-recourse
basis payable only from the cash flows and proceeds received under this
Agreement for reimbursement of P&I Advances and/or Servicing Advances only to
the extent provided herein, and neither the Master Servicer, the Securities
Administrator, the Trustee nor the Trust are otherwise obligated or liable to
repay any P&I Advances and/or Servicing Advances financed by the lender; (b) the
Servicer will be responsible for remitting to the lender the applicable amounts
collected by it as Servicing Fees and as reimbursement for P&I Advances and/or
Servicing Advances funded by the lender, as applicable, subject to the
restrictions and priorities created in this Agreement; and (c) neither the
Master Servicer, the Securities Administrator nor the Trustee shall have any
responsibility to calculate any amount payable under an Advance Facility or to
track or monitor the administration of the financing arrangement between the
Servicer and the lender or the payment of any amount under an Advance Facility.

         (f)      The Servicer shall indemnify the Master Servicer, the
Securities Administrator, the Trustee and the Trust Fund for any cost, liability
or expense relating to the Advance Facility including, without limitation, a
claim, pending or threatened, by an Advance Financing Person.


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         SECTION 3.26. The Servicer Indemnification.

         The Servicer agrees to indemnify the Trustee, Master Servicer and the
Securities Administrator, from, and hold the Trustee, Master Servicer and the
Securities Administrator harmless against, any loss, liability or expense
(including reasonable attorney's fees and expenses) incurred by any such Person
by reason of the Servicer's willful misfeasance, bad faith or gross negligence
in the performance of its duties under this Agreement or by reason of the
Servicer's reckless disregard of its obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Servicer, the Trustee, the
Master Servicer and the Securities Administrator. Any payment hereunder made by
the Servicer to any such Person shall be from the Servicer's own funds, without
reimbursement from REMIC I therefor.


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                                   ARTICLE IV

                       ADMINISTRATION AND MASTER SERVICING
                  OF THE MORTGAGE LOANS BY THE MASTER SERVICER

         SECTION 4.01. Master Servicer.

         The Master Servicer shall supervise, monitor and oversee the obligation
of the Servicer and the Interim Servicers to service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the Servicing
Agreements and shall have full power and authority to do any and all things
which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with the
Servicer and the Interim Servicers as necessary from time-to-time to carry out
the Master Servicer's obligations hereunder, shall receive, review and evaluate
all reports, information and other data provided to the Master Servicer by the
Servicer and the Interim Servicers and shall cause the Servicer and the Interim
Servicers to perform and observe the covenants, obligations and conditions to be
performed or observed by the Servicer under this Agreement or the Interim
Servicers under the Interim Servicing Agreements. The Master Servicer shall
independently and separately monitor the Servicer's and the related Interim
Servicer's servicing activities with respect to each related Mortgage Loan,
reconcile the results of such monitoring with such information provided in the
previous sentence on a monthly basis and coordinate corrective adjustments to
the Servicer's or the related Interim Servicer's and Master Servicer's records,
and based on such reconciled and corrected information, prepare the statements
specified in Section 5.03 and any other information and statements required to
be provided by the Master Servicer hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Servicer or the Interim Servicers to the Distribution Account
pursuant to the terms hereof and pursuant to the Servicing Agreements based on
information provided to the Master Servicer by the Servicer and the Interim
Servicers. Notwithstanding anything to the contrary contained herein, the Master
Servicer shall have no obligation to supervise, monitor or oversee the
performance of the Interim Servicers under the Servicing Agreements, on or after
the Servicing Transfer Date.

         The Trustee shall furnish the Servicer, the related Interim Servicer
and the Master Servicer with any limited powers of attorney and other documents
in form as provided to it necessary or appropriate to enable the Servicer, the
related Interim Servicer and the Master Servicer to service and administer the
related Mortgage Loans and REO Property. The Trustee shall have no
responsibility for any action of the Master Servicer, the Servicer or the
related Interim Servicer pursuant to any such limited power of attorney and
shall be indemnified by the Master Servicer, the Servicer or the related Interim
Servicer, as applicable, for any cost, liability or expense incurred by the
Trustee in connection with such Person's misuse of any such power of attorney.

         The Trustee, the Custodian and the Securities Administrator shall
provide access to the records and documentation in possession of the Trustee,
the Custodian or the Securities Administrator regarding the related Mortgage
Loans and REO Property and the servicing thereof to the Certificateholders, the
FDIC, and the supervisory agents and examiners of the FDIC, such


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access being afforded only upon reasonable prior written request and during
normal business hours at the office of the Trustee, the Custodian or the
Securities Administrator; provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide access to such records and documentation if the provision
thereof would violate the legal right to privacy of any Mortgagor. The Trustee,
the Custodian and the Securities Administrator shall allow representatives of
the above entities to photocopy any of the records and documentation and shall
provide equipment for that purpose at a charge that covers the Trustee's, the
Custodian's or the Securities Administrator's actual costs.

         The Trustee shall execute and deliver to the Servicer, the related
Interim Servicer or the Master Servicer upon request any court pleadings,
requests for trustee's sale or other documents necessary or desirable to (i) the
foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or any other Mortgage Loan Document; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or any other Mortgage Loan Document or otherwise available at
law or equity.

         SECTION 4.02. REMIC-Related Covenants.

         For as long as each REMIC shall exist, the Trustee and the Securities
Administrator shall act in accordance herewith to treat such REMIC as a REMIC,
and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicer, the related Interim Servicer or the
Master Servicer to assure such continuing treatment. In particular, the Trustee
shall not (a) sell or permit the sale of all or any portion of the Mortgage
Loans or of any investment of deposits in an Account unless such sale is as a
result of a repurchase of the Mortgage Loans pursuant to this Agreement or the
Trustee has received a REMIC Opinion prepared at the expense of the Trust Fund;
and (b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a Opinion of
Counsel stating that such contribution will not result in an Adverse REMIC Event
as defined in Section 11.01(f).

         SECTION 4.03. Monitoring of Servicer.

         (a)      The Master Servicer shall be responsible for monitoring the
compliance by the Servicer with its duties under this Agreement and the Interim
Servicers with their respective duties under the Servicing Agreements. In the
review of the Servicer's or the related Interim Servicer's activities, the
Master Servicer may rely upon an officer's certificate of the Servicer or the
related Interim Servicer with regard to the Servicer's or the related Interim
Servicer's compliance with the terms of this Agreement or the related Servicing
Agreement, as applicable. In the event that either the Master Servicer or the
Trustee, in its judgment, determines that the Servicer or the related Interim
Servicer should be terminated in accordance with the terms hereof or the terms
of the related Servicing Agreement or that a notice should be sent pursuant to
the terms hereof or the terms of the related Servicing Agreement with respect to
the occurrence of an event that, unless cured, would constitute a Servicer Event
of Default or an event of default under the applicable Servicing Agreement,
either the Master Servicer or the Trustee shall notify the Servicer, the related
Interim Servicer, the Seller, the Master Servicer and the Trustee, as


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applicable, thereof and either the Master Servicer or the Trustee shall issue
such notice or take such other action as it deems appropriate.

         (b)      The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under this
Agreement and the Interim Servicers under the Servicing Agreements. In the event
that the Servicer fails to perform its obligations in accordance with this
Agreement, subject to this Section and Article VIII, the Trustee shall terminate
the rights and obligations of the Servicer hereunder in accordance with the
provisions of Article VIII. In the event that an Interim Servicer fails to
perform its obligations in accordance with the related Servicing Agreement, the
Master Servicer shall terminate the rights and obligations of such Interim
Servicer in accordance with the related Servicing Agreement. Such enforcement,
including, without limitation, the legal prosecution of claims and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense,
provided that the Master Servicer shall not be required to prosecute or defend
any legal action except to the extent that the Master Servicer shall have
received reasonable indemnity for its costs and expenses in pursuing such
action.

         (c)      The Master Servicer shall be entitled to be reimbursed by the
Servicer or the related Interim Servicer, as applicable (or from amounts on
deposit in the Distribution Account if the Servicer or the related Interim
Servicer is unable to fulfill its obligations hereunder or under the related
Servicing Agreement) for all reasonable out-of-pocket or third party costs
associated with the transfer of servicing from the predecessor Servicer or
Interim Servicer, including without limitation, any reasonable out-of-pocket or
third party costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Master Servicer
to service the Mortgage Loans properly and effectively, upon presentation of
reasonable documentation of such costs and expenses.

         (d)      The Master Servicer shall require the Servicer and the Interim
Servicers to comply with the remittance requirements and other obligations set
forth in this Agreement and the related Servicing Agreements.

         SECTION 4.04. Fidelity Bond.

         The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
such Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.

         SECTION 4.05. Power to Act; Procedures.

         The Master Servicer shall master service the Mortgage Loans and shall
have full power and authority, subject to the REMIC Provisions and the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in connection with the master servicing


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and administration of the Mortgage Loans, including but not limited to the power
and authority (i) to execute and deliver, on behalf of the Certificateholders
and the Trustee, customary consents or waivers and other instruments and
documents, (ii) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages, (iii) to collect any
Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate foreclosure
or other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan, in each case, in accordance with the provisions of this
Agreement; provided, however, that the Master Servicer shall not (and,
consistent with its responsibilities under Section 4.03, shall not permit the
Servicer or the related Interim Servicer to) knowingly or intentionally take any
action, or fail to take (or fail to cause to be taken) any action reasonably
within its control and the scope of duties more specifically set forth herein,
that, under the REMIC Provisions, if taken or not taken, as the case may be,
would cause REMIC I or REMIC II to fail to qualify as a REMIC or result in the
imposition of a tax upon the Trust Fund (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense of
the Master Servicer) to the effect that the contemplated action will not cause
REMIC I or REMIC II to fail to qualify as a REMIC or result in the imposition of
a tax upon REMIC I or REMIC II, as the case may be. The Trustee shall furnish
the Master Servicer, upon written request from a Servicing Officer, with any
powers of attorney prepared and delivered to it and reasonably acceptable to it
by empowering the Master Servicer, the Servicer or the related Interim Servicer
to execute and deliver instruments of satisfaction or cancellation, or of
partial or full release or discharge, and to foreclose upon or otherwise
liquidate Mortgaged Property, and to appeal, prosecute or defend in any court
action relating to the Mortgage Loans or the Mortgaged Property, in accordance
with this Agreement or the related Servicing Agreement, and the Trustee shall
execute and deliver such other documents prepared and delivered to it and
reasonably acceptable to it, as the Master Servicer, the Servicer or the related
Interim Servicer may request, to enable the Master Servicer to master service
and administer the Mortgage Loans and carry out its duties hereunder, in each
case in accordance with Accepted Master Servicing Practices (and the Trustee
shall have no liability for misuse of any such powers of attorney by the Master
Servicer, the Servicer or the related Interim Servicer and shall be indemnified
by the Master Servicer, the Servicer or the related Interim Servicer, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person's use or misuse of any such power of attorney). If
the Master Servicer or the Trustee has been advised that it is likely that the
laws of the state in which action is to be taken prohibit such action if taken
in the name of the Trustee or that the Trustee would be adversely affected under
the "doing business" or tax laws of such state if such action is taken in its
name, the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 9.10. In the performance of its duties hereunder,
the Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.

         SECTION 4.06. Due-on-Sale Clauses; Assumption Agreements.

         To the extent Mortgage Loans contain enforceable due-on-sale clauses,
the Master Servicer shall cause the Servicer or the related Interim Servicer, as
applicable, to enforce such clauses in accordance with this Agreement or the
related Servicing Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
this Agreement or the related Servicing Agreement and, as a consequence, a


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Mortgage Loan is assumed, the original Mortgagor may be released from liability
in accordance with this Agreement or the related Servicing Agreement.

         SECTION 4.07. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.

         (a)      The Master Servicer shall transmit to the Trustee or Custodian
such documents and instruments coming into the possession of the Master Servicer
from time to time as are required by the terms hereof to be delivered to the
Trustee or Custodian. Any funds received by the Master Servicer in respect of
any Mortgage Loan or which otherwise are collected by the Master Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be remitted to the Securities Administrator for deposit in the Distribution
Account. The Master Servicer shall, and, subject to Section 3.20 of the
Agreement or the related Servicing Agreement, shall cause the Servicer or the
related Interim Servicer to, provide access to information and documentation
regarding the Mortgage Loans to the Trustee, its agents and accountants at any
time upon reasonable request and during normal business hours, and to
Certificateholders that are savings and loan associations, banks or insurance
companies, the Office of Thrift Supervision, the FDIC and the supervisory agents
and examiners of such Office and Corporation or examiners of any other federal
or state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority,
such access to be afforded without charge but only upon reasonable request in
writing and during normal business hours at the offices of the Master Servicer
designated by it. In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.

         (b)      All Mortgage Files and funds collected or held by, or under
the control of, the Master Servicer, in respect of any Mortgage Loans, whether
from the collection of principal and interest payments or from Liquidation
Proceeds or Insurance Proceeds, shall be remitted to the Trustee for deposit in
the Distribution Account.

         SECTION 4.08. Standard Hazard Insurance and Flood Insurance Policies.

         For each Mortgage Loan, the Master Servicer shall enforce the
obligation of the Servicer under this Agreement or the related Interim Servicer
under the applicable Servicing Agreement to maintain or cause to be maintained
standard fire and casualty insurance and, where applicable, flood insurance, all
in accordance with the provisions of this Agreement or the related Servicing
Agreement. It is understood and agreed that such insurance shall be with
insurers meeting the eligibility requirements set forth in Section 3.11 of the
Agreement or the eligibility requirements set forth in the related Servicing
Agreement and that no earthquake or other additional insurance is to be required
of any Mortgagor or to be maintained on property acquired in respect of a
defaulted loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.

         SECTION 4.09. Presentment of Claims and Collection of Proceeds.

         The Master Servicer shall enforce the Servicer's obligations under this
Agreement to prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.


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Any proceeds disbursed to the Master Servicer in respect of such policies, bonds
or contracts shall be promptly remitted to the Trustee for deposit in the
Distribution Account upon receipt, except that any amounts realized that are to
be applied to the repair or restoration of the related Mortgaged Property as a
condition precedent to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable insurance policy need not be so or remitted.

         SECTION 4.10. Maintenance of Primary Mortgage Insurance Policies.

         (a)      The Master Servicer shall not take, or permit the Servicer or
the related Interim Servicer to take (to the extent such action is prohibited by
this Agreement or the related Servicing Agreement), any action that would result
in noncoverage under any primary mortgage insurance policy of any loss which,
but for the actions of the Master Servicer, the Servicer or the related Interim
Servicer, as applicable, would have been covered thereunder. The Master Servicer
shall use its best reasonable efforts to cause the Servicer or the related
Interim Servicer to keep in force and effect (to the extent that the Mortgage
Loan requires the Mortgagor to maintain such insurance), primary mortgage
insurance applicable to each Mortgage Loan in accordance with the provisions of
this Agreement or the related Servicing Agreement. The Master Servicer shall
not, and shall not permit the Servicer or the related Interim Servicer to,
cancel or refuse to renew any primary mortgage insurance policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement or the related Servicing Agreement.

         (b)      The Master Servicer agrees to cause the Servicer or the
related Interim Servicer to present, on behalf of the Trustee and the
Certificateholders, claims to the insurer under any primary mortgage insurance
policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any primary mortgage insurance policies
respecting defaulted Mortgage Loans.

         SECTION 4.11. Trustee to Retain Possession of Certain Insurance
Policies and Documents.

         The Trustee or the applicable Custodian, shall retain possession and
custody of the originals (to the extent available) of any primary mortgage
insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer and the
Servicer have otherwise fulfilled their respective obligations under this
Agreement the Trustee or the Custodian shall also retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
of this Agreement and the Custodial Agreement. The Master Servicer shall
promptly deliver or cause to be delivered to the Trustee or the Custodian, upon
the execution or receipt thereof the originals of any primary mortgage insurance
policies, any certificates of renewal, and such other documents or instruments
that constitute Mortgage Loan Documents that come into the possession of the
Master Servicer from time to time.

         SECTION 4.12. Realization Upon Defaulted Mortgage Loans.

         The Master Servicer shall cause the Servicer or the related Interim
Servicer to foreclose upon, repossess or otherwise comparably convert the
ownership of Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in default and as to


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which no satisfactory arrangements can be made for collection of delinquent
payments, all in accordance with this Agreement or the related Servicing
Agreement.

         SECTION 4.13. Compensation for the Master Servicer.

         As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Master Servicing Fee and the income
from investment of or earnings on the funds from time to time in the
Distribution Account, as provided in Section 3.10. The Master Servicing Fee
payable to the Master Servicer in respect of any Distribution Date shall be
reduced in accordance with Section 4.18. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement.

         SECTION 4.14. REO Property.

         (a)      In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall cause the Servicer or the Interim
Servicer to sell, any REO Property as expeditiously as possible and in
accordance with the provisions of this Agreement or the related Servicing
Agreement. Further, the Master Servicer shall cause the Servicer or the related
Interim Servicer to sell any REO Property prior to three years after the end of
the calendar year of its acquisition by REMIC I unless (i) the Trustee shall
have been supplied by the Servicer or the related Interim Servicer with an
Opinion of Counsel to the effect that the holding by the Trust Fund of such REO
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of any REMIC hereunder as defined in
section 860F of the Code or cause any REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel) or (ii) the Servicer shall have applied
for, prior to the expiration of such three-year period, an extension of such
three-year period in the manner contemplated by Section 856(e)(3) of the Code,
in which case the three-year period shall be extended by the applicable
extension period. The Master Servicer shall cause the Servicer or the related
Interim Servicer to protect and conserve, such REO Property in the manner and to
the extent required by this Agreement or the related Servicing Agreement in
accordance with the REMIC Provisions and in a manner that does not result in a
tax on "net income from foreclosure property" or cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code.

         (b)      The Master Servicer shall cause the Servicer or the related
Interim Servicer to deposit all funds collected and received in connection with
the operation of any REO Property in the REO Account or in the account delegated
for such amounts under the related Servicing Agreement.

         SECTION 4.15. Annual Officer's Certificate as to Compliance.

         (a)      The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 15 of each year, commencing on March 15,
2005, an Officer's Certificate, certifying that with respect to the period
ending December 31 of the prior year: (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or


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portion thereof and its performance under this Agreement, (ii) to the best of
such Servicing Officer's knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (iii) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe that the Master
Servicer has failed to perform any of its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a material default in the performance or fulfillment of
any such duties, responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status thereof.

         (b)      Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).

         SECTION 4.16. Annual Independent Accountant's Servicing Report.

         If the Master Servicer has, during the course of any calendar year,
directly serviced any of the Mortgage Loans, then the Master Servicer at its
expense shall cause a nationally recognized firm of independent certified public
accountants to furnish a statement to the Trustee, the Rating Agencies and the
Seller on or before March 15 of each year, commencing on March 15, 2005 to the
effect that, with respect to the most recently ended fiscal year, such firm has
examined certain records and documents relating to the Master Servicer's
performance of its servicing obligations under this Agreement and pooling and
servicing and trust agreements in material respects similar to this Agreement
and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Freddie Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies (unless (i) the Master Servicer shall have failed to provide the Trustee
with such statement or (ii) the Trustee shall be unaware of the Master
Servicer's failure to provide such statement). If such report discloses
exceptions that are material, the Master Servicer shall advise the Trustee
whether such exceptions have been or are susceptible of cure, and will take
prompt action to do so.

         SECTION 4.17. UCC.

         The Depositor agrees to file continuation statements for any Uniform
Commercial Code financing statements which the Seller has informed the Depositor
were filed on the Closing


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Date in connection with the Trust. The Depositor shall file any financing
statements or amendments thereto required by any change in the Uniform
Commercial Code.

         SECTION 4.18. Obligation of the Master Servicer in Respect of
Prepayment Interest Shortfalls.

         In the event of any Prepayment Interest Shortfalls, the Master Servicer
shall deposit into the Distribution Account not later than the related
Distribution Date an amount equal to the lesser of (i) the aggregate amounts
required to be paid by the Servicer or the related Interim Servicer with respect
to Prepayment Interest Shortfalls attributable to Principal Prepayments in full
on the Mortgage Loans for the related Distribution Date, and not so paid by the
Servicer or the related Interim Servicer and (ii) the aggregate amount of the
related Master Servicing Fees for such Distribution Date, without reimbursement
therefor.

         SECTION 4.19. Prepayment Penalty Verification.

         On or prior to each Servicer Remittance Date, the Servicer or the
related Interim Servicer shall provide in an electronic format acceptable to the
Master Servicer the data necessary for the Master Servicer to perform its
verification duties set forth in this Section 4.19. The Master Servicer or a
third party reasonably acceptable to the Master Servicer and the Depositor (the
"Verification Agent") will perform such verification duties and will use its
best efforts to issue its findings in a report (the "Verification Report")
delivered to the Master Servicer and the Depositor within ten (10) Business Days
following the related Distribution Date; provided, however, that if the
Verification Agent is unable to issue the Verification Report within ten (10)
Business Days following the Distribution Date, the Verification Agent may issue
and deliver to the Master Servicer and the Depositor the Verification Report
upon the completion of its verification duties. The Master Servicer shall
forward the Verification Report to the Servicer or the related Interim Servicer
and shall notify the Servicer or the related Interim Servicer if the Master
Servicer has determined that the Servicer or the related Interim Servicer did
not deliver the appropriate Prepayment Charge to the Securities Administrator in
accordance with this Agreement or the related Servicing Agreement. Such written
notification from the Master Servicer shall include the loan number, prepayment
penalty code and prepayment penalty amount as calculated by the Master Servicer
or the Verification Agent, as applicable, of each Mortgage Loan for which there
is a discrepancy. If the Servicer or the related Interim Servicer agrees with
the verified amounts, the Servicer or the related Interim Servicer shall adjust
the immediately succeeding Servicer Report and the amount remitted to the
Trustee with respect to prepayments accordingly. If the Servicer or the related
Interim Servicer disagrees with the determination of the Master Servicer, the
Servicer or the related Interim Servicer shall, within five (5) Business Days of
its receipt of the Verification Report, notify the Master Servicer of such
disagreement and provide the Master Servicer with detailed information to
support its position. The Servicer, the related Interim Servicer and the Master
Servicer shall cooperate to resolve any discrepancy on or prior to the
immediately succeeding Servicer Remittance Date, and the Servicer or the related
Interim Servicer will indicate the effect of such resolution on the related
Servicer Report and shall adjust the amount remitted with respect to prepayments
on such Servicer Remittance Date accordingly.

         During such time as the Servicer, the related Interim Servicer and the
Master Servicer are resolving discrepancies with respect to the Prepayment
Charges, no payments in


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respect of any disputed Prepayment Charges will be remitted to the Securities
Administrator for deposit in the Distribution Account and the Master Servicer
shall not be obligated to deposit such payments, unless otherwise required
pursuant to Section 8.01 hereof. In connection with such duties, the Master
Servicer shall be able to rely solely on the information provided to it by the
Servicer or the related Interim Servicer in accordance with this Section. The
Master Servicer shall not be responsible for verifying the accuracy of any of
the information provided to it by the Servicer or the related Interim Servicer.










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                                    ARTICLE V

                         PAYMENTS TO CERTIFICATEHOLDERS

         SECTION 5.01. Distributions.

         (a)      (1) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:

                  (i)      to Holders of REMIC I Regular Interest I-LTAA, REMIC
         I Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I
         Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
         Regular Interest I-LTA2C, REMIC I Regular Interest I-LTA2D, REMIC I
         Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
         Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I
         Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I
         Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC I
         Regular Interest I-LTM9, REMIC I Regular Interest I-LTM10, REMIC I
         Regular Interest I-LTM11, REMIC I Regular Interest I-LTB, REMIC I
         Regular Interest I-LTZZ and REMIC I Regular Interest I-LTP, PRO RATA,
         in an amount equal to (A) the Uncertificated Interest for such
         Distribution Date, plus (B) any amounts in respect thereof remaining
         unpaid from previous Distribution Dates. Amounts payable as
         Uncertificated Interest in respect of REMIC I Regular Interest I-LTZZ
         shall be reduced when the REMIC I Overcollateralization Amount is less
         than the REMIC I Required Overcollateralization Amount, by the lesser
         of (x) the amount of such difference and (y) the Maximum I-LTZZ
         Uncertificated Interest Deferral Amount and such amount will be payable
         to the Holders of REMIC I Regular Interest I-LTA1A, REMIC I Regular
         Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I Regular
         Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, REMIC I Regular
         Interest I-LTA2D, REMIC I Regular Interest I-LTM1, REMIC I Regular
         Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
         Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
         Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC I Regular
         Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular
         Interest I-LTM10, REMIC I Regular Interest I-LTM11 and REMIC I Regular
         Interest I-LTB, in the same proportion as the Overcollateralization
         Increase Amount is allocated to the Corresponding Certificates and the
         Uncertificated Balance of REMIC I Regular Interest I-LTZZ shall be
         increased by such amount;

                  (ii)     to Holders of REMIC I Regular Interest I-LT1SUB,
         REMIC I Regular Interest I-LT1GRP, REMIC I Regular Interest I-LT2SUB,
         REMIC I Regular Interest I-LT2GRP, and REMIC I Regular Interest I-LTXX,
         PRO RATA, in an amount equal to (A) the Uncertificated Interest for
         such Distribution Date, plus (B) any amounts in respect thereof
         remaining unpaid from previous Distribution Dates;

                  (iii)    to the Holders of REMIC I Regular Interests, in an
         amount equal to the remainder of the REMIC I Marker Allocation
         Percentage of the available funds for


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<PAGE>


         such Distribution Date after the distributions made pursuant to clause
         (i) above, allocated as follows:

                           (A)      98.00% of such remainder to the Holders of
                  REMIC I Regular Interest I-LTAA, until the Uncertificated
                  Balance of such Uncertificated REMIC I Regular Interest is
                  reduced to zero;

                           (B)      2.00% of such remainder, first, to the
                  Holders of REMIC I Regular Interest I-LTA1A, REMIC I Regular
                  Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
                  Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C,
                  REMIC I Regular Interest I-LTA2D, REMIC I Regular Interest
                  I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
                  Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I
                  Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6,
                  REMIC I Regular Interest I-LTM7, REMIC I Regular Interest
                  I-LTM8, REMIC I Regular Interest I-LTM9, REMIC I Regular
                  Interest I-LTM10, REMIC I Regular Interest I-LTM11 and REMIC I
                  Regular Interest I-LTB, 1% in the same proportion as principal
                  payments are allocated to the Corresponding Certificates,
                  until the Uncertificated Balances of such REMIC I Regular
                  Interests are reduced to zero and second to the Holders of
                  REMIC I Regular Interest I-LTZZ, until the Uncertificated
                  Balance of such REMIC I Regular Interest is reduced to zero;

                           (C)      to the Holders of REMIC I Regular Interest
                  I-LTP, all Prepayment Charges and on the Distribution Date
                  immediately following the expiration of the latest Prepayment
                  Charge as identified on the Prepayment Charge Schedule or any
                  Distribution Date thereafter until $100 has been distributed
                  pursuant to this clause; then

                           (D)      any remaining amount to the Holders of the
                  Class R-I Interest, in respect of the Class R-I Interest;

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.

                  (iv)     to the Holders of REMIC I Regular Interests, in an
         amount equal to the remainder of the REMIC I Sub WAC Allocation
         Percentage of available funds for such Distribution Date after the
         distributions made pursuant to clause (ii) above, such that
         distributions of principal shall be deemed to be made to the REMIC I
         Regular Interests first, so as to keep the Uncertificated Balance of
         each REMIC I Regular Interest ending with the designation "GRP" equal
         to 0.01% of the aggregate Stated Principal Balance of the Mortgage
         Loans in the related Loan Group; second, to each REMIC I Regular
         Interest ending with the designation "SUB," so that the Uncertificated
         Balance of each such REMIC I Regular Interest is equal to 0.01% of the
         excess of (x) the aggregate Stated Principal Balance of the Mortgage
         Loans in the related Loan Group over (y) the current Certificate
         Principal Balance of the Class A Certificate in the related Loan Group
         (except that if any such excess is a larger number than in the
         preceding distribution period, the least amount of principal shall be
         distributed to such REMIC I Regular Interests such that


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<PAGE>


         the REMIC I Subordinated Balance Ratio is maintained); and third, any
         remaining principal to REMIC I Regular Interest I-LTXX.

                  (v)      Notwithstanding the distributions described in
         Section 5.01(a)(1), distributions of funds shall be made to
         Certificateholders only in accordance with Section 5.01(2) through (7)
         and Section 5.01(b).

                  (2)      On each Distribution Date, the Securities
         Administrator shall withdraw from the Distribution Account to the
         extent on deposit therein an amount equal to the Group I Interest
         Remittance Amount and make the following disbursements and transfers in
         the order of priority described below, in each case to the extent of
         the Group I Interest Remittance Amount remaining for such Distribution
         Date:

                  FIRST, concurrently, to the Holders of the Class A-1A
                  Certificates and Class A-1B Certificates, the Senior Interest
                  Distribution Amount allocable to each such Class, on a PRO
                  RATA basis, based on the entitlement of each such Class; and

                  SECOND, concurrently, to the Holders of the Class A-2A, Class
                  A-2B, Class A-2C and Class A-2D Certificates, the Senior
                  Interest Distribution Amount allocable to each such Class, to
                  the extent remaining unpaid after the distribution of the
                  Group II Interest Remittance Amount as set forth in Section
                  5.01(a)(3) below, on a PRO RATA basis, based on the
                  entitlement of each such Class.

                  (3)      On each Distribution Date, the Securities
         Administrator shall withdraw from the Distribution Account to the
         extent on deposit therein an amount equal to the Group II Interest
         Remittance Amount and make the following disbursements and transfers in
         the order of priority described below, in each case to the extent of
         the Group II Interest Remittance Amount remaining for such Distribution
         Date:

                  FIRST, concurrently, to the Holders of the Class A-2A, Class
                  A-2B, Class A-2C and Class A-2D Certificates, the Senior
                  Interest Distribution Amount allocable to each such Class, on
                  a PRO RATA basis, based on the entitlement of each such Class;
                  and

                  SECOND, concurrently, to the Holders of the Class A-1A
                  Certificates and Class A-1B Certificates, the Senior Interest
                  Distribution Amount allocable to each such Class, to the
                  extent remaining unpaid after the distribution of the Group I
                  Interest Remittance Amount as set forth in Section 5.01(a)(2)
                  above, on a PRO RATA basis, based on the entitlement of each
                  such Class.

                  (4)      On each Distribution Date, the Securities
         Administrator shall withdraw from the Distribution Account to the
         extent on deposit therein an amount equal to the Group I Interest
         Remittance Amount, and the Group II Interest Remittance Amount
         remaining after the distributions required by clauses (2) and (3) above
         and make the following disbursements and transfers in the order of
         priority described below, in each case to the extent of the Group I
         Interest Remittance Amount and Group II Interest Remittance Amount
         remaining for such Distribution Date:

                  sequentially, to the Holders of the Class M-1, Class M-2,
                  Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
                  M-8, Class M-9, Class M-10, Class M-11


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<PAGE>


                  and Class B Certificates, in that order, the Interest
                  Distribution Amount allocable to each such Class.

                  (5)      On each Distribution Date (a) prior to the Stepdown
         Date or (b) on which a Trigger Event is in effect, the Securities
         Administrator shall withdraw from the Distribution Account to the
         extent on deposit therein an amount equal to the Group I Principal
         Distribution Amount and the Group II Principal Distribution Amount and
         distribute to the Certificateholders the following amounts, in the
         following order of priority:

                           (i)      The Group I Principal Distribution Amount
         shall be distributed in the following order of priority:

                  FIRST, to the Class A-1A Certificates and Class A-1B
                  Certificates as follows:

                  (1) for each Distribution Date on which a Trigger Event is in
                  effect, sequentially, to the Holders of the Class A-1A
                  Certificates and Class A-1B Certificates, in that order, until
                  the Certificate Principal Balance of each such Class has been
                  reduced to zero; and

                  (2) for each Distribution Date on which a Trigger Event is not
                  in effect, concurrently, to the Holders of the Class A-1A
                  Certificates and Class A-1B Certificates, on a PRO RATA basis,
                  based on the Certificate Principal Balance of each such Class,
                  until the Certificate Principal Balance of each such Class has
                  been reduced to zero; and

                  SECOND, concurrently, (i) to the Holders of the Class A-2A
                  Certificates and (ii) to the Holders of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, after taking into account
                  the distribution of the Group II Principal Distribution Amount
                  as described in Section 5.01(a)(5)(ii) below, on a PRO RATA
                  basis, based on the Certificate Principal Balance of each such
                  Class, until the Certificate Principal Balance of each such
                  Class has been reduced to zero; provided however, that the PRO
                  RATA allocation to the Class A-2B, Class A-2C and Class A-2D
                  Certificates pursuant to this Section 5.01(a)(5)(i) shall be
                  based on the total Certificate Principal Balance of the Class
                  A-2B, Class A-2C and Class A-2D Certificates but shall be
                  distributed sequentially to the Class A-2B, Class A-2C and
                  Class A-2D Certificates, in that order, until the Certificate
                  Principal Balance of each such Class has been reduced to zero.

                           (ii)     The Group II Principal Distribution Amount
         shall be distributed in the following order of priority:

                  FIRST, concurrently, (i) to the Holders of the Class A-2A
                  Certificates and (ii) to the Holders of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, on a PRO RATA basis, based
                  on the Certificate Principal Balance of each such Class, until
                  the Certificate Principal Balance of each such Class has been
                  reduced to zero; provided however, that the PRO RATA
                  allocation to the Class A-2B, Class A-2C and the Class A-2D
                  Certificates pursuant to this Section 5.01(a)(5)(ii) shall be
                  based on the total Certificate Principal Balance of the Class
                  A-2B, Class A-2C and the


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<PAGE>


                  Class A-2D Certificates, but shall be distributed sequentially
                  to the Class A-2B, Class A-2C and Class A-2D Certificates, in
                  that order, until the Certificate Principal Balance of each
                  such Class has been reduced to zero;

                  SECOND, to the Class A-1A Certificates and Class A-1B
                  Certificates as follows:

                  (1) for each Distribution Date on which a Trigger Event is in
                  effect and after taking into account the distribution of the
                  Group I Principal Distribution Amount as described above in
                  Section 5.01(a)(5)(i),, sequentially, to the Holders of the
                  Class A-1A Certificates and Class A-1B Certificates, in that
                  order, until the Certificate Principal Balance of each such
                  Class has been reduced to zero; and

                  (2) for each Distribution Date on which a Trigger Event is not
                  in effect and after taking into account the distribution of
                  the Group I Principal Distribution Amount as described above
                  in Section 5.01(a)(5)(i), concurrently, to the Holders of the
                  Class A-1A Certificates and Class A-1B Certificates, on a PRO
                  RATA basis, based on the Certificate Principal Balance of each
                  such Class, until the Certificate Principal Balance of each
                  such Class has been reduced to zero.

                           (iii)    The Group I Principal Distribution Amount
         and Group II Principal Distribution Amount remaining after
         distributions pursuant to Sections 5.01(a)(5)(i) and (ii) above shall
         be distributed in the following order of priority:

                  sequentially, to the Holders of the Class M-1, Class M-2,
                  Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
                  M-8, Class M-9, Class M-10, Class M-11 and Class B
                  Certificates, in that order, until the Certificate Principal
                  Balance of each such Class has been reduced to zero.

                  (6)      On each Distribution Date (a) on or after the
         Stepdown Date and (b) on which a Trigger Event is not in effect, the
         Securities Administrator shall withdraw from the Distribution Account
         to the extent on deposit therein an amount equal to the Group I
         Principal Distribution Amount and the Group II Principal Distribution
         Amount and distribute to the Certificateholders the following amounts,
         in the following order of priority:

                           (i)      The Group I Principal Distribution Amount
         shall be distributed in the following order of priority:

                  FIRST, concurrently, to the Holders of the Class A-1A
                  Certificates and Class A-1B Certificates, on a PRO rata, based
                  on the Certificate Principal Balance of each such Class, the
                  Class A-1 Principal Distribution Amount, until the Certificate
                  Principal Balance of each such Class has been reduced to zero;
                  and

                  SECOND, concurrently, (i) to the Holders of the Class A-2A
                  Certificates and (ii) to the Holders of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, after taking into account
                  the distribution of the Group II Principal Distribution
                  Amount, pursuant to Section 5.01(a)(6)(ii) below up to an
                  amount equal to the amount, if any, of the Class A-2 Principal
                  Distribution Amount remaining unpaid on such Distribution
                  Date, on a PRO RATA basis, based on the Certificate Principal
                  Balance


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<PAGE>


                  of each such Class, until the Certificate Principal Balance of
                  each such Class has been reduced to zero; provided however,
                  that the PRO RATA allocation to the Class A-2B, Class A-2C and
                  Class A-2D Certificates pursuant to this Section 5.01(a)(6)(i)
                  shall be based on the total Certificate Principal Balance of
                  the Class A-2B, Class A-2C and Class A-2D Certificates, but
                  shall be distributed sequentially to the Class A-2B, Class
                  A-2C and Class A-2D Certificates, in that order, until the
                  Certificate Principal Balance of each such Class has been
                  reduced to zero.

                           (ii)     The Group II Principal Distribution Amount
         shall be distributed in the following order of priority:

                  FIRST, concurrently, (i) to the Holders of the Class A-2A
                  Certificates and (ii) to the Holders of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, the Class A-2 Principal
                  Distribution Amount, on a PRO RATA basis, based on the
                  Certificate Principal Balance of each such Class, until the
                  Certificate Principal Balance of each such Class has been
                  reduced to zero; provided however, that the PRO RATA
                  allocation to the Class A-2B, Class A-2C and Class A-2D
                  Certificates pursuant to this Section 5.01(a)(6)(ii) shall be
                  based on the total Certificate Principal Balance of the Class
                  A-2B, Class A-2C and Class A-2D Certificates, but shall be
                  distributed sequentially to the Class A-2B, Class A-2C and
                  Class A-2D Certificates, in that order, until the Certificate
                  Principal Balance of each such Class has been reduced to zero;
                  and

                  SECOND, concurrently, to the Holders of the Class A-1A
                  Certificates and the Class A-1B Certificates, after taking
                  into account the distribution of the Group I Principal
                  Distribution Amount pursuant to Section 5.01(a)(6)(i), up to
                  an amount equal to the amount, if any, of the Class A-1
                  Principal Distribution Amount remaining unpaid on such
                  Distribution Date, on a PRO RATA basis, based on the
                  Certificate Principal Balance of each such Class, until the
                  Certificate Principal Balance of each such Class has been
                  reduced to zero.

                           (iii)    The Principal Distribution Amount remaining
         after distributions pursuant to Sections 5.01(a)(6)(i) and (ii) above
         shall be distributed in the following order of priority:

                  FIRST, to the Holders of the Class M-1 Certificates, the
                  lesser of (x) the remaining Principal Distribution Amount and
                  (y) the Class M-1 Principal Distribution Amount, until the
                  Certificate Principal Balance of the Class M-1 Certificates
                  has been reduced to zero;

                  SECOND, to the Holders of the Class M-2 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the amounts distributed to the
                  Holders of the Class M-1 Certificates under clause first
                  above, and (y) the Class M-2 Principal Distribution Amount,
                  until the Certificate Principal Balance of the Class M-2
                  Certificates has been reduced to zero;

                  THIRD, to the Holders of the Class M-3 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts


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<PAGE>


                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above and to the Holders of the Class M-2
                  Certificates under clause second above, and (y) the Class M-3
                  Principal Distribution Amount, until the Certificate Principal
                  Balance of the Class M-3 Certificates has been reduced to
                  zero;

                  FOURTH, to the Holders of the Class M-4 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above and to the Holders of
                  the Class M-3 Certificates under clause third above, and (y)
                  the Class M-4 Principal Distribution Amount, until the
                  Certificate Principal Balance of the Class M-4 Certificates
                  has been reduced to zero;

                  FIFTH, to the Holders of the Class M-5 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above and to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, and (y) the Class M-5 Principal Distribution Amount,
                  until the Certificate Principal Balance of the Class M-5
                  Certificates has been reduced to zero;

                  SIXTH, to the Holders of the Class M-6 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above and to the Holders of the Class M-5 Certificates under
                  clause fifth above, and (y) the Class M-6 Principal
                  Distribution Amount, until the Certificate Principal Balance
                  of the Class M-6 Certificates has been reduced to zero;

                  SEVENTH, to the Holders of the Class M-7 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, to the Holders of the Class M-5 Certificates under
                  clause fifth above and to the Holders of the Class M-6
                  Certificates under clause sixth above, and (y) the Class M-7
                  Principal Distribution Amount, until the Certificate Principal
                  Balance of the Class M-7 Certificates has been reduced to
                  zero;

                  EIGHTH, to the Holders of the Class M-8 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of


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<PAGE>


                  the Class M-4 Certificates under clause fourth above, to the
                  Holders of the Class M-5 Certificates under clause fifth
                  above, to the Holders of the Class M-6 Certificates under
                  clause sixth above and to the Holders of the Class M-7
                  Certificates under clause seventh above, and (y) the Class M-8
                  Principal Distribution Amount, until the Certificate Principal
                  Balance of the Class M-8 Certificates has been reduced to
                  zero;

                  NINTH, to the Holders of the Class M-9 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, to the Holders of the Class M-5 Certificates under
                  clause fifth above, to the Holders of the Class M-6
                  Certificates under clause sixth above, to the Holders of the
                  Class M-7 Certificates under clause seventh above and to the
                  Holders of the Class M-8 Certificates under clause eighth
                  above, and (y) the Class M-9 Principal Distribution Amount,
                  until the Certificate Principal Balance of the Class M-9
                  Certificates has been reduced to zero;

                  TENTH, to the Holders of the Class M-10 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, to the Holders of the Class M-5 Certificates under
                  clause fifth above, to the Holders of the Class M-6
                  Certificates under clause sixth above, to the Holders of the
                  Class M-7 Certificates under clause seventh above, to the
                  Holders of the Class M-8 Certificates under clause eighth
                  above and to the Holders of the Class M-9 Certificates under
                  clause ninth above, and (y) the Class M-10 Principal
                  Distribution Amount, until the Certificate Principal Balance
                  of the Class M-10 Certificates has been reduced to zero;

                  ELEVENTH, to the Holders of the Class M-11 Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, to the Holders of the Class M-5 Certificates under
                  clause fifth above, to the Holders of the Class M-6
                  Certificates under clause sixth above, to the Holders of the
                  Class M-7 Certificates under clause seventh above, to the
                  Holders of the Class M-8 Certificates under clause eighth
                  above, to the Holders of the Class M-9 Certificates under
                  clause ninth above and to the Holders of the Class M-10
                  Certificates under clause tenth above, and (y) the Class M-11
                  Principal Distribution Amount, until the Certificate Principal
                  Balance of the Class M-11 Certificates has been reduced to
                  zero; and


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<PAGE>


                  TWELFTH, to the Holders of the Class B Certificates, the
                  lesser of (x) the excess of (i) the remaining Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause first above, to the Holders of the Class M-2
                  Certificates under clause second above, to the Holders of the
                  Class M-3 Certificates under clause third above, to the
                  Holders of the Class M-4 Certificates under clause fourth
                  above, to the Holders of the Class M-5 Certificates under
                  clause fifth above, to the Holders of the Class M-6
                  Certificates under clause sixth above, to the Holders of the
                  Class M-7 Certificates under clause seventh above, to the
                  Holders of the Class M-8 Certificates under clause eighth
                  above, to the Holders of the Class M-9 Certificates under
                  clause ninth above, to the Holders of the Class M-10
                  Certificates under clause tenth above and to the Holders of
                  the Class M-11 Certificates under clause eleventh above and
                  (y) the Class B Principal Distribution Amount, until the
                  Certificate Principal Balance of the Class B Certificates has
                  been reduced to zero.

                  (7)      On each Distribution Date, the Net Monthly Excess
         Cashflow (or, in the case of clause (i) below, the Net Monthly Excess
         Cashflow exclusive of any Overcollateralization Reduction Amount) shall
         be distributed as follows:

                           (i)      to the Holders of the Class or Classes of
         Certificates then entitled to receive distributions in respect of
         principal, in an amount equal to any Extra Principal Distribution
         Amount, payable to such Holders in accordance with the priorities set
         forth in Section 5.01(b) below;

                           (ii)     sequentially, to the Holders of the Class
         M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
         Class M-8, Class M-9, Class M-10, Class M-11 and Class B Certificates,
         in that order, in an amount equal to the Interest Carry Forward Amount
         allocable to each such Class;

                           (iii)    sequentially, to the Holders of the Class
         M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
         Class M-8, Class M-9, Class M-10, Class M-11 and Class B Certificates,
         in that order, in an amount equal to the Allocated Realized Loss Amount
         allocable to each such Class;

                           (iv)     concurrently, to the Holders of the Class A
         Certificates, in an amount equal to such Certificates' allocated share
         of any Prepayment Interest Shortfalls on the related Mortgage Loans to
         the extent not covered by payments pursuant to Section 3.22 or 4.18 of
         this Agreement or pursuant to the related Servicing Agreement and any
         shortfalls resulting from the application of the Relief Act or similar
         state or local law or the bankruptcy code with respect to the related
         Mortgage Loans to the extent not previously reimbursed pursuant to
         Section 1.02;

                           (v)      sequentially, to the Holders of the Class
         M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7,
         Class M-8, Class M-9, Class M-10, Class M-11 and Class B Certificates,
         in that order, in an amount equal to such certificates' share of any
         Prepayment Interest Shortfalls on the Mortgage Loans to the extent not
         covered by payments pursuant to Sections 3.22 or Section 4.18 of this
         Agreement or pursuant to the related Servicing Agreement and any Relief
         Act Interest Shortfall, in each case that were allocated to such Class
         for such Distribution Date and for


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<PAGE>


         any prior Distribution Date, to the extent not previously reimbursed
         pursuant to Section 1.02;

                           (vi)     to the Reserve Fund from amounts otherwise
         payable to the Class CE-1 Certificates, and then from the Reserve Fund
         to the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
         Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and
         Class B Certificates in that order, in an amount equal to the unpaid
         amount of any Net WAC Rate Carryover Amount for each such Class for
         such Distribution Date;

                           (vii)    to the Reserve Fund, the amount required to
         be deposited therein pursuant to Section 3.24(b), after taking into
         account amounts received under the Cap Contracts;

                           (viii)   to the Holders of the Class CE-1
         Certificates the Interest Distribution Amount and any
         Overcollateralization Reduction Amount for such Distribution Date;

                           (ix)     For so long as Wells Fargo is the Servicer,
         to the Holders of the Class CE-2 Certificates an amount equal to the
         Servicing Fee calculated as though the Servicing Fee Rate equaled
         0.315%;

                           (x)      to the Holders of the Class R Certificates,
         in respect of the Class R-II Interest, any remaining amounts; provided
         that if such Distribution Date is the Distribution Date immediately
         following the expiration of the latest Prepayment Charge term as
         identified on the Mortgage Loan Schedule or any Distribution Date
         thereafter, then any such remaining amounts will be distributed first,
         to the Holders of the Class P Certificates, until the Certificate
         Principal Balance thereof has been reduced to zero; and second, to the
         Holders of the Class R Certificates.

         The Class CE-1 Certificates are intended to receive all principal and
interest received by the Trust on the Mortgage Loans that is not otherwise
distributable to any other Class of Regular Certificates or REMIC Regular
Interests. If the Securities Administrator determines that the Residual
Certificates are entitled to any distributions on any Distribution Date other
than the final Distribution Date, the Securities Administrator, prior to any
such distribution to any Residual Certificate, shall notify the Depositor of
such impending distribution. Upon such notification, the Depositor will prepare
and request that the other parties hereto enter into an amendment to the Pooling
and Servicing Agreement pursuant to Section 12.01, to revise such mistake in the
distribution provisions.

         On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Securities Administrator
will first, withdraw from the Reserve Fund all income from the investment of
funds in the Reserve Fund and distribute such amount to the Holders of the Class
CE-1 Certificates, and second, withdraw from the Reserve Fund, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount first, concurrently
to the Class A Certificates, on a PRO RATA basis; second, to the Class M-1
Certificates, third, to the Class M-2 Certificates, fourth, to the Class M-3
Certificates, fifth, to the Class M-4 Certificates, sixth, to the Class M-5
Certificates, seventh, to the Class M-6


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<PAGE>


Certificates, eighth, to the Class M-7 Certificates, ninth, to the Class M-8
Certificates, tenth, to the Class M-9 Certificates, eleventh, to the Class M-10
Certificates, twelfth to the Class M-11 Certificates and thirteenth, to the
Class B Certificates in each case to the extent to the extent any Net WAC Rate
Carryover Amount is allocable to each such Class.

         (b)      (i) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Extra Principal Distribution
Amount shall be distributed in the following order of priority;

                  FIRST, to the Holders of the Class A Certificates as follows:

                  (1) for each Distribution Date on which a Trigger Event is in
                  effect, concurrently to the Holders of the Class A
                  Certificates, on a pro rata basis, based on the Certificate
                  Principal Balance of each such Class, until the Certificate
                  Principal Balance of each such Class has been reduced to zero;
                  provided, however that the pro rata allocation to the Class
                  A-1A Certificates and Class A-1B Certificates pursuant to this
                  clause shall be based on the total Certificate Principal
                  Balance of the Class A-1A Certificates and Class A-1B
                  Certificates, but shall be distributed to the Class A-1A
                  Certificates and the Class A-1B Certificates on a sequential
                  basis, in that order, until the Certificate Principal Balances
                  of the Class A-1A Certificates and Class A-1B Certificates
                  have been reduced to zero; provided, further that the pro rata
                  allocation to the Class A-2B, Class A-2C and Class A-2D
                  Certificates pursuant to this clause shall be based on the
                  total Certificate Principal Balance of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, but shall be distributed to
                  the Class A-2B, Class A-2C and Class A-2D Certificates on a
                  sequential basis, in that order, until the Certificate
                  Principal Balances of the Class A-2B, Class A-2C and Class
                  A-2D Certificates have been reduced to zero;

                  (2) for each Distribution Date on which a Trigger Event is not
                  in effect, concurrently to the Holders of the Class A
                  Certificates, on a PRO RATA basis, based on the Certificate
                  Principal Balance of each such Class, until the Certificate
                  Principal Balance of each such Class has been reduced to zero;
                  provided, however that the pro rata allocation to the Class
                  A-2B, Class A-2C and Class A-2D Certificates pursuant to this
                  clause shall be based on the total Certificate Principal
                  Balance of the Class A-2B, Class A-2C and Class A-2D
                  Certificates, but shall be distributed to the Class A-2B,
                  Class A-2C and Class A-2D Certificates on a sequential basis,
                  in that order, until the Certificate Principal Balances of the
                  Class A-2B, Class A-2C and Class A-2D Certificates have been
                  reduced to zero;

                  SECOND, sequentially, to the Holders of the Class M-1, Class
                  M-2, Class M 3, Class M-4, Class M-5, Class M-6, Class M-7,
                  Class M-8, Class M-9, Class M-10, Class M-11 and Class B
                  Certificates, in that order, until the Certificate Principal
                  Balance of each such Class has been reduced to zero.

                           (ii)     On each Distribution Date (a) on or after
the Stepdown Date and (b) on which a Trigger Event is not in effect,
distributions of principal to the extent of the Extra Principal Distribution
Amount shall be distributed in the following order of priority:


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<PAGE>


                  FIRST, (a) the lesser of (x) the Group I Principal
                  Distribution Amount and (y) the Class A-1 Principal
                  Distribution Amount, shall be distributed to the Holders of
                  the Class A-1A Certificates and Class A-1B Certificates, on a
                  PRO RATA basis, based on the Certificate Principal Balance of
                  each such Class, until the Certificate Principal Balance of
                  each such Class has been reduced to zero and (b) the lesser of
                  (x) the Group II Principal Distribution Amount and (y) the
                  Class A-2 Principal Distribution Amount, shall be distributed
                  concurrently (i) to the Holders of the Class A-2A Certificates
                  and (ii) to the Holders of the Class A-2B, Class A-2C and
                  Class A-2D Certificates, on a PRO RATA basis, based on the
                  Certificate Principal Balance of each such Class, until the
                  Certificate Principal Balance of each such Class has been
                  reduced to zero, provided, however that the PRO RATA
                  allocation to the Class A-2B, Class A-2C and Class A-2D
                  Certificates pursuant to this clause shall be based on the
                  total Certificate Principal Balance of the Class A-2B, Class
                  A-2C and Class A-2D Certificates, but shall be distributed
                  sequentially to the Class A-2B, Class A-2C and Class A-2D
                  Certificates, in that order, until the Certificate Principal
                  Balance of each such Class has been reduced to zero;

                  SECOND, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the amount distributed to the
                  Holders of the Class A Certificates pursuant to clause FIRST
                  of this Section 5.01(b)(ii) and (y) the Class M-1 Principal
                  Distribution Amount, shall be distributed to the Holders of
                  the Class M-1 Certificates, until the Certificate Principal
                  Balance of such Class has been reduced to zero;

                  THIRD, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii) and to
                  the Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii) and (y) the Class M-2
                  Principal Distribution Amount, shall be distributed to the
                  Holders of the Class M-2 Certificates, until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  FOURTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii) and to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii) and (y) the Class M-3 Principal
                  Distribution Amount, shall be distributed to the Holders of
                  the Class M-3 Certificates, until the Certificate Principal
                  Balance of such Class has been reduced to zero;

                  FIFTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii) and to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii) and (y) the Class M-4 Principal Distribution
                  Amount, shall be


                                      127
<PAGE>


                  distributed to the Holders of the Class M-4 Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero;

                  SIXTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii) and to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii) and (y)
                  the Class M-5 Principal Distribution Amount, shall be
                  distributed to the Holders of the Class M-5 Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero;

                  SEVENTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii) and to
                  the Holders of the Class M-5 Certificates pursuant to clause
                  sixth of this Section 5.01(b)(ii) and (y) the Class M-6
                  Principal Distribution Amount, shall be distributed to the
                  Holders of the Class M-6 Certificates, until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  EIGHTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section 5.01(b)(ii) and to the Holders of the Class
                  M-6 Certificates pursuant to clause seventh of this Section
                  5.01(b)(ii) and (y) the Class M-7 Principal Distribution
                  Amount, shall be distributed to the Holders of the Class M-7
                  Certificates, until the Certificate Principal Balance of such
                  Class has been reduced to zero;

                  NINTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of


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<PAGE>


                  this Section 5.01(b)(ii), to the Holders of the Class M-5
                  Certificates pursuant to clause sixth of this Section
                  5.01(b)(ii), to the Holders of the Class M-6 Certificates
                  pursuant to clause seventh of this Section 5.01(b)(ii) and to
                  the Holders of the Class M-7 Certificates pursuant to clause
                  eighth of this Section 5.01(b)(ii) and (y) the Class M-8
                  Principal Distribution Amount, shall be distributed to the
                  Holders of the Class M-8 Certificates, until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  TENTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section 5.01(b)(ii), to the Holders of the Class M-6
                  Certificates pursuant to clause seventh of this Section
                  5.01(b)(ii), to the Holders of the Class M-7 Certificates
                  pursuant to clause eighth of this Section 5.01(b)(ii) and to
                  the Holders of the Class M-8 Certificates pursuant to clause
                  ninth of this Section 5.01(b)(ii) and (y) the Class M-9
                  Principal Distribution Amount, shall be distributed to the
                  Holders of the Class M-9 Certificates, until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  ELEVENTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section 5.01(b)(ii), to the Holders of the Class M-6
                  Certificates pursuant to clause seventh of this Section
                  5.01(b)(ii), to the Holders of the Class M-7 Certificates
                  pursuant to clause eighth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-8 Certificates pursuant to clause ninth
                  of this Section 5.01(b)(ii) and to the Holders of the Class
                  M-9 Certificates pursuant to clause tenth of this Section
                  5.01(b)(ii) and (y) the Class M-10 Principal Distribution
                  Amount, shall be distributed to the Holders of the Class M-10
                  Certificates, until the Certificate Principal Balance of such
                  Class has been reduced to zero;

                  TWELFTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section


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<PAGE>


                  5.01(b)(ii), to the Holders of the Class M-6 Certificates
                  pursuant to clause seventh of this Section 5.01(b)(ii), to the
                  Holders of the Class M-7 Certificates pursuant to clause
                  eighth of this Section 5.01(b)(ii), to the Holders of the
                  Class M-8 Certificates pursuant to clause ninth of this
                  Section 5.01(b)(ii), to the Holders of the Class M-9
                  Certificates pursuant to clause tenth of this Section
                  5.01(b)(ii) and to the Holders of the Class M-10 Certificates
                  pursuant to clause eleventh of this Section 5.01(b)(ii) and
                  (y) the Class M-11 Principal Distribution Amount, shall be
                  distributed to the Holders of the Class M-11 Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero; and

                  THIRTEENTH, the lesser of (x) the excess of (i) the Principal
                  Distribution Amount over (ii) the sum of the amounts
                  distributed to the Holders of the Class A Certificates
                  pursuant to clause first of this Section 5.01(b)(ii), to the
                  Holders of the Class M-1 Certificates pursuant to clause
                  second of this Section 5.01(b)(ii), to the Holders of the
                  Class M-2 Certificates pursuant to clause third of this
                  Section 5.01(b)(ii), to the Holders of the Class M-3
                  Certificates pursuant to clause fourth of this Section
                  5.01(b)(ii), to the Holders of the Class M-4 Certificates
                  pursuant to clause fifth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section 5.01(b)(ii), to the Holders of the Class M-6
                  Certificates pursuant to clause seventh of this Section
                  5.01(b)(ii), to the Holders of the Class M-7 Certificates
                  pursuant to clause eighth of this Section 5.01(b)(ii), to the
                  Holders of the Class M-8 Certificates pursuant to clause ninth
                  of this Section 5.01(b)(ii), to the Holders of the Class M-9
                  Certificates pursuant to clause tenth of this Section
                  5.01(b)(ii), to the Holders of the Class M-10 Certificates
                  pursuant to clause eleventh of this Section 5.01(b)(ii) and to
                  the Holders of the Class M-11 Certificates pursuant to clause
                  twelfth of this Section 5.01(b)(ii) and (y) the Class B
                  Principal Distribution Amount, shall be distributed to the
                  Holders of the Class B Certificates, until the Certificate
                  Principal Balance of such Class has been reduced to zero.

         (c)      On each Distribution Date, the Securities Administrator shall
withdraw any amounts then on deposit in the Distribution Account that represent
Prepayment Charges and shall distribute such amounts to the Class P
Certificateholders as described above.

         (d)      All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 5.01(f) or
Section 10.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance that is in excess of


                                      130
<PAGE>


the lesser of (i) $5,000,000 or (ii) two-thirds of the initial Certificate
Principal Balance of such Class of Certificates, or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Securities Administrator or such other location
specified in the notice to Certificateholders of such final distribution.

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

         (e)      The rights of the Certificateholders to receive distributions
in respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Agreement. None of the Holders
of any Class of Certificates, the Trustee, the Servicer, the Securities
Administrator or the Master Servicer shall in any way be responsible or liable
to the Holders of any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.

         (f)      Except as otherwise provided in Section 10.01, whenever the
Securities Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Securities
Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:

                  (i)      the Securities Administrator expects that the final
                  distribution with respect to such Class of Certificates will
                  be made on such Distribution Date but only upon presentation
                  and surrender of such Certificates at the office of the
                  Securities Administrator therein specified, and

                  (ii)     no interest shall accrue on such Certificates from
                  and after the end of the related Interest Accrual Period.

         Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust by the Securities Administrator and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 5.01(f) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Securities Administrator shall mail a second notice to the remaining
non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been


                                      131
<PAGE>


surrendered for cancellation, the Securities Administrator shall, directly or
through an agent, mail a final notice to the remaining non-tendering
Certificateholders concerning surrender of their Certificates but shall continue
to hold any remaining funds for the benefit of non-tendering Certificateholders.
The costs and expenses of maintaining the funds in trust and of contacting such
Certficateholders shall be paid out of the assets remaining in such trust fund.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Securities Administrator shall pay to the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Securities
Administrator as a result of such Certificateholder's failure to surrender its
Certificate(s) on the final Distribution Date for final payment thereof in
accordance with this Section 5.01(f). Any such amounts held in trust by the
Securities Administrator shall be held uninvested in an Eligible Account.

         (g)      Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate, a
Mezzanine Certificate or a Class B Certificate be reduced more than once in
respect of any particular amount both (a) allocated to such Certificate in
respect of Realized Losses pursuant to Section 5.04 and (b) distributed to the
Holder of such Certificate in reduction of the Certificate Principal Balance
thereof pursuant to this Section 5.01 from Net Monthly Excess Cashflow and (ii)
in no event shall the Uncertificated Balance of a REMIC Regular Interest be
reduced more than once in respect of any particular amount both (a) allocated to
such REMIC Regular Interest in respect of Realized Losses pursuant to Section
5.04 and (b) distributed on such REMIC Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 5.01.

         SECTION 5.02. Statements to Certificateholders.

         On each Distribution Date, the Securities Administrator (based on the
information set forth in the Servicer Report or the report provided by the
related Interim Servicer under the Servicing Agreements for such Distribution
Date and information provided by the Trustee or the counterparty to the Cap
Contracts with respect to payments made pursuant to the Cap Contracts) shall
make available to each Holder of the Certificates, a statement as to the
distributions made on such Distribution Date setting forth:

                  (i)      the amount of the distribution made on such
         Distribution Date to the Holders of the Certificates of each Class
         allocable to principal, and the amount of the distribution made on such
         Distribution Date to the Holders of the Class P Certificates allocable
         to Prepayment Charges;

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

                  (iii)    the aggregate Servicing Fee received by the Interim
         Servicers and the Servicer and Master Servicing Fee received by the
         Master Servicer during the related Due Period;

                  (iv)     the aggregate amount of P&I Advances for such
         Distribution Date;


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<PAGE>


                  (v)      Reserved;

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

                  (vii)    the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
         days, (c) delinquent 90 or more days, in each case, as of the last day
         of the preceding calendar month, (d) as to which foreclosure
         proceedings have been commenced and (e) with respect to which the
         related Mortgagor has filed for protection under applicable bankruptcy
         laws, with respect to whom bankruptcy proceedings are pending or with
         respect to whom bankruptcy protection is in force;

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

                  (ix)     if available, the book value of any REO Property as
         of the close of business on the last Business Day of the calendar month
         preceding the Distribution Date;

                  (x)      the aggregate amount of Principal Prepayments made
         during the related Prepayment Period and the aggregate amount of any
         Prepayment Charges received in respect thereof;

                  (xi)     the aggregate amount of Realized Losses incurred
         during the related Prepayment Period and the aggregate amount of
         Realized Losses incurred since the Closing Date;

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

                  (xiii)   the aggregate Certificate Principal Balance of each
         Class of Certificates, after giving effect to the distributions, and
         allocations of Realized Losses, made on such Distribution Date,
         separately identifying any reduction thereof due to allocations of
         Realized Losses;

                  (xiv)    the Certificate Factor for each such Class of
         Certificates applicable to such Distribution Date;

                  (xv)     the Interest Distribution Amount in respect of the
         Class A Certificates, the Mezzanine Certificates, the Class B
         Certificates, and the Class CE-1 Certificates for such Distribution
         Date and the Interest Carry Forward Amount, if any, with respect to the
         Class A Certificates, the Mezzanine Certificates and the Class B
         Certificates on such Distribution Date, and in the case of the Class A
         Certificates, the Mezzanine Certificates and the Class B Certificates
         separately identifying any reduction


                                      133
<PAGE>


         thereof due to allocations of Realized Losses, Prepayment Interest
         Shortfalls, Relief Act Interest Shortfalls and Net WAC Rate Carryover
         Amounts;

                  (xvi)    the aggregate amount of any Prepayment Interest
         Shortfall for such Distribution Date, to the extent not covered by
         payments by the Servicer pursuant to Section 3.22 of this Agreement,
         the Master Servicer pursuant to Section 4.18 of this Agreement or the
         related Interim Servicer pursuant to the applicable Servicing
         Agreement;

                  (xvii)   the aggregate amount of Relief Act Interest
         Shortfalls for such Distribution Date;

                  (xviii)  the Required Overcollateralization Amount and the
         Credit Enhancement Percentage for such Distribution Date;

                  (xix)    the Overcollateralization Increase Amount, if any,
         for such Distribution Date;

                  (xx)     the Overcollateralization Reduction Amount, if any,
         for such Distribution Date;

                  (xxi)    the Net WAC Rate Carryover Amount, if any, for such
         Distribution Date;

                  (xxii)   the Net WAC Rate Carryover Amount, if any,
         outstanding after reimbursements therefor on such Distribution Date and
         any amounts received under the Cap Contracts;

                  (xxiii)  the respective Pass-Through Rates applicable to the
         Class A Certificates, the Mezzanine Certificates, the Class B
         Certificates, and the Class CE-1 Certificates for such Distribution
         Date;

                  (xxiv)   the amount of any deposit to the Reserve Fund
         contemplated by Section 3.24(b);

                  (xxv)    the balance of the Reserve Fund prior to the deposit
         or withdrawal of any amounts on such Distribution Date;

                  (xxvi)   the amount of any deposit to the Reserve Fund
         pursuant to Section 5.01(a)(7)(vi);

                  (xxvii)  the balance of the Reserve Fund after all deposits
         and withdrawals on such Distribution Date;

                  (xxviii) the Loss Severity Percentage with respect to each
         Mortgage Loan; and

                  (xxix)   the Aggregate Loss Severity Percentage.


                                      134
<PAGE>


         The Securities Administrator will make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to the Certificateholders and the Rating Agencies
via the Securities Administrator's internet website. The Securities
Administrator's internet website shall initially be located at
http:\\www.ctslink.com and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at 1-301-815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities Administrator shall provide timely and adequate notification to all
above parties regarding any such changes.

         In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall be expressed as a dollar amount per Single
Certificate of the relevant Class.

         Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall furnish upon request to each Person who at
any time during the calendar year was a Holder of a Regular Certificate a
statement containing the information set forth in subclauses (i) through (iii)
above, aggregated for such calendar year or applicable portion thereof during
which such person was a Certificateholder. Such obligation of the Securities
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.

         Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall furnish upon request to each Person who at
any time during the calendar year was a Holder of a Residual Certificate a
statement setting forth the amount, if any, actually distributed with respect to
the Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.

         The Securities Administrator shall, upon request, furnish to each
Certificateholder during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, as applicable, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided at the expense of the Certificateholder, in accordance with such
reasonable and explicit instructions and directions as the Certificateholder may
provide.

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

         SECTION 5.03. Servicer Reports; P&I Advances.

         (a)      On the 18th calendar day of each month, and if the 18th
calendar day is not a Business Day, on or before 12:00 noon New York time on the
immediately following Business Day, the Servicer shall deliver to the Master
Servicer and the Securities Administrator by telecopy or electronic mail (or by
such other means as the Servicer, the Master Servicer and


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the Securities Administrator may agree from time to time) a remittance report
containing such information with respect to the Mortgage Loans and the related
Distribution Date as is reasonably available to the Servicer as the Master
Servicer or the Securities Administrator may reasonably require so as to enable
the Master Servicer to master service the Mortgage Loans and oversee the
servicing by the Servicer and the Securities Administrator to fulfill its
obligations hereunder with respect to securities and tax reporting.

         (b)      The amount of P&I Advances to be made by the Servicer on any
Distribution Date shall equal, subject to Section 5.03(d), (i) the aggregate
amount of Monthly Payments (net of the related Servicing Fees), due during the
related Due Period in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, which was acquired during or prior to
the related Prepayment Period and as to which an REO Disposition did not occur
during the related Prepayment Period, an amount equal to the excess, if any, of
the REO Imputed Interest on such REO Property for the most recently ended
calendar month, over the net income from such REO Property deposited in the
Collection Account pursuant to Section 3.21 for distribution on such
Distribution Date; provided, however, the Servicer shall not be required to make
P&I Advances with respect to Relief Act Interest Shortfalls, or with respect to
Prepayment Interest Shortfalls in excess of its obligations under Section 3.22.
For purposes of the preceding sentence, the Monthly Payment on each Balloon
Mortgage Loan with a delinquent Balloon Payment is equal to the assumed monthly
payment that would have been due on the related Due Date based on the original
principal amortization schedule for such Balloon Mortgage Loan.

         On the Servicer Remittance Date, the Servicer shall remit in
immediately available funds to the Securities Administrator for deposit in the
Distribution Account an amount equal to the aggregate amount of P&I Advances, if
any, to be made in respect of the Mortgage Loans for the related Distribution
Date either (i) from its own funds or (ii) from the Collection Account, to the
extent of any Amounts Held For Future Distribution on deposit therein (in which
case it will cause to be made an appropriate entry in the records of the
Collection Account that Amounts Held For Future Distribution have been, as
permitted by this Section 5.03, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans. In addition, the Servicer shall have the right to reimburse
itself for any outstanding P&I Advance made from its own funds from Amounts Held
for Future Distribution. Any Amounts Held For Future Distribution used by the
Servicer to make P&I Advances or to reimburse itself for outstanding P&I
Advances shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Remittance Date immediately following the Due Period or
Prepayment Period for which such amounts relate. The Securities Administrator
will notify the Servicer and the Master Servicer by the close of business on the
Business Day prior to the Distribution Date in the event that the amount
remitted by the Servicer to the Securities Administrator on such date is less
than the P&I Advances required to be made by the Servicer for the related
Distribution Date.

         (c)      The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in


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connection therewith or the removal thereof from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section.

         (d)      Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the Servicer that it has made a Nonrecoverable P&I Advance
or a Nonrecoverable Servicing Advance or that any proposed P&I Advance or
Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by a
certification of a Servicing Officer delivered to the Master Servicer.

         (e)      Subject to and in accordance with the provisions of Article
VIII, in the event the Servicer fails to make any required P&I Advance, then any
other successor Servicer shall be required to make such P&I Advance on the
Distribution Date on which the Servicer was required to make such Advance,
subject to its determination of recoverability. In addition, in the event that
an Interim Servicer fails to make a required P&I Advance under the related
Servicing Agreement, the Master Servicer will be required to make such P&I
Advance, subject to its determination of recoverability.

         SECTION 5.04. Allocation of Realized Losses.

         (a)      Prior to the Determination Date, the Servicer shall determine
as to each Mortgage Loan and REO Property and include in the monthly remittance
report provided to the Master Servicer and the Securities Administrator
(substantially in the form of Schedule 4 hereto) such information as is
reasonably available to the Servicer as the Master Servicer or the Securities
Administrator may reasonably require so as to enable the Master Servicer to
master service the Mortgage Loans and oversee the servicing by the Servicer and
the Securities Administrator to fulfill its obligations hereunder with respect
to securities and tax reporting, which shall include, but not be limited to: (i)
the total amount of Realized Losses, if any, incurred in connection with any
Final Recovery Determinations made during the related Prepayment Period; and
(ii) the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Servicer shall
also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period.

         (b)      All Realized Losses on the Mortgage Loans allocated to any
REMIC I Regular Interest pursuant to Section 5.04(c) on the Mortgage Loans shall
be allocated by the Securities Administrator on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class CE-1
Certificates; third, to the Class B Certificates until the Certificate Principal
Balance of the Class B Certificates has been reduced to zero, fourth, to the
Class M-11 Certificates until the Certificate Principal Balance of the Class
M-11 Certificates has been reduced to zero, fifth, to the Class M-10
Certificates, until the Certificate Principal Balance of the Class M-10
Certificates has been reduced to zero; sixth, to the Class M-9 Certificates,
until the Certificate Principal Balance of the Class M-9 Certificates has been
reduced to zero; seventh, to the Class M-8 Certificates, until the Certificate
Principal Balance of the Class M-8 Certificates


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has been reduced to zero; eighth, to the Class M-7 Certificates, until the
Certificate Principal Balance of the Class M-7 Certificates has been reduced to
zero; ninth, to the Class M-6 Certificates, until the Certificate Principal
Balance of the Class M-6 Certificates has been reduced to zero; tenth, to the
Class M-5 Certificates, until the Certificate Principal Balance of the Class M-5
Certificates has been reduced to zero; eleventh, to the Class M-4 Certificates,
until the Certificate Principal Balance of the Class M-4 Certificates has been
reduced to zero; twelfth, to the Class M-3 Certificates until the Certificate
Principal Balance of the Class M-3 Certificates has been reduced to zero;
thirteenth, to the Class M-2 Certificates, until the Certificate Principal
Balance of the Class M-2 Certificates has been reduced to zero and fourteenth,
to the Class M-1 Certificates, until the Certificate Principal Balance of the
Class M-1 Certificates has been reduced to zero. All Realized Losses to be
allocated to the Certificate Principal Balances of all Classes on any
Distribution Date shall be so allocated after the actual distributions to be
made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate
Principal Balance of such Class immediately prior to the relevant Distribution
Date, before reduction thereof by any Realized Losses, in each case to be
allocated to such Class of Certificates, on such Distribution Date.

         Any allocation of Realized Losses to a Mezzanine Certificate or Class B
Certificate on any Distribution Date shall be made by reducing the Certificate
Principal Balance thereof by the amount so allocated; any allocation of Realized
Losses to a Class CE-1 Certificates shall be made by reducing the amount
otherwise payable in respect thereof pursuant to Section 5.01(a)(7)(viii). No
allocations of any Realized Losses shall be made to the Certificate Principal
Balances of the Class A Certificates or Class P Certificates.

         As used herein, an allocation of a Realized Loss on a "PRO RATA basis"
among two or more specified Classes of Certificates means an allocation on a PRO
RATA basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the, Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.

         In addition, in the event that the Servicer receives any Subsequent
Recoveries, the Servicer shall deposit such funds into the Collection Account
pursuant to Section 3.08. If, after taking into account such Subsequent
Recoveries, the amount of a Realized Loss is reduced, the amount of such
Subsequent Recoveries will be applied to increase the Certificate Principal
Balance of the Class of Subordinate Certificates with the highest payment
priority to which Realized Losses have been allocated, but not by more than the
amount of Realized Losses previously allocated to that Class of Subordinate
Certificates pursuant to this Section 5.04 and not previously reimbursed to such
Class of Subordinate Certificates with Net Monthly Excess Cashflow pursuant to
Section 5.01(a)(7). The amount of any remaining Subsequent Recoveries will be
applied to sequentially increase the Certificate Principal Balance of the
Subordinate Certificates, beginning with the Class of Subordinate Certificates
with the next highest payment priority, up to the amount of such Realized Losses
previously allocated to such Class of Subordinate Certificates pursuant to this
Section 5.04 and not previously reimbursed to such Class of Subordinate
Certificates with Net Monthly Excess Cashflow pursuant to Section
5.01(a)(7)(iii). Holders of such Certificates will not be entitled to any
payment in respect of current interest on the amount of such increases for any
Interest Accrual Period preceding the


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Distribution Date on which such increase occurs. Any such increases shall be
applied to the Certificate Principal Balance of each Subordinate Certificate of
such Class in accordance with its respective Percentage Interest.

         (c)      (i) The REMIC I Marker Percentage of all Realized Losses on
the Mortgage Loans shall be allocated by the Trustee, based solely on the
instructions of the Securities Administrator, on each Distribution Date to the
following REMIC I Regular Interests in the specified percentages, as follows:
first, to Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount, 98.00% and 2.00%, respectively; second, to
the Uncertificated Balances of the REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC I Principal
Loss Allocation Amount, 98.00% and 2.00%, respectively; third, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTB and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest I-LTB
has been reduced to zero; fourth, to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM11 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM11 has been reduced to zero; fifth, to
the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM10 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM10 has been reduced to zero; sixth, to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM9 has been reduced to zero; seventh, to
the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM8 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM8 has been reduced to zero; eighth, to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM7 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM7 has been reduced to zero; ninth, to
the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM6 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM6 has been reduced to zero; tenth, to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM5 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM5 has been reduced to zero; eleventh,
to the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTM4 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and
1.00%, respectively, until the Uncertificated Balance of REMIC I Regular
Interest I-LTM4 has been reduced to zero; twelfth, to the Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM3 and
REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until
the Uncertificated Balance of REMIC I Regular Interest I-LTM3 has been reduced
to zero; thirteenth, to the Uncertificated Balances of REMIC I Regular Interest
I-LTAA, REMIC I Regular Interest I-LTM2 and REMIC I Regular Interest I-LTZZ,
98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance of REMIC
I Regular Interest I-LTM2 has been reduced to zero; and fourteenth, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM1 and REMIC I Regular


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Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM1 has been reduced to zero.

                  (ii)     The REMIC I Sub WAC Allocation Percentage of all
         Realized Losses shall be applied after all distributions have been made
         on each Distribution Date first, so as to keep the Uncertificated
         Balance of each REMIC I Regular Interest ending with the designation
         "GRP" equal to 0.01% of the aggregate Stated Principal Balance of the
         Mortgage Loans in the related Loan Group; second, to each REMIC I
         Regular Interest ending with the designation "SUB," so that the
         Uncertificated Balance of each such REMIC I Regular Interest is equal
         to 0.01% of the excess of (x) the aggregate Stated Principal Balance of
         the Mortgage Loans in the related Loan Group over (y) the current
         Certificate Principal Balance of the Class A Certificate in the related
         Loan Group (except that if any such excess is a larger number than in
         the preceding distribution period, the least amount of Realized Losses
         shall be applied to such REMIC I Regular Interests such that the REMIC
         I Subordinated Balance Ratio is maintained); and third, any remaining
         Realized Losses shall be allocated to REMIC I Regular Interest I-LTXX.

         SECTION 5.05. Compliance with Withholding Requirements.

         Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount that the Trustee reasonably believes are applicable under the
Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Securities Administrator does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Securities
Administrator shall indicate the amount withheld to such Certificateholders.

         SECTION 5.06. Reports Filed with Securities and Exchange Commission.

         The Depositor shall prepare or cause to be prepared the initial current
report on Form 8-K. Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("EDGAR"), a
Form 8-K (or other comparable Form containing the same or comparable information
or other information mutually agreed upon) with a copy of the statement to be
furnished to the Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2005, the Securities Administrator shall, in
accordance with industry standards, file a Form 15 Suspension Notice with
respect to the Trust Fund, if applicable. Prior to (i) March 20, 2005 and (ii)
unless and until a Form 15 Suspension Notice shall have been filed, prior to
March 20th of each year thereafter, the Master Servicer shall provide the
Securities Administrator with a Master Servicer Certification, together with a
copy of the annual independent accountant's servicing report and annual
statement of compliance of the Servicer to be delivered pursuant to this
Agreement and, if applicable, the annual independent accountant's servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 4.15 and 4.16. Prior to (i) March 31, 2005 and (ii) unless
and until a Form 15 Suspension Notice shall have been filed, March 31 of each
year thereafter, the Securities Administrator shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust. Such Form
10-K shall include the Master Servicer Certification and


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other documentation provided by the Master Servicer pursuant to the second
preceding sentence. The Depositor hereby grants to the Securities Administrator
a limited power of attorney to execute and file each such document on behalf of
the Depositor. Such power of attorney shall continue until either the earlier of
(i) receipt by the Securities Administrator from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. The Depositor agrees to promptly furnish to the Securities Administrator,
from time to time upon request, such further information, reports and financial
statements within its control related to this Agreement, the Mortgage Loans as
the Securities Administrator reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Securities Administrator shall
have no responsibility to file any items other than those specified in this
Section 5.06; provided, however, the Securities Administrator will cooperate
with the Depositor in connection with any additional filings with respect to the
Trust Fund as the Depositor deems necessary under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Fees and expenses incurred by the
Securities Administrator in connection with this Section 5.06 shall not be
reimbursable from the Trust Fund.










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                                   ARTICLE VI

                                THE CERTIFICATES

         SECTION 6.01. The Certificates.

         (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

         The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-6. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.

         Upon original issue, the Certificates shall be executed and
authenticated by the Securities Administrator and delivered by the Trustee to
and upon the written order of the Depositor. The Certificates shall be executed
by manual or facsimile signature on behalf of the Trust by the Securities
Administrator by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Securities Administrator shall bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
herein executed by the Securities Administrator by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.

         (b)      The Class A Certificates and the Mezzanine Certificates shall
initially be issued as one or more Certificates held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository and
registered in the name of the Depository or its nominee and, except as provided
below, registration of such Certificates may not be transferred by the
Securities Administrator except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("Definitive Certificates") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Securities Administrator
is hereby initially appointed as the Book-Entry Custodian and hereby agrees to
act as such in accordance herewith and in accordance with the agreement that it
has with the Depository authorizing it to act as such. The Book-Entry Custodian
may, and, if it is no longer qualified to act as such, the Book-Entry Custodian
shall, appoint, by a written instrument delivered to the Depositor, the Servicer
and, if the Trustee is not the Book-Entry Custodian, the Trustee, any other
transfer agent (including the


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Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Securities
Administrator resigns or is removed in accordance with the terms hereof, the
successor Securities Administrator or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

         (c)      The Class B Certificates initially offered and sold in
offshore transactions in reliance on Regulation S shall be issued in the form of
a temporary global certificate in definitive, fully registered form (each, a
"Regulation S Temporary Global Certificate"), which shall be deposited with the
Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository for the account of designated agents holding on behalf of
Euroclear or Clearstream. Beneficial interests in each Regulation S Temporary
Global Certificate may be held only through Euroclear or Clearstream; provided,
however, that such interests may be exchanged for interests in a Definitive
Certificate in accordance with the requirements described in Section 6.02. After
the expiration of the Release Date, a beneficial interest in a Regulation S
Temporary Global Certificate may be exchanged for a beneficial interest in the
related permanent global certificate of the same Class (each, a "Regulation S
Permanent Global Certificate"), in accordance with the procedures set forth in
Section 6.02. Each Regulation S Permanent Global Certificate shall be deposited
with the Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository.

         The Class B Certificates offered and sold to Qualified Institutional
Buyers ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A")
or institutional investors that are accredited investors within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
("Institutional Accredited Investors") will be issued in the form of Definitive
Certificates.

         (d)      The Class CE-1, Class CE-2 and Class P Certificates offered
and sold to Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A
under the Securities Act ("Rule 144A") will be issued in the form of Definitive
Certificates.

         (e)      The Trustee, the Servicer, the Securities Administrator, the
Master Servicer and the Depositor may for all purposes (including the making of
payments due on the Book-Entry Certificates and Global Certificates) deal with
the Depository as the authorized representative of the Certificate Owners with
respect to the Book-Entry Certificates and Global Certificates for the purposes
of exercising the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the Book-Entry Certificates and Global
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates and Global
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate Owners. The
Securities


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Administrator may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.

         If (i)(A) the Depositor advises the Securities Administrator in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Securities
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Default, Certificate Owners representing in the aggregate not less than 51% of
the Ownership Interests of the Book-Entry Certificates advise the Securities
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Securities Administrator shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. With respect to a Global Certificate, the related
Certificate Owner (other than a Holder of a Regulation S Temporary Global
Certificate) may request that its interest in a Global Certificate be exchanged
for a Definitive Certificate. Upon surrender to the Securities Administrator of
the Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, or the Global Certificates by the Depository accompanied by
registration instructions from the Depository for registration of transfer, the
Securities Administrator shall cause the Definitive Certificates to be issued.
Such Definitive Certificates will be issued in minimum denominations of $10,000
except that any beneficial ownership that was represented by a Book-Entry
Certificate, or a Global Certificate, as applicable in an amount less than
$10,000 immediately prior to the issuance of a Definitive Certificate shall be
issued in a minimum denomination equal to the amount represented by such
Book-Entry Certificate or a Global Certificate, as applicable. None of the
Depositor, the Servicer, the Master Servicer, the Securities Administrator or
the Trustee shall be liable for any delay in the delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Securities Administrator, to the extent
applicable with respect to such Definitive Certificates, and the Securities
Administrator shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.

         SECTION 6.02. Registration of Transfer and Exchange of Certificates.

         (a)      The Securities Administrator shall cause to be kept at one of
the offices or agencies to be appointed by the Securities Administrator in
accordance with the provisions of Section 9.11, a Certificate Register for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Securities Administrator shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.

         (b)      No transfer of any Class B Certificate, Class CE-1
Certificate, Class CE-2 Certificate, Class P Certificate or Residual Certificate
shall be made unless that transfer is made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "1933 Act"), and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that such a transfer of a Class B Certificate, Class
CE-1 Certificate, Class CE-2 Certificate, Class P Certificate or Residual
Certificate is to be made without registration or qualification (other than


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in connection with the initial transfer of any such Certificate by the
Depositor), the Securities Administrator shall require receipt of: (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee, substantially
in the form attached hereto as Exhibit B-1; (ii) if such transfer is purportedly
being made in reliance upon Rule 501(a) under the 1933 Act, written
certifications from the Certificateholder desiring to effect the transfer and
from such Certificateholder's prospective transferee, substantially in the form
attached hereto as Exhibit B-2; (iii) if such transfer is purportedly being made
in reliance on Regulation S, a written certification from the prospective
transferee, substantially in the form attached hereto as Exhibit B-1 and (iv) in
all other cases, an Opinion of Counsel satisfactory to the Securities
Administrator that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee, the Master Servicer, the Securities
Administrator or the Servicer), together with copies of the written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such Certificateholder's prospective transferee upon which such Opinion of
Counsel is based, if any. Neither of the Depositor nor the Securities
Administrator is obligated to register or qualify any such Certificates under
the 1933 Act or any other securities laws or to take any action not otherwise
required under this Agreement to permit the transfer of such Certificates
without registration or qualification. Any Certificateholder desiring to effect
the transfer of any such Certificate shall, and does hereby agree to, indemnify
the Trustee, the Depositor, the Master Servicer, the Securities Administrator
and the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.

         A holder of a beneficial interest in a Regulation S Temporary Global
Certificate must provide Euroclear or Clearstream, as the case may be, with a
certificate in the form of Annex A to Exhibit B-1 hereto certifying that the
beneficial owner of the interest in such Global Certificate is not a U.S. Person
(as defined in Regulation S), and Euroclear or Clearstream, as the case may be,
must provide to the Trustee and Securities Administrator a certificate in the
form of Exhibit B-1 hereto prior to (i) the payment of interest or principal
with respect to such holder's beneficial interest in the Regulation S Temporary
Global Certificate and (ii) any exchange of such beneficial interest for a
beneficial interest in a Regulation S Permanent Global Certificate.

         (c)      No transfer of a Class CE-1 Certificate, Class CE-2
Certificate, Class P Certificate or a Residual Certificate or any interest
therein shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such Plan or any
Person acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29 C.F.R. ss.
2510.3-101 ("Plan Assets") unless the Securities Administrator is provided with
an Opinion of Counsel on which the Depositor, the Master Servicer, the
Securities Administrator, the Trustee and the Servicer may rely, which
establishes to the satisfaction of the Securities Administrator that the
purchase of such Certificates is permissible under applicable law, will not
constitute or result in any prohibited transaction under ERISA or Section 4975
of the Code and will not subject the Depositor, the Servicer, the Trustee, the
Master Servicer, the Securities Administrator or the Trust Fund to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Trustee, the Master Servicer, the Securities Administrator, the Trust Fund.
An Opinion of Counsel will not be required in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the


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Depositor (in which case, the Depositor or any affiliate thereof shall have
deemed to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Securities Administrator shall be entitled to
conclusively rely upon a representation (which, upon the request of the
Securities Administrator, shall be a written representation) from the Depositor
of the status of such transferee as an affiliate of the Depositor.

         Each Transferee of a Mezzanine Certificate or Class B Certificate will
be deemed to have represented by virtue of its purchase or holding of such
Certificate (or interest therein) that either (a) such Transferee is not a Plan
or purchasing such Certificate with Plan Assets, (b) in the case of a Mezzanine
Certificate, it has acquired and is holding such Certificate in reliance on
Prohibited Transaction Exemption ("PTE") 94-84 or FAN 97-03E, as amended by PTE
97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE 2000-58, 65 Fed. Reg. 67765
(November 13, 2000) and PTE 2002-41, 67 Fed. Reg. 54487 (August 22, 2002) (the
"Exemption"), and that it understands that there are certain conditions to the
availability of the Exemption including that such Certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by a Rating
Agency or (c) the following conditions are satisfied: (i) such Transferee is an
insurance company, (ii) the source of funds used to purchase or hold such
Certificate (or interest therein) is an "insurance company general account" (as
defined in PTCE 95-60, and (iii) the conditions set forth in Sections I and III
of PTCE 95-60 have been satisfied.

         If any Certificate or any interest therein is acquired or held in
violation of the conditions described in this Section 6.02(c), the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate, retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding of
any certificate or interest therein was effected in violation of the conditions
described in this Section 6.02(c) shall indemnify and hold harmless the
Depositor, the Trustee, the Servicer, the Master Servicer, the Securities
Administrator and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.

         (d)      (i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably authorized the Securities Administrator or its designee
under clause (iii)(A) below to deliver payments to a Person other than such
Person and to negotiate the terms of any mandatory sale under clause (iii)(B)
below and to execute all instruments of Transfer and to do all other things
necessary in connection with any such sale. The rights of each Person acquiring
any Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:

                           (A)      Each Person holding or acquiring any
                  Ownership Interest in a Residual Certificate shall be a
                  Permitted Transferee and shall promptly notify the Securities
                  Administrator of any change or impending change in its status
                  as a Permitted Transferee.

                           (B)      In connection with any proposed Transfer of
                  any Ownership Interest in a Residual Certificate, the Trustee
                  shall require delivery to it, and shall not register the
                  Transfer of any Residual Certificate until its receipt of, an
                  affidavit and agreement (a "Transfer Affidavit and Agreement,"
                  in the form attached hereto as Exhibit B-3) from the proposed
                  Transferee, in form and


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                  substance satisfactory to the Securities Administrator,
                  representing and warranting, among other things, that such
                  Transferee is a Permitted Transferee, that it is not acquiring
                  its Ownership Interest in the Residual Certificate that is the
                  subject of the proposed Transfer as a nominee, trustee or
                  agent for any Person that is not a Permitted Transferee, that
                  for so long as it retains its Ownership Interest in a Residual
                  Certificate, it will endeavor to remain a Permitted
                  Transferee, and that it has reviewed the provisions of this
                  Section 6.02(d) and agrees to be bound by them.

                           (C)      Notwithstanding the delivery of a Transfer
                  Affidavit and Agreement by a proposed Transferee under clause
                  (B) above, if an authorized officer of the Securities
                  Administrator who is assigned to this transaction has actual
                  knowledge that the proposed Transferee is not a Permitted
                  Transferee, no Transfer of an Ownership Interest in a Residual
                  Certificate to such proposed Transferee shall be effected.

                           (D)      Each Person holding or acquiring any
                  Ownership Interest in a Residual Certificate shall agree (x)
                  to require a Transfer Affidavit and Agreement from any other
                  Person to whom such Person attempts to transfer its Ownership
                  Interest in a Residual Certificate and (Y) not to transfer its
                  Ownership Interest unless it provides a Transferor Affidavit
                  (in the form attached hereto as Exhibit B-2) to the Securities
                  Administrator stating that, among other things, it has no
                  actual knowledge that such other Person is not a Permitted
                  Transferee.

                           (E)      Each Person holding or acquiring an
                  Ownership Interest in a Residual Certificate, by purchasing an
                  Ownership Interest in such Certificate, agrees to give the
                  Securities Administrator written notice that it is a
                  "pass-through interest holder" within the meaning of temporary
                  Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately
                  upon acquiring an Ownership Interest in a Residual
                  Certificate, if it is, or is holding an Ownership Interest in
                  a Residual Certificate on behalf of, a "pass-through interest
                  holder."

                           (ii)     The Securities Administrator will register
         the Transfer of any Residual Certificate only if it shall have received
         the Transfer Affidavit and Agreement and all of such other documents as
         shall have been reasonably required by the Securities Administrator as
         a condition to such registration. In addition, no Transfer of a
         Residual Certificate shall be made unless the Securities Administrator
         shall have received a representation letter from the Transferee of such
         Certificate to the effect that such Transferee is a Permitted
         Transferee.

                           (iii)    (A) If any purported Transferee shall become
         a Holder of a Residual Certificate in violation of the provisions of
         this Section 6.02(d), then the last preceding Permitted Transferee
         shall be restored, to the extent permitted by law, to all rights as
         holder thereof retroactive to the date of registration of such Transfer
         of such Residual Certificate. The Securities Administrator shall be
         under no liability to any Person for any registration of Transfer of a
         Residual Certificate that is in fact not permitted by this Section
         6.02(d) or for making any payments due on such Certificate to


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<PAGE>


         the holder thereof or for taking any other action with respect to such
         holder under the provisions of this Agreement.

                           (B)      If any purported Transferee shall become a
                  holder of a Residual Certificate in violation of the
                  restrictions in this Section 6.02(d) and to the extent that
                  the retroactive restoration of the rights of the holder of
                  such Residual Certificate as described in clause (iii)(A)
                  above shall be invalid, illegal or unenforceable, then the
                  Securities Administrator shall have the right, without notice
                  to the holder or any prior holder of such Residual
                  Certificate, to sell such Residual Certificate to a purchaser
                  selected by the Securities Administrator on such terms as the
                  Securities Administrator may choose. Such purported Transferee
                  shall promptly endorse and deliver each Residual Certificate
                  in accordance with the instructions of the Securities
                  Administrator. Such purchaser may be the Securities
                  Administrator itself or any Affiliate of the Securities
                  Administrator. The proceeds of such sale, net of the
                  commissions (which may include commissions payable to the
                  Securities Administrator or its Affiliates), expenses and
                  taxes due, if any, will be remitted by the Securities
                  Administrator to such purported Transferee. The terms and
                  conditions of any sale under this clause (iii)(B) shall be
                  determined in the sole discretion of the Securities
                  Administrator, and the Securities Administrator shall not be
                  liable to any Person having an Ownership Interest in a
                  Residual Certificate as a result of its exercise of such
                  discretion.

                           (iv)     The Securities Administrator shall make
         available to the Internal Revenue Service and those Persons specified
         by the REMIC Provisions all information necessary to compute any tax
         imposed (A) as a result of the Transfer of an Ownership Interest in a
         Residual Certificate to any Person who is a Disqualified Organization,
         including the information described in Treasury regulations sections
         1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
         inclusions" of such Residual Certificate and (B) as a result of any
         regulated investment company, real estate investment trust, common
         trust fund, partnership, trust, estate or organization described in
         Section 1381 of the Code that holds an Ownership Interest in a Residual
         Certificate having as among its record holders at any time any Person
         which is a Disqualified Organization. Reasonable compensation for
         providing such information may be charged or collected by the
         Securities Administrator.

                           (v)      The provisions of this Section 6.02(d) set
         forth prior to this subsection (v) may be modified, added to or
         eliminated, provided that there shall have been delivered to the
         Securities Administrator at the expense of the party seeking to modify,
         add to or eliminate any such provision the following:

                           (A)      written notification from each Rating Agency
                  to the effect that the modification, addition to or
                  elimination of such provisions will not cause such Rating
                  Agency to downgrade its then-current ratings of any Class of
                  Certificates; and

                           (B)      an Opinion of Counsel, in form and substance
                  satisfactory to the Securities Administrator, to the effect
                  that such modification of, addition to or


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                  elimination of such provisions will not cause any Trust REMIC
                  to cease to qualify as a REMIC and will not cause any Trust
                  REMIC, as the case may be, to be subject to an entity-level
                  tax caused by the Transfer of any Residual Certificate to a
                  Person that is not a Permitted Transferee or a Person other
                  than the prospective transferee to be subject to a REMIC-tax
                  caused by the Transfer of a Residual Certificate to a Person
                  that is not a Permitted Transferee.

         (e)      Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Securities Administrator maintained for such purpose pursuant to Section 9.11,
the Securities Administrator shall execute, authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.

         (f)      At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Securities Administrator maintained
for such purpose pursuant to Section 9.11. Whenever any Certificates are so
surrendered for exchange, the Securities Administrator shall execute,
authenticate and deliver, the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall (if so required by the Securities Administrator)
be duly endorsed by, or be accompanied by a written instrument of transfer in
the form satisfactory to the Securities Administrator duly executed by, the
Holder thereof or his attorney duly authorized in writing.

         (g)      No service charge to the Certificateholders shall be made for
any transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

         (h)      All Certificates surrendered for transfer and exchange shall
be canceled and destroyed by the Securities Administrator in accordance with its
customary procedures.

         SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.

         If (i) any mutilated Certificate is surrendered to the Securities
Administrator, or the Securities Administrator receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and of the
ownership thereof, and (ii) there is delivered to Securities Administrator such
security or indemnity as may be required by it to save it harmless, then, in the
absence of actual knowledge by the Securities Administrator that such
Certificate has been acquired by a protected purchaser, the Securities
Administrator, shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Securities
Administrator may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Securities Administrator)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the
applicable REMIC created hereunder, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.


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         SECTION 6.04. Persons Deemed Owners.

         The Depositor, the Servicer, the Trustee, the Master Servicer, the
Securities Administrator and any agent of any of them may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Depositor, the Servicer, the Trustee,
the Master Servicer, the Securities Administrator or any agent of any of them
shall be affected by notice to the contrary.

         SECTION 6.05. Certain Available Information.

         On or prior to the date of the first sale of any Class B, Class CE-1
Certificate, Class CE-2 Certificate, Class P Certificate or Residual Certificate
to an Independent third party, the Depositor shall provide to the Securities
Administrator ten copies of any private placement memorandum or other disclosure
document used by the Depositor in connection with the offer and sale of such
Certificate. In addition, if any such private placement memorandum or disclosure
document is revised, amended or supplemented at any time following the delivery
thereof to the Securities Administrator, the Depositor promptly shall inform the
Securities Administrator of such event and shall deliver to the Securities
Administrator ten copies of the private placement memorandum or disclosure
document, as revised, amended or supplemented. The Securities Administrator
shall maintain at its office as set forth in Section 12.05 hereof and shall make
available free of charge during normal business hours for review by any Holder
of a Certificate or any Person identified to the Securities Administrator as a
prospective transferee of a Certificate, originals or copies of the following
items: (i) in the case of a Holder or prospective transferee of a Class B, Class
CE-1 Certificate, Class CE-2 Certificate, Class P Certificate or Residual
Certificate, the related private placement memorandum or other disclosure
document relating to such Class of Certificates, in the form most recently
provided to the Securities Administrator; and (ii) in all cases, (A) this
Agreement and any amendments hereof entered into pursuant to Section 11.01, (B)
all monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date and (C) any copies of all Officers' Certificates of the Servicer
since the Closing Date delivered to the Master Servicer to evidence such
Person's determination that any P&I Advance or Servicing Advance was, or if
made, would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance.
Copies and mailing of any and all of the foregoing items will be available from
the Securities Administrator upon request at the expense of the Person
requesting the same.


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                                  ARTICLE VII

               THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER

         SECTION 7.01. Liability of the Depositor, the Servicer and the Master
Servicer.

         The Depositor, the Servicer and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement upon them in their respective capacities as Depositor,
Servicer and Master Servicer and undertaken hereunder by the Depositor, the
Servicer and the Master Servicer herein.

         SECTION 7.02. Merger or Consolidation of the Depositor, the Servicer or
the Master Servicer.

         Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Servicer will keep in full effect its existence, rights and franchises as a
national banking association. Subject to the following paragraph, the Master
Servicer will keep in full effect its existence, rights and franchises as a
national banking association. The Depositor, the Servicer and the Master
Servicer each will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its respective duties
under this Agreement.

         The Depositor, the Servicer or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor, the Servicer or the Master Servicer shall
be a party, or any Person succeeding to the business of the Depositor, the
Servicer or the Master Servicer, shall be the successor of the Depositor, the
Servicer or the Master Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that any successor of the Servicer or the Master Servicer shall meet
the eligibility requirements set forth in clauses (i) and (iii) of the last
paragraph of Section 8.02(a) or Section 7.06, as applicable.

         SECTION 7.03. Limitation on Liability of the Depositor, the Servicer,
the Master Servicer and Others.

         None of the Depositor, the Servicer, the Securities Administrator, the
Master Servicer or any of the directors, officers, employees or agents of the
Depositor, the Servicer or the Master Servicer shall be under any liability to
the Trust Fund or the Certificateholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer, the Securities Administrator, the Master Servicer or
any such person against any breach of warranties, representations or covenants
made herein or against any specific liability imposed on any such Person
pursuant hereto or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in


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the performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Servicer, the Securities Administrator, the
Master Servicer and any director, officer, employee or agent of the Depositor,
the Servicer, the Securities Administrator and the Master Servicer may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any Person respecting any matters arising hereunder. The
Depositor, the Servicer, the Securities Administrator, the Master Servicer and
any director, officer, employee or agent of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement, the Certificates or
any Credit Risk Management Agreement or any loss, liability or expense incurred
other than by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under this Agreement and, in its opinion, does not involve
it in any expense or liability; provided, however, that each of the Depositor,
the Servicer, the Securities Administrator and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor, the Servicer, the
Securities Administrator and the Master Servicer shall be entitled to be
reimbursed therefor from the Collection Account or the Distribution Account as
and to the extent provided in Article III and Article IV, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Collection Account and the Distribution Account.

         Notwithstanding anything to the contrary contained herein, the Servicer
shall not be liable for any actions or inactions prior to the Cut-off Date of
any prior servicer of the Mortgage Loans and the Master Servicer shall not be
liable for any action or inaction of the Servicer or the Interim Servicers,
except to the extent expressly provided herein, or the Credit Risk Management
Agreement.

         SECTION 7.04. Limitation on Resignation of the Servicer.

         (a)      Except as expressly provided herein, the Servicer shall
neither assign all or substantially all of its rights under this Agreement or
the servicing hereunder nor delegate all or substantially all of its duties
hereunder nor sell or otherwise dispose of all or substantially all of its
property or assets without, in each case, the prior written consent of the
Trustee, which consent shall not be unreasonably withheld; provided, that in
each case, there must be delivered to the Trustee and the Master Servicer a
letter from each Rating Agency to the effect that such transfer of servicing or
sale or disposition of assets will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates. Notwithstanding
the foregoing, the Servicer, without the consent of the Trustee or the Master
Servicer, may retain third-party contractors to perform certain servicing and
loan administration functions, including without limitation hazard insurance
administration, tax payment and administration, flood certification and
administration, collection services and similar functions, provided, however,


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that the retention of such contractors by the Servicer shall not limit the
obligation of the Servicer to service the Mortgage Loans pursuant to the terms
and conditions of this Agreement. The Servicer shall not resign from the
obligations and duties hereby imposed on it except by consent of the Trustee or
upon determination that its duties hereunder are no longer permissible under
applicable law or as provided in Section 7.04(c). Any such determination
pursuant to the preceding sentence permitting the resignation (other than
pursuant to Section 7.04(c)) of the Servicer shall be evidenced by an Opinion of
Counsel to such effect obtained at the expense of the Servicer and delivered to
the Trustee and the Rating Agencies. No resignation of the Servicer shall become
effective until the Trustee or a successor Servicer shall have assumed the
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.

         (b)      Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit the Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Servicer hereunder; provided, however,
that as provided in Section 3.02, no Sub-Servicer shall be a third-party
beneficiary hereunder and the parties hereto shall not be required to recognize
any Sub-Servicer as an indemnitee under this Agreement.

         SECTION 7.05. Limitation on Resignation of the Master Servicer.

         The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer meeting the criteria specified in Section 7.06 shall
have assumed the Master Servicer's responsibilities, duties, liabilities (other
than those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.

         SECTION 7.06. Assignment of Master Servicing.

         The Master Servicer may sell and assign its rights and delegate its
duties and obligations in its entirety as Master Servicer under this Agreement;
provided, however, that: (i) the purchaser or transferee accept in writing such
assignment and delegation and assume the obligations of the Master Servicer
hereunder (a) shall have a net worth of not less than $15,000,000 (unless
otherwise approved by each Rating Agency pursuant to clause (ii) below); (b)
shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee); and (c) shall execute and deliver to the Trustee an
agreement, in form and substance reasonably satisfactory to the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by it as
master servicer under this Agreement, any custodial agreement from and after the
effective date of such agreement; (ii) each Rating Agency shall be given prior
written notice of the identity of the proposed successor to the Master Servicer
and each Rating Agency's rating


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of the Certificates in effect immediately prior to such assignment, sale and
delegation will not be downgraded, qualified or withdrawn as a result of such
assignment, sale and delegation, as evidenced by a letter to such effect
delivered to the Master Servicer and the Trustee; and (iii) the Master Servicer
assigning and selling the master servicing shall deliver to the Trustee an
officer's certificate and an Opinion of Independent counsel, each stating that
all conditions precedent to such action under this Agreement have been completed
and such action is permitted by and complies with the terms of this Agreement.
No such assignment or delegation shall affect any liability of the Master
Servicer arising out of acts or omissions prior to the effective date thereof.

         SECTION 7.07. Rights of the Depositor in Respect of the Servicer and
the Master Servicer.

         Each of the Master Servicer and the Servicer shall afford (and any
Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the
Depositor and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer or the Servicer (and any
such Sub-Servicer) in respect of the Servicer's rights and obligations hereunder
and access to officers of the Master Servicer or the Servicer (and those of any
such Sub-Servicer) responsible for such obligations, and the Master Servicer
shall have access to all such records maintained by the Servicer and any
Sub-Servicers. Upon request, each of the Master Servicer and the Servicer shall
furnish to the Depositor and the Trustee its (and any such Sub-Servicer's) most
recent financial statements and such other information relating to the Master
Servicer's or the Servicer's capacity to perform its obligations under this
Agreement as it possesses (and that any such Sub-Servicer possesses). To the
extent such information is not otherwise available to the public, the Depositor
and the Trustee shall not disseminate any information obtained pursuant to the
preceding two sentences without the Master Servicer's or the Servicer's written
consent, except as required pursuant to this Agreement or to the extent that it
is appropriate to do so (i) to its legal counsel, auditors, taxing authorities
or other governmental agencies and the Certificateholders, (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor and the Trustee
or the Trust Fund, and in any case, the Depositor or the Trustee, (iii)
disclosure of any and all information that is or becomes publicly known, or
information obtained by the Trustee from sources other than the Depositor, the
Servicer or the Master Servicer, (iv) disclosure as required pursuant to this
Agreement or (v) disclosure of any and all information (A) in any preliminary or
final offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in advance
by the Depositor, the Servicer or the Master Servicer or (B) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Trustee
having a need to know the same, provided that the Trustee advises such recipient
of the confidential nature of the information being disclosed, shall use its
best efforts to assure the confidentiality of any such disseminated non-public
information. Nothing in this Section 7.07 shall limit the obligation of the
Servicer to comply with any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 7.07 as a result of such obligation shall not
constitute a breach of this Section. Nothing in this Section 7.07 shall require
the Servicer to collect, create, collate or otherwise generate any information
that it does not generate in its usual course of business. The Servicer shall
not be required to make copies of or ship documents to any party unless
provisions have been made for the reimbursement of the costs thereof. The
Depositor may, but is not obligated to, enforce the obligations of the Master


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Servicer and the Servicer under this Agreement and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer or the Servicer under this Agreement or exercise the rights of the
Master Servicer or the Servicer under this Agreement; provided that neither the
Master Servicer nor the Servicer shall be relieved of any of its obligations
under this Agreement by virtue of such performance by the Depositor or its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer or the Servicer and is not
obligated to supervise the performance of the Master Servicer or the Servicer
under this Agreement or otherwise.

         SECTION 7.08. Duties of the Credit Risk Manager.

         For and on behalf of the Depositor, the Credit Risk Manager will
provide reports and recommendations concerning certain delinquent and defaulted
Mortgage Loans, and as to the collection of any Prepayment Charges with respect
to the Mortgage Loans. Such reports and recommendations will be based upon
information provided to the Credit Risk Manager pursuant to the Credit Risk
Management Agreements, and the Credit Risk Manager shall look solely to the
Servicer and/or Master Servicer for all information and data (including loss and
delinquency information and data) relating to the servicing of the related
Mortgage Loans. Upon any termination of the Credit Risk Manager or the
appointment of a successor Credit Risk Manager, the Depositor shall give written
notice thereof to the Servicer, the Master Servicer, the Securities
Administrator, the Trustee, and each Rating Agency. Notwithstanding the
foregoing, the termination of the Credit Risk Manager pursuant to this Section
shall not become effective until the appointment of a successor Credit Risk
Manager.

         SECTION 7.09. Limitation Upon Liability of the Credit Risk Manager.

         Neither the Credit Risk Manager, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the Servicer under the related Credit Risk
Management Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Credit Risk Manager or any such person against
liability that would otherwise be imposed by reason of willful malfeasance or
bad faith in its performance of its duties. The Credit Risk Manager and any
director, officer, employee, or agent of the Credit Risk Manager may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder, and may rely
in good faith upon the accuracy of information furnished by the Servicer
pursuant to the related Credit Risk Management Agreement in the performance of
its duties thereunder and hereunder.

         SECTION 7.10. Removal of the Credit Risk Manager.

         The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall provide
written notice to the Credit Risk Manager of its removal, which shall be
effective upon receipt of such notice by the Credit Risk Manager, with a copy to
the Securities Administrator and the Master Servicer.


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                                  ARTICLE VIII

                                     DEFAULT

         SECTION 8.01. Servicer Events of Default.

         (a)      "Servicer Event of Default," wherever used herein, means any
one of the following events:

                  (i)      any failure by the Servicer to remit to the
         Securities Administrator for distribution to the Certificateholders any
         payment (other than a P&I Advance required to be made from its own
         funds on any Servicer Remittance Date pursuant to Section 5.03)
         required to be made under the terms of the Certificates and this
         Agreement which continues unremedied for a period of one Business Day
         after the date upon which written notice of such failure, requiring the
         same to be remedied, shall have been given to the Servicer by the
         Depositor or the Trustee (in which case notice shall be provided by
         telecopy), or to the Servicer, the Depositor, the Trustee and by the
         Holders of Certificates entitled to at least 25% of the Voting Rights;
         or

                  (ii)     any failure on the part of the Servicer duly to
         observe or perform in any material respect any other of the covenants
         or agreements on the part of the Servicer contained in this Agreement,
         or the material breach by the Servicer of any representation and
         warranty contained in Section 2.05, which continues unremedied for a
         period of 30 days after the date on which written notice of such
         failure, requiring the same to be remedied, shall have been given to
         the Servicer by the Depositor or the Trustee or to the Servicer, the
         Depositor and the Trustee by the Holders of Certificates entitled to at
         least 25% of the Voting Rights; provided, however, that in the case of
         a failure that cannot be cured within thirty (30) days, the cure period
         may be extended for an additional thirty (30) days if the Servicer can
         demonstrate to the reasonable satisfaction of the Trustee that the
         Servicer is diligently pursuing remedial action; or

                  (iii)    a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator in any insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceeding, or for the winding-up or
         liquidation of its affairs, shall have been entered against the
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 90 days; or

                  (iv)     the Servicer shall consent to the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshalling of assets and liabilities or similar proceedings
         of or relating to it or of or relating to all or substantially all of
         its property; or

                  (v)      the Servicer shall admit in writing its inability to
         pay its debts generally as they become due, file a petition to take
         advantage of any applicable insolvency or reorganization statute, make
         an assignment for the benefit of its creditors, or voluntarily suspend
         payment of its obligations;


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                  (vi)     failure by the Servicer to duly perform, within the
         required time period, its obligations under Section 3.17, 3.18 or 3.19
         which failure continues unremedied for a period of ten (10) days after
         the date on which written notice of such failure, requiring the same to
         be remedied, shall have been given to the Servicer by any party to this
         Agreement; or

                  (vii)    any failure of the Servicer to make any P&I Advance
         on any Servicer Remittance Date required to be made from its own funds
         pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
         York time on the Business Day immediately following the Servicer
         Remittance Date.

         If a Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor if given by the Trustee or to the
Trustee if given by the Depositor) with a copy to the Master Servicer and each
Rating Agency, terminate all of the rights and obligations of the Servicer in
its capacity as the Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. If a Servicer
Event of Default described in clause (vii) hereof shall occur, the Trustee
shall, by notice in writing to the Servicer, the Depositor and the Master
Servicer, terminate all of the rights and obligations of the Servicer in its
capacity as the Servicer under this Agreement and in and to the Mortgage Loans
and the proceeds thereof. Subject to Section 8.02, on or after the receipt by
the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Certificates (other than as a
Holder of any Certificate) or the Mortgage Loans or otherwise, shall pass to and
be vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on behalf of and at the expense of the
Servicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees promptly (and in any event no later than ten Business Days
subsequent to such notice) to provide the Trustee with all documents and records
requested by it to enable it to assume the Servicer's functions under this
Agreement, and to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights under this Agreement, including, without
limitation, the transfer within one Business Day to the Trustee for
administration by it of all cash amounts which at the time shall be or should
have been credited by the Servicer to the Collection Account held by or on
behalf of the Servicer or thereafter be received with respect to the Mortgage
Loans or any REO Property (provided, however, that the Servicer shall continue
to be entitled to receive all amounts accrued or owing to it under this
Agreement on or prior to the date of such termination, whether in respect of P&I
Advances, Servicing Advances, accrued and unpaid Servicing Fees or otherwise,
and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(a), the Trustee shall not
be deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Trustee's Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such a Servicer Event of Default is received by the Trustee at its
Corporate Trust Office and such notice


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references the Certificates, the Trust or this Agreement. The Trustee shall
promptly notify the Master Servicer and the Rating Agencies of the occurrence of
a Servicer Event of Default of which it has knowledge as provided above.

         The Trustee shall be entitled to be reimbursed by the Servicer (or from
amounts on deposit in the Distribution Account if the Servicer is unable to
fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from the predecessor
Servicer, including without limitation, any reasonable out-of-pocket or third
party costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.

         (b)      "Master Servicer Event of Default," wherever used herein,
means any one of the following events:

                  (i)      any failure on the part of the Master Servicer duly
         to observe or perform in any material respect any other of the
         covenants or agreements on the part of the Master Servicer contained in
         this Agreement, or the breach by the Master Servicer of any
         representation and warranty contained in Section 2.04, which continues
         unremedied for a period of 30 days after the date on which written
         notice of such failure, requiring the same to be remedied, shall have
         been given to the Master Servicer by the Depositor or the Trustee or to
         the Master Servicer, the Depositor and the Trustee by the Holders of
         Certificates entitled to at least 25% of the Voting Rights; or

                  (ii)     a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises in an involuntary case
         under any present or future federal or state bankruptcy, insolvency or
         similar law or the appointment of a conservator or receiver or
         liquidator in any insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceeding, or for the winding-up or
         liquidation of its affairs, shall have been entered against the Master
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 90 days; or

                  (iii)    the Master Servicer shall consent to the appointment
         of a conservator or receiver or liquidator in any insolvency,
         readjustment of debt, marshalling of assets and liabilities or similar
         proceedings of or relating to it or of or relating to all or
         substantially all of its property; or

                  (iv)     the Master Servicer shall admit in writing its
         inability to pay its debts generally as they become due, file a
         petition to take advantage of any applicable insolvency or
         reorganization statute, make an assignment for the benefit of its
         creditors, or voluntarily suspend payment of its obligations.

         If a Master Servicer Event of Default shall occur, then, and in each
and every such case, so long as such Master Servicer Event of Default shall not
have been remedied, the Depositor or the Trustee may, and at the written
direction of the Holders of Certificates entitled to at least 51% of Voting
Rights, the Trustee shall, by notice in writing to the Master Servicer (and to
the Depositor if given by the Trustee or to the Trustee if given by the
Depositor) with a


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<PAGE>


copy to each Rating Agency, terminate all of the rights and obligations of the
Master Servicer in its capacity as Master Servicer under this Agreement, to the
extent permitted by law, and in and to the Mortgage Loans and the proceeds
thereof. On or after the receipt by the Master Servicer of such written notice,
all authority and power of the Master Servicer under this Agreement, whether
with respect to the Certificates (other than as a Holder of any Certificate) or
the Mortgage Loans or otherwise including, without limitation, the compensation
payable to the Master Servicer under this Agreement, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the Master Servicer, any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees promptly (and in any event no later than ten Business Days subsequent to
such notice) to provide the Trustee with all documents and records requested by
it to enable it to assume the Master Servicer's functions under this Agreement,
and to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights under this Agreement (provided, however,
that the Master Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the date of such
termination and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(b), the Trustee shall not
be deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, the Trust or this
Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Default of which it has knowledge as
provided above.

         To the extent that the costs and expenses of the Trustee related to the
termination of the Master Servicer, appointment of a successor Master Servicer
or the transfer and assumption of the master servicing by the Trustee
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the terminated Master
Servicer, the Trustee shall be entitled to reimbursement of such costs and
expenses from the Distribution Account..

         SECTION 8.02. Master Servicer to Act; Appointment of Successor.

         (a)      On and after the time the Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Servicer
in its capacity as Servicer under this Agreement and the transactions set forth
or provided for herein, and all the responsibilities, duties and liabilities
relating thereto and arising thereafter shall be assumed by the Trustee (except
for any representations or warranties of the Servicer under this Agreement, the


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responsibilities, duties and liabilities contained in Section 2.03 and the
obligation to deposit amounts in respect of losses pursuant to Section 3.10(b))
by the terms and provisions hereof including, without limitation, the Servicer's
obligations to make P&I Advances pursuant to Section 5.03; provided, however,
that if the Trustee is prohibited by law or regulation from obligating itself to
make advances regarding delinquent mortgage loans, then the Trustee shall not be
obligated to make P&I Advances pursuant to Section 5.03; and provided further,
that any failure to perform such duties or responsibilities caused by the
Servicer's failure to provide information required by Section 8.01 shall not be
considered a default by the Trustee as successor to the Servicer hereunder;
provided, however, that (1) it is understood and acknowledged by the parties
hereto that there will be a period of transition (not to exceed 90 days) before
the actual servicing functions can be fully transferred to the Trustee or any
successor Servicer appointed in accordance with the following provisions and (2)
any failure to perform such duties or responsibilities caused by the Servicer's
failure to provide information required by Section 8.01 shall not be considered
a default by the Trustee as successor to the Servicer hereunder. As compensation
therefor, the Trustee shall be entitled to the Servicing Fee and all funds
relating to the Mortgage Loans to which the Servicer would have been entitled if
it had continued to act hereunder. Notwithstanding the above and subject to the
immediately following paragraph, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act promptly appoint or petition a court of
competent jurisdiction to appoint, a Person that satisfies the eligibility
criteria set forth below as the successor to the Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer under this Agreement.

         Notwithstanding anything herein to the contrary, in no event shall the
Trustee or the Master Servicer be liable for any Servicing Fee or for any
differential in the amount of the Servicing Fee paid hereunder and the amount
necessary to induce any successor Servicer to act as successor Servicer under
this Agreement and the transactions set forth or provided for herein.

         Any successor Servicer appointed under this Agreement must (i) be an
established mortgage loan servicing institution that is a Fannie Mae and Freddie
Mac approved seller/servicer, (ii) be approved by each Rating Agency by a
written confirmation from each Rating Agency that the appointment of such
successor Servicer would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities of the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer under Section 8.01 herein) under
this Agreement as if originally named as a party to this Agreement.

         (b)      (1) All servicing transfer costs (including, without
limitation, servicing transfer costs of the type described in Section 8.02(a)
and incurred by the Trustee, the Master Servicer and any successor Servicer
under paragraph (b)(2) below) shall be paid by the terminated Servicer upon
presentation of reasonable documentation of such costs, and if such predecessor
or initial Servicer, as applicable, defaults in its obligation to pay such
costs, the successor Servicer, the Master Servicer and the Trustee shall be
entitled to reimbursement therefor from the assets of the Trust Fund.

         (2) No appointment of a successor to the Servicer under this Agreement
shall be effective until the assumption by the successor of all of the
Servicer's responsibilities, duties and


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liabilities hereunder. In connection with such appointment and assumption
described herein, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer as such hereunder. The Depositor, the Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Pending appointment of a successor
to the Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided.

         SECTION 8.03. Notification to Certificateholders.

         (a)      Upon any termination of the Servicer or the Master Servicer
pursuant to Section 8.01(a) or (b) or any appointment of a successor to the
Servicer or the Master Servicer pursuant to Section 8.02, the Trustee shall give
prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register.

         (b)      Not later than the later of 60 days after the occurrence of
any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or a Master Servicer Event of
Default or five days after a Responsible Officer of the Trustee becomes aware of
the occurrence of such an event, the Trustee shall transmit by mail to all
Holders of Certificates notice of each such occurrence, unless such default or
Servicer Event of Default or Master Servicer Event of Default shall have been
cured or waived.

         SECTION 8.04. Waiver of Servicer Events of Default.

         The Holders representing at least 66% of the Voting Rights evidenced by
all Classes of Certificates affected by any default, Servicer Event of Default
or Master Servicer Event of Default hereunder may waive such default, Servicer
Event of Default or Master Servicer Event of Default; provided, however, that a
Servicer Event of Default under clause (i) or (vii) of Section 8.01(a) may be
waived only by all of the Holders of the Regular Certificates. Upon any such
waiver of a default, Servicer Event of Default or Master Servicer Event of
Default, such default, Servicer Event of Default or Master Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default, Servicer Event of Default or Master Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.





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                                   ARTICLE IX

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

         SECTION 9.01. Duties of Trustee and Securities Administrator.

         The Trustee, prior to the occurrence of a Master Servicer Event of
Default or Servicer Event of Default and after the curing or waiver of all
Master Servicer Events of Default or Servicer Events of Default which may have
occurred, and the Securities Administrator each undertake to perform such duties
and only such duties as are specifically set forth in this Agreement as duties
of the Trustee and the Securities Administrator, respectively. During the
continuance of a Master Servicer Event of Default or Servicer Event of Default,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

         Each of the Trustee and the Securities Administrator, upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to it, which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee or the Securities Administrator, as the case may
be, shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to its satisfaction, the
Securities Administrator will provide notice to the Trustee thereof and the
Trustee will provide notice to the Certificateholders.

I                  The Trustee shall promptly remit to the Servicer any
complaint, claim, demand, notice or other document (collectively, the "Notices")
delivered to the Trustee as a consequence of the assignment of any Mortgage Loan
hereunder and relating to the servicing of the Mortgage Loans; provided than any
such notice (i) is delivered to the Trustee at its Corporate Trust Office, (ii)
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
The Trustee shall have no duty hereunder with respect to any Notice it may
receive or which may be alleged to have been delivered to or served upon it
unless such Notice is delivered to it or served upon it at its Corporate Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.

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

                  (i)      Prior to the occurrence of a Master Servicer Event of
         Default or Servicer Event of Default, and after the curing or waiver of
         all such Master Servicer Events of Default or Servicer Event of Default
         which may have occurred with respect to the Trustee and at all times
         with respect to the Securities Administrator, the duties and
         obligations of the Trustee shall be determined solely by the express
         provisions of this Agreement, neither the Trustee nor the Securities
         Administrator shall be liable except for the performance of such duties
         and obligations as are specifically set forth in this


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         Agreement, no implied covenants or obligations shall be read into this
         Agreement against the Trustee or the Securities Administrator and, in
         the absence of bad faith on the part of the Trustee or the Securities
         Administrator, respectively, the Trustee or the Securities
         Administrator, respectively, may conclusively rely, as to the truth of
         the statements and the correctness of the opinions expressed therein,
         upon any certificates or opinions furnished to the Trustee or the
         Securities Administrator, respectively, that conform to the
         requirements of this Agreement;

                  (ii)     Neither the Trustee nor the Securities Administrator
         shall be liable for an error of judgment made in good faith by a
         Responsible Officer or Responsible Officers of the Trustee or an
         officer or officers of the Securities Administrator, respectively,
         unless it shall be proved that the Trustee or the Securities
         Administrator, respectively, was negligent in ascertaining the
         pertinent facts; and

                  (iii)    Neither the Trustee nor the Securities Administrator
         shall be liable with respect to any action taken, suffered or omitted
         to be taken by it in good faith in accordance with the direction of the
         Holders of Certificates entitled to at least 25% of the Voting Rights
         relating to the time, method and place of conducting any proceeding for
         any remedy available to the Trustee or the Securities Administrator or
         exercising any trust or power conferred upon the Trustee or the
         Securities Administrator under this Agreement.

         SECTION 9.02. Certain Matters Affecting Trustee and Securities
Administrator.

         (a)      Except as otherwise provided in Section 9.01:

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

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

                  (iii)    Neither the Trustee nor the Securities Administrator
         shall be under any obligation to exercise any of the trusts or powers
         vested in it by this Agreement or to institute, conduct or defend any
         litigation hereunder or in relation hereto at the request, order or
         direction of any of the Certificateholders, pursuant to the provisions
         of this Agreement, unless such Certificateholders shall have offered to
         the Trustee or the Securities Administrator, as the case may be,
         reasonable security or indemnity satisfactory to it against the costs,
         expenses and liabilities which may be incurred therein or thereby;
         nothing contained herein shall, however, relieve the Trustee of the
         obligation, upon the occurrence of a Master Servicer Event of Default
         or Servicer Event of Default,


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         (in each case which has not been cured or waived), to exercise such of
         the rights and powers vested in it by this Agreement, and to 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;

                  (iv)     Neither the Trustee nor the Securities Administrator
         shall be liable for any action taken, suffered or omitted by it in good
         faith and believed by it to be authorized or within the discretion or
         rights or powers conferred upon it by this Agreement;

                  (v)      Prior to the occurrence of a Master Servicer Event of
         Default or Servicer Event of Default hereunder and after the curing or
         waiver of all Master Servicer Events of Default or Servicer Event of
         Default which may have occurred with respect to the Trustee and at all
         times with respect to the Securities Administrator, neither the Trustee
         nor the Securities Administrator shall be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, approval, bond or other paper or document, unless
         requested in writing to do so by the Holders of Certificates entitled
         to at least 25% of the Voting Rights; provided, however, that if the
         payment within a reasonable time to the Trustee or the Securities
         Administrator of the costs, expenses or liabilities likely to be
         incurred by it in the making of such investigation is, in the opinion
         of the Trustee or the Securities Administrator, as applicable, not
         reasonably assured to the Trustee or the Securities Administrator by
         such Certificateholders, the Trustee or the Securities Administrator,
         as applicable, may require reasonable indemnity satisfactory to it
         against such expense, or liability from such Certificateholders as a
         condition to taking any such action;

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

                  (vii)    The Trustee shall not be liable for any loss
         resulting from the investment of funds held in the Collection Account,
         for any loss resulting from the investment of funds held in the Reserve
         Fund or for any loss resulting from the redemption or sale of any such
         investment as therein authorized;

                  (viii)   The Trustee shall not be deemed to have notice of any
         default, Master Servicer Event of Default or Servicer Event of Default
         unless a Responsible Officer of the Trustee has actual knowledge
         thereof or unless written notice of any event which is in fact such a
         default is received by a Responsible Officer of the Trustee at the
         Corporate Trust Office of the Trustee, and such notice references the
         Certificates and this Agreement; and

                  (ix)     The rights, privileges, protections, immunities and
         benefits given to the Trustee, including, without limitation, its right
         to be indemnified, are extended to, and shall be enforceable by, each
         agent, custodian and other Person employed to act hereunder.


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         (b)      All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.

         (c)      The Trustee is hereby directed by the Depositor to execute the
Cap Contracts on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents of the Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts.

         (d)      None of the Securities Administrator, the Master Servicer, the
Servicer, the Seller, the Depositor, the Custodian or the Trustee shall be
responsible for the acts or omissions of the others, it being understood that
this Agreement shall not be construed to render those partners joint venturers
or agents of one another.

         SECTION 9.03. Trustee and Securities Administrator not Liable for
Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates (other than the
signature of the Securities Administrator, the authentication of the Securities
Administrator on the Certificates, the acknowledgments of the Trustee contained
in Article II and the representations and warranties of the Trustee in Section
9.12) shall be taken as the statements of the Depositor and neither the Trustee
nor the Securities Administrator assumes any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 9.12) or of the
Certificates (other than the signature of the Securities Administrator and
authentication of the Securities Administrator on the Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities Administrator
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Servicer, other than with respect to the Securities Administrator any
funds held by it or on behalf of the Trustee in accordance with Section 3.23 and
3.24.

         SECTION 9.04. Trustee and Securities Administrator May Own
Certificates.

         Each of the Trustee and the Securities Administrator in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
and may transact business with other interested parties and their Affiliates
with the same rights it would have if it were not Trustee or the Securities
Administrator.


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         SECTION 9.05. Fees and Expenses of Trustee and Securities
Administrator.

         The fees of the Trustee and the Securities Administrator hereunder and
of Wells Fargo under the Custodial Agreement shall be paid in accordance with a
side letter agreement with the Master Servicer and at the sole expense of the
Master Servicer. In addition, the Trustee, the Securities Administrator, the
Custodian and any director, officer, employee or agent of the Trustee, the
Securities Administrator and the Custodian shall be indemnified by the Trust and
held harmless against any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee, the Custodian or the
Securities Administrator in connection with any claim or legal action or any
pending or threatened claim or legal action arising out of or in connection with
the acceptance or administration of its respective obligations and duties under
this Agreement, including the Cap Contracts and any and all other agreements
related hereto, other than any loss, liability or expense (i) for which the
Trustee is indemnified by the Master Servicer or any Servicer, (ii) that
constitutes a specific liability of the Trustee or the Securities Administrator
pursuant to Section 11.01(g) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder by the Trustee or the Securities Administrator or by reason of
reckless disregard of obligations and duties hereunder. In no event shall the
Trustee or the Securities Administrator be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if it has been advised of the likelihood of such loss or
damage and regardless of the form of action. The Master Servicer agrees to
indemnify the Trustee, from, and hold the Trustee harmless against, any loss,
liability or expense (including reasonable attorney's fees and expenses)
incurred by the Trustee by reason of the Master Servicer's willful misfeasance,
bad faith or gross negligence in the performance of its duties under this
Agreement or by reason of the Master Servicer's reckless disregard of its
obligations and duties under this Agreement. In addition, the Seller agrees to
indemnify the Trustee for, and to hold the Trustee harmless against, any loss,
liability or expense arising out of, or in connection with, the provisions set
forth in the last paragraph of Section 2.01, including, without limitation, all
costs, liabilities and expenses (including reasonable legal fees and expenses)
of investigating and defending itself against any claim, action or proceeding,
pending or threatened, relating to the provisions of such paragraph. The
indemnities in this Section 9.05 shall survive the termination or discharge of
this Agreement and the resignation or removal of the Master Servicer, the
Trustee, the Securities Administrator or the Custodian. Any payment hereunder
made by the Master Servicer to the Trustee shall be from the Master Servicer's
own funds, without reimbursement from REMIC I therefor.

         SECTION 9.06. Eligibility Requirements for Trustee and Securities
Administrator.

         The Trustee and the Securities Administrator shall at all times be a
corporation or an association (other than the Depositor, the Seller, the Master
Servicer or any Affiliate of the foregoing) organized and doing business under
the laws of any state or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such


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corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published. In
case at any time the Trustee or the Securities Administrator, as applicable,
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee or the Securities Administrator, as applicable, shall resign
immediately in the manner and with the effect specified in Section 9.07.

         SECTION 9.07. Resignation and Removal of Trustee and Securities
Administrator.

         The Trustee and the Securities Administrator may at any time resign and
be discharged from the trust hereby created by giving written notice thereof to
the Depositor, to the Master Servicer, to the Securities Administrator (or the
Trustee, if the Securities Administrator resigns) and to the Certificateholders.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor trustee or successor securities administrator by written instrument,
in duplicate, which instrument shall be delivered to the resigning Trustee or
Securities Administrator, as applicable, and to the successor trustee or
successor securities administrator, as applicable. A copy of such instrument
shall be delivered to the Certificateholders, the Trustee, the Securities
Administrator and the Master Servicer by the Depositor. If no successor trustee
or successor securities administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator, as the case may
be, may, at the expense of the Trust Fund, petition any court of competent
jurisdiction for the appointment of a successor trustee, successor securities
administrator, Trustee or Securities Administrator, as applicable.

         If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 9.06 and shall fail
to resign after written request therefor by the Depositor, or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.

         The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee or the Securities Administrator and
appoint a successor trustee or successor securities administrator by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee or the Securities
Administrator so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders, the
Trustee (in the case of the removal of the Securities Administrator), the
Securities Administrator (in the case of the removal of the Trustee) and the
Master Servicer by the Depositor.


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<PAGE>


         Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.08.

         Notwithstanding anything to the contrary contained herein, the Master
Servicer and the Securities Administrator shall at all times be the same Person.

         SECTION 9.08. Successor Trustee or Securities Administrator.

         Any successor trustee or successor securities administrator appointed
as provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor and its predecessor trustee or predecessor securities administrator an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee or predecessor securities administrator
shall become effective and such successor trustee or successor securities
administrator without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee or securities
administrator herein. The predecessor trustee or predecessor securities
administrator shall deliver to the successor trustee or successor securities
administrator all Mortgage Loan Documents and related documents and statements
to the extent held by it hereunder, as well as all moneys, held by it hereunder,
and the Depositor and the predecessor trustee or predecessor securities
administrator shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee or successor securities administrator all
such rights, powers, duties and obligations.

         No successor trustee or successor securities administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or successor securities administrator shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
trustee or successor securities administrator shall not result in a downgrading
of any Class of Certificates by any Rating Agency, as evidenced by a letter from
each Rating Agency.

         Upon acceptance of appointment by a successor trustee or successor
securities administrator as provided in this Section, the Depositor shall mail
notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.

         SECTION 9.09. Merger or Consolidation of Trustee or Securities
Administrator.

         Any corporation or association into which the Trustee or the Securities
Administrator may be merged or converted or with which it may be consolidated or
any corporation or association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator shall be a
party, or any corporation or association succeeding to the business of the
Trustee or the Securities Administrator shall be the successor of


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the Trustee or the Securities Administrator hereunder, provided such corporation
or association shall be eligible under the provisions of Section 8.06, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.

         SECTION 9.10. Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, and for the benefit of the Holders of the Certificates, such title to
REMIC I, or any part thereof, and, subject to the other provisions of this
Section 9.10, such powers, duties, obligations, rights and trusts as the Trustee
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 9.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.

         In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trust conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee, or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.

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


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         SECTION 9.11. Appointment of Office or Agency.

         The Certificates may be surrendered for registration of transfer or
exchange at the Securities Administrator's office located at Sixth and
Marquette, Minneapolis, Minnesota 55479, and presented for final distribution at
the Corporate Trust Office of the Securities Administrator where notices and
demands to or upon the Securities Administrator in respect of the Certificates
and this Agreement may be served.

         SECTION 9.12. Representations and Warranties.

         The Trustee hereby represents and warrants to the Master Servicer, the
Securities Administrator, the Servicer and the Depositor as applicable, as of
the Closing Date, that:

                  (i)      It is a banking corporation duly organized, validly
         existing and in good standing under the laws of the State of New York.

                  (ii)     The execution and delivery of this Agreement by it,
         and the performance and compliance with the terms of this Agreement by
         it, will not violate its articles of association or bylaws or
         constitute a default (or an event which, with notice or lapse of time,
         or both, would constitute a default) under, or result in the breach of,
         any material agreement or other instrument to which it is a party or
         which is applicable to it or any of its assets.

                  (iii)    It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv)     This Agreement, assuming due authorization, execution
         and delivery by the other parties hereto, constitutes a valid, legal
         and binding obligation of it, enforceable against it in accordance with
         the terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.

                  (v)      It is not in violation of, and its execution and
         delivery of this Agreement and its performance and compliance with the
         terms of this Agreement will not constitute a violation of, any law,
         any order or decree of any court or arbiter, or any order, regulation
         or demand of any federal, state or local governmental or regulatory
         authority, which violation, in its good faith and reasonable judgment,
         is likely to affect materially and adversely either the ability of it
         to perform its obligations under this Agreement or its financial
         condition.

                  (vi)     No litigation is pending or, to the best of its
         knowledge, threatened against it, which would prohibit it from entering
         into this Agreement or, in its good faith reasonable judgment, is
         likely to materially and adversely affect either the ability of it to
         perform its obligations under this Agreement or its financial
         condition.


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                                   ARTICLE X

                                   TERMINATION

         SECTION 10.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.

         (a)      Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Securities Administrator, the Servicer and the Trustee (other than the
obligations of the Master Servicer to the Trustee pursuant to Section 9.05 and
of the Servicer to make remittances to the Securities Administrator and the
Securities Administrator to make payments in respect of the REMIC I Regular
Interests, REMIC I Regular Interests or the Classes of Certificates as
hereinafter set forth) shall terminate upon payment to the Certificateholders
and the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Master Servicer of all
Mortgage Loans and each REO Property remaining in REMIC I and (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. The purchase by the Master Servicer of all Mortgage
Loans and each REO Property remaining in REMIC I shall be at a price (the
"Termination Price") equal to the sum of (i) the greater of (A) the aggregate
Purchase Price of all the Mortgage Loans included in REMIC I, plus the appraised
value of each REO Property, if any, included in REMIC I, such appraisal to be
conducted by an appraiser mutually agreed upon by the Master Servicer and the
Trustee in their reasonable discretion and (B) the aggregate fair market value
of all of the assets of REMIC I (as determined by the Master Servicer and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 10.01) plus
(ii) any amounts due the Servicer and the Master Servicer in respect of unpaid
Servicing Fees, Master Servicing Fees and outstanding P&I Advances and Servicing
Advances.

         (b)      The Master Servicer shall have the right to purchase all of
the Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause
(i) of the preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Master Servicer may elect to purchase all
of the Mortgage Loans and each REO Property remaining in REMIC I pursuant to
clause (i) above only if the aggregate Stated Principal Balance of the Mortgage
Loans and each REO Property remaining in the Trust Fund at the time of such
election is reduced to less than 10% of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date. By acceptance of the Residual
Certificates, the Holder of the Residual Certificates agrees, in connection with
any termination hereunder, to assign and transfer any portion of the Termination
Price in excess of par, and to the extent received in respect of such
termination, to pay any such amounts to the Holders of the Class CE-1
Certificates.

         (c)      Notice of the liquidation of the Certificates shall be given
promptly by the Securities Administrator by letter to the Certificateholders
mailed (a) in the event such notice is


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<PAGE>


given in connection with the purchase of the Mortgage Loans and each REO
Property by the Master Servicer, not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and the final payment in respect of the REMIC I Regular Interests, REMIC I
Regular Interests or the Certificates will be made upon presentation and
surrender of the related Certificates at the office of the Securities
Administrator therein designated, (ii) the amount of any such final payment,
(iii) that no interest shall accrue in respect of the REMIC I Regular Interests,
REMIC I Regular Interests or Certificates from and after the Interest Accrual
Period relating to the final Distribution Date therefor and (iv) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Securities Administrator. In the event such notice is given in
connection with the purchase of all of the Mortgage Loans and each REO Property
remaining in REMIC I by the Master Servicer, the Master Servicer shall deliver
to the Securities Administrator for deposit in the Distribution Account not
later than the Business Day prior to the Distribution Date on which the final
distribution on the Certificates an amount in immediately available funds equal
to the above-described Termination Price. The Securities Administrator shall
remit to the Servicer, the Master Servicer, the Trustee and the Custodian from
such funds deposited in the Distribution Account (i) any amounts which the
Servicer would be permitted to withdraw and retain from the Collection Account
pursuant to Section 3.09 as if such funds had been deposited therein (including
all unpaid Servicing Fees and all outstanding P&I Advances and Servicing
Advances) and (ii) any other amounts otherwise payable by the Securities
Administrator to the Master Servicer, the Trustee, the Custodian and the
Servicer from amounts on deposit in the Distribution Account pursuant to the
terms of this Agreement prior to making any final distributions pursuant to
Section 10.01(d) below. Upon certification to the Trustee by the Securities
Administrator of the making of such final deposit, the Trustee shall promptly
release or cause to be released to the Master Servicer the Mortgage Files for
the remaining Mortgage Loans, and Trustee shall execute all assignments,
endorsements and other instruments delivered to it and necessary to effectuate
such transfer.

         (d)      Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Securities Administrator
shall distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 5.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 10.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Securities Administrator shall mail
a second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such


                                      172
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Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall pay to the Depositor all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Securities Administrator as a result of such Certificateholder's
failure to surrender its Certificate(s) on the final Distribution Date for final
payment thereof in accordance with this Section 10.01. Any such amounts held in
trust by the Securities Administrator shall be held uninvested in an Eligible
Account.

         SECTION 10.02. Additional Termination Requirements.

         (a)      In the event that the Master Servicer purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:

                  (i)      The Trustee shall specify the first day in the 90-day
         liquidation period in a statement attached to each Trust REMIC's final
         Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall
         satisfy all requirements of a qualified liquidation under Section 860F
         of the Code and any regulations thereunder, as evidenced by an Opinion
         of Counsel obtained by and at the expense of the Master Servicer;

                  (ii)     During such 90-day liquidation period and, at or
         prior to the time of making of the final payment on the Certificates,
         the Trustee shall sell all of the assets of REMIC I to the Master
         Servicer for cash; and

                  (iii)    At the time of the making of the final payment on the
         Certificates, the Securities Administrator shall distribute or credit,
         or cause to be distributed or credited, to the Holders of the Residual
         Certificates all cash on hand in the Trust Fund (other than cash
         retained to meet claims), and the Trust Fund shall terminate at that
         time.

         (b)      At the expense of the Master Servicer (or, if the Trust Fund
is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 10.01, at the expense of the Trust
Fund), the Master Servicer shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each Trust REMIC pursuant to this Section 10.02.

         (c)      By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.


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                                   ARTICLE XI

                                REMIC PROVISIONS

         SECTION 11.01. REMIC Administration.

         (a)      The Trustee shall elect to treat each Trust REMIC as a REMIC
under the Code and, if necessary, under applicable state law. Each such election
will be made by the Securities Administrator on Form 1066 or other appropriate
federal tax or information return or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interests in REMIC I. The Class A Certificates, the Mezzanine
Certificates, the Class B Certificates, the Class P Certificates and the Class
CE-1 Certificates and Class CE-2 Certificates (exclusive of any right to receive
payments from the Reserve Fund) shall be designated as the Regular Interests in
REMIC II and the Class R-II Interest shall be designated as the Residual
Interests in REMIC II. The Trustee shall not permit the creation of any
"interests" in each Trust REMIC (within the meaning of Section 860G of the Code)
other than the REMIC I Regular Interests and the interests represented by the
Certificates.

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

         (c)      The Securities Administrator shall be reimbursed for any and
all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to each Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Securities Administrator, as
agent for each Trust REMIC's tax matters person shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any Trust
REMIC and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. The holder of the largest Percentage Interest of
each Class of Residual Certificates shall be designated, in the manner provided
under Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.

         (d)      The Securities Administrator shall prepare and file and the
Trustee shall sign all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.

         (e)      The Securities Administrator shall perform on behalf of each
Trust REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the


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<PAGE>


Code, the REMIC Provisions or other such compliance guidance, the Securities
Administrator shall provide (i) to any Transferor of a Residual Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any Person who is not a Permitted
Transferee upon receipt of additional reasonable compensation, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of each
Trust REMIC. The Depositor shall provide or cause to be provided to the
Securities Administrator, within ten (10) days after the Closing Date, all
information or data that the Securities Administrator reasonably determines to
be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

         (f)      To the extent in the control of the Trustee or the Securities
Administrator, each such Person (i) shall take such action and shall cause each
REMIC created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions, (ii) shall
not take any action, cause the Trust Fund to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (A) endanger the status of each Trust
REMIC as a REMIC or (B) result in the imposition of a tax upon the Trust Fund
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless such action or inaction is permitted under this Agreement or the Trustee
and the Securities Administrator have received an Opinion of Counsel, addressed
to the them (at the expense of the party seeking to take such action but in no
event at the expense of the Trustee or the Securities Administrator) to the
effect that the contemplated action will not, with respect to any Trust REMIC,
endanger such status or result in the imposition of such a tax, nor (iii) shall
the Securities Administrator take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action; provided that the Securities
Administrator may conclusively rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion of
Counsel. In addition, prior to taking any action with respect to any Trust REMIC
or the respective assets of each, or causing any Trust REMIC to take any action,
which is not contemplated under the terms of this Agreement, the Securities
Administrator will consult with the Trustee or its designee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur with
respect to any Trust REMIC, and the Securities Administrator shall not take any
such action or cause any Trust REMIC to take any such action as to which the
Trustee has advised it in writing that an Adverse REMIC Event could occur. The
Trustee may consult with counsel to make such written advice, and the cost of
same shall be home by the party seeking to take the action not permitted by this
Agreement, but in no event shall such cost be an expense of the Trustee.

         (g)      In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of


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<PAGE>


the Code, or any other tax is imposed by the Code or any applicable provisions
of state or local tax laws, such tax shall be charged (i) to the Trustee
pursuant to Section 11.03, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article XI, (ii) to the
Securities Administrator pursuant to Section 11.03, if such tax arises out of or
results from a breach by the Securities Administrator of any of its obligations
under this Article XI, (iii) to the Master Servicer pursuant to Section 11.03,
if such tax arises out of or results from a breach by the Master Servicer of any
of its obligations under Article IV or under this Article XI, (iv) to the
Servicer pursuant to Section 11.03, if such tax arises out of or results from a
breach by the Servicer of any of its obligations under Article III or under this
Article XI, or (v) in all other cases, against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.

         (h)      The Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to each Trust REMIC on a
calendar year and on an accrual basis.

         (i)      Following the Startup Day, neither the Securities
Administrator nor the Trustee shall accept any contributions of assets to any
Trust REMIC other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause the related REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.

         (j)      Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.

         (k)      The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.

         SECTION 11.02. Prohibited Transactions and Activities.

         None of the Depositor, the Servicer, the Securities Administrator, the
Master Servicer or the Trustee shall sell, dispose of or substitute for any of
the Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, (iii) the termination of REMIC I pursuant to Article X of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II of this Agreement), nor acquire any
assets for any Trust REMIC (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any Trust REMIC after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03), unless it
has received an


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<PAGE>


Opinion of Counsel, addressed to the Trustee and the Securities Administrator
(at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee) that such sale, disposition, substitution, acquisition or contribution
will not (a) affect adversely the status of any Trust REMIC as a REMIC or (b)
cause any Trust REMIC to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.

         SECTION 11.03. Indemnification.

         (a)      The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or the Servicer including, without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Depositor, the
Master Servicer, the Securities Administrator or the Servicer as a result of the
Trustee's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Trustee set forth in this Agreement.

         (b)      The Servicer agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer, the Securities Administrator and the Trustee for
any taxes and costs including any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or the Trustee, as a result of the Servicer's failure to perform
its covenants set forth in Article III in accordance with the standard of care
of the Servicer set forth in this Agreement.

         (c)      The Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the Servicer and the Trustee for any taxes and costs including any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer or the Trustee, as a result of the Master Servicer's
failure to perform its covenants set forth in Article IV in accordance with the
standard of care of the Master Servicer set forth in this Agreement.

         (d)      The Securities Administrator agrees to be liable for any taxes
and costs incurred by the Trust Fund, the Depositor, the Servicer or the Trustee
including any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor, the Servicer or the Trustee as a result of the Securities
Administrator's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities Administrator set forth
in this Agreement.


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                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         SECTION 12.01. Amendment.

         This Agreement may be amended from time to time by the Depositor, the
Servicer, the Master Servicer, the Securities Administrator and the Trustee, but
without the consent of any of the Certificateholders, (i) to cure any ambiguity
or defect, (ii) to correct, modify or supplement any provisions herein
(including to give effect to the expectations of Certificateholders), or (iii)
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect in any material respect the
interest of any Certificateholders and further provided that any such amendment
shall be deemed not to adversely affect in any material respect the interests of
the Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.

         This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Master Servicer, the Securities Administrator and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or a Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates. Without limiting the
generality of the foregoing, any amendment to this Agreement required in
connection with the compliance with or the clarification of any reporting
obligations described in Section 5.06 hereof shall not require the consent of
any Certificateholder and without the need for any Opinion of Counsel or Rating
Agency confirmation.

         Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment is permitted
hereunder and will not result in the imposition of any tax on any Trust


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REMIC pursuant to the REMIC Provisions or cause any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding and that
such amendment is authorized or permitted by this Agreement.

         Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.

         It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         The cost of any Opinion of Counsel to be delivered pursuant to this
Section 12.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee.

         The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.

         SECTION 12.02. Recordation of Agreement; Counterparts.

         To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Depositor at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.

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

         SECTION 12.03. Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

         No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.


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<PAGE>


         No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder. and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

         SECTION 12.04. Governing Law.

         This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflicts of laws principles thereof.

         SECTION 12.05. Notices.

         All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when received if sent by facsimile,
receipt confirmed, if personally delivered at or mailed by first class mail,
postage prepaid, or by express delivery service or delivered in any other manner
specified herein, to (a) in the case of the Depositor, ACE Securities Corp.,
AMACAR GROUP, 6525 Morrison Boulevard, Suite 318, Charlotte, North Carolina
28211, Attention: Juliana Johnson (telecopy number:(704) 365-1362), or such
other address or telecopy number as may hereafter be furnished to the Servicer,
the Master Servicer, the Securities Administrator and the Trustee in writing by
the Depositor, (b) in the case of the Servicer, Wells Fargo Bank, N.A., 1 Home
Campus, Des Moines, Iowa 50328-0001, Attention: ______ (telecopy number:
__________), or such other address or telecopy number as may hereafter be
furnished to the Trustee, the Master Servicer, the Securities Administrator and
the Depositor in writing by the Servicer, (c) in the case of the Master Servicer
and the Securities Administrator, P.O. Box 98, Columbia, Maryland 21046 and for
overnight delivery to 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Ace Securities Corp., 2004-HE3 (telecopy number: (410) 715-2380), or
such other address or telecopy number as may hereafter be furnished to the
Trustee, the Depositor and the Servicer in writing by the Master Servicer or the
Securities Administrator and (d) in the case of the Trustee, at the Corporate
Trust Office or such other address or telecopy number as the Trustee may
hereafter be furnish to the Servicer, the Master Servicer, the Securities
Administrator and the Depositor in writing by the Trustee. Any notice required
or permitted to be given to a Certificateholder shall be given by first class


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mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above.

         SECTION 12.06. Severability of Provisions.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

         SECTION 12.07. Notice to Rating Agencies.

         The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies with respect to each of the following of which a Responsible
Officer has actual knowledge:

                  1.       Any material change or amendment to this Agreement;

                  2.       The occurrence of any Servicer Event of Default or
         Master Servicer Event of Default that has not been cured or waived;

                  3.       The resignation or termination of the Servicer, the
         Master Servicer or the Trustee;

                  4.       The repurchase or substitution of Mortgage Loans
         pursuant to or as contemplated by Section 2.03;

                  5.       The final payment to the Holders of any Class of
         Certificates;

                  6.       Any change in the location of the Distribution
         Account; and

                  7.       Any event that would result in the inability of the
         Trustee as successor Servicer to make advances regarding delinquent
         Mortgage Loans.

         In addition, the Securities Administrator shall promptly make available
to each Rating Agency copies of each report to Certificateholders described in
Section 5.02.

         The Servicer shall make available to the Securities Administrator
copies of the following:

                  8.       Each annual statement as to compliance described in
         Section 3.17; and

                  9.       Each annual independent public accountants' servicing
         report described in Section 3.18.


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         Any such notice pursuant to this Section 12.07 shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service to Standard &
Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041 and to Moody's Investors Service, Inc., 99 Church Street,
New York, New York 10007 or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.

         SECTION 12.08. Article and Section References.

         All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

         SECTION 12.09. Grant of Security Interest.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee, on behalf of the Trust and
for the benefit of the Certificateholders, be, and be construed as, a sale of
the Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans are
held to be property of the Depositor, then, (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Depositor to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, to secure a debt or other obligation of the Depositor and
(b)(1) this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code as in effect from
time to time in the State of New York; (2) the conveyance provided for in
Section 2.01 shall be deemed to be a grant by the Depositor to the Trustee, on
behalf of the Trust and for the benefit of the Certificateholders, of a security
interest in all of the Depositor's right, title and interest in and to the
Mortgage Loans and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account and the
Distribution Account, whether in the form of cash, instruments, securities or
other property; (3) the obligations secured by such security agreement shall be
deemed to be all of the Depositor's obligations under this Agreement, including
the obligation to provide to the Certificateholders the benefits of this
Agreement relating to the Mortgage Loans and the Trust Fund; and (4)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. Accordingly, the
Depositor hereby grants to the Trustee, on behalf of the Trust and for the
benefit of the Certificateholders, a security interest in the Mortgage Loans and
all other property described in clause (2) of the preceding sentence, for the
purpose of securing to the Trustee the performance by the Depositor of the
obligations described in clause (3) of the preceding sentence. Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee, on behalf of the
Trust and for the benefit of the Certificateholders.


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         SECTION 12.10. Survival of Indemnification.

         Any and all indemnities to be provided by any party to this Agreement
shall survive the termination and resignation of any party hereto and the
termination of this Agreement.


                                      183
<PAGE>


         IN WITNESS WHEREOF, the Depositor, the Servicer, the Master Servicer,
the Securities Administrator and the Trustee have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.

                                  ACE SECURITIES CORP.,
                                  as Depositor


                                  By: __________________________________________
                                  Name:
                                  Title:


                                  By:___________________________________________
                                  Name:
                                  Title:


                                  HSBC BANK USA, NATIONAL ASSOCIATION
                                  not in its individual capacity but solely as
                                  Trustee


                                  By:___________________________________________
                                  Name:
                                  Title:


                                  WELLS FARGO BANK, N.A.
                                  as Master Servicer and Securities
                                  Administrator


                                  By:___________________________________________
                                  Name:
                                  Title:


                                  WELLS FARGO BANK, N.A.
                                  as Servicer


                                  By:___________________________________________
                                  Name:
                                  Title:


<PAGE>


                                  ACKNOWLEDGED AND AGREED FOR PURPOSES OF
                                  SECTION 9.05:


                                  DB STRUCTURED PRODUCTS, INC


                                  By:____________________________________
                                  Name:
                                  Title:


                                  By:____________________________________
                                  Name:
                                  Title:


<PAGE>


STATE OF     )
             ) ss.:
COUNTY OF    )

         On the ___ day of October 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                ________________________________
                                                         Notary Public


[Notarial Seal]                                  My commission expires


<PAGE>


STATE OF     )
             ) ss.:
COUNTY OF    )

         On the ___ day of October 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                ________________________________
                                                         Notary Public


[Notarial Seal]                                  My commission expires


<PAGE>


STATE OF     )
             ) ss.:
COUNTY OF    )

         On the ___ day of October 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of Wells Fargo Bank, N.A. one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said federally chartered savings bank, and acknowledged
to me that such federally chartered savings bank executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                ________________________________
                                                         Notary Public


[Notarial Seal]                                  My commission expires


<PAGE>


STATE OF     )
             ) ss.:
COUNTY OF    )

         On the ___ day of October 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of Wells Fargo Bank, N.A., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                ________________________________
                                                         Notary Public


[Notarial Seal]                                  My commission expires


<PAGE>


STATE OF      )
              ) ss.:
COUNTY OF     )

         On the ___ day of October 2004, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of HSBC Bank USA, National Association, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.


                                                ________________________________
                                                         Notary Public


[Notarial Seal]                                  My commission expires


<PAGE>



                                   EXHIBIT A-1
                                   -----------

              FORM OF CLASS A-[1A][1B][2A][2B][2C][2D] CERTIFICATE

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

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
     TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
     THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
     CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
     BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
     CO., HAS AN INTEREST HEREIN.


<PAGE>


Series 2004-HE3, Class A-                     Aggregate Certificate Principal
[1A][1B][2A][2B][2C][2D]                      Balance of the Class A-[1A][1B]
                                              [2A][2B][2C][2D] Certificates as
                                              of the Issue Date: $

Pass-Through Rate: Variable                   Denomination:  $

Date of Pooling and Servicing Agreement and Cut-off Date: Master Servicer: Wells
Fargo Bank, N.A. October 1, 2004

First Distribution Date: November 25, 2004    Trustee: HSBC Bank USA, National
                                              Association

No.__                                         Issue Date: October 29, 2004

                                              CUSIP:________________

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


                                     A-1-2
<PAGE>


          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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

     This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class
A-[1A][1B][2A][2B][2C][2D] Certificates as of the Issue Date) in that certain
beneficial ownership interest evidenced by all the Class
A-[1A][1B][2A][2B][2C][2D] Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A. as master servicer (the "Master Servicer"), securities administrator (the
"Securities Administrator"), and as servicer (the "Servicer") and HSBC Bank USA,
National Association as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following such 25th day (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class A-[1A][1B][2A][2B][2C][2D] Certificates on
such Distribution Date pursuant to the Agreement.

     All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by the Securities Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class
A-[1A][1B][2A][2B][2C][2D] Certificates the aggregate initial Certificate
Principal Balance of


                                     A-1-3
<PAGE>


which is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the
aggregate initial Certificate Principal Balance of the Class
A-[1A][1B][2A][2B][2C][2D] Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the Agreement.

     The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall be a rate per
annum equal to the lesser of (i) One-Month LIBOR plus [_____]%, in the case of
each Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired in
respect thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, or
One-Month LIBOR plus [_____]%, in the case of any Distribution Date thereafter
and (ii) the applicable Net WAC Pass-Through Rate for such Distribution Date.

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

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

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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities


                                     A-1-4
<PAGE>


Administrator as provided in the Agreement, duly endorsed by, or accompanied by
an assignment in the form below or other written instrument of transfer in form
satisfactory to the Securities Administrator duly executed by, the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.

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

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

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

     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assumes any
responsibility for their correctness.

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


                                     A-1-5
<PAGE>


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

Dated:
                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class A-[1A][1B][2A][2B][2C][2D] Certificates referred
to in the within-mentioned Agreement.

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


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


<PAGE>


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

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT -     Custodian
                                                                --------------
                                                                (Cust) (Minor)
                                                             under Uniform Gifts
                                                                to Minors Act
TEN ENT - as tenants by the entireties                          --------------
                                                                    (State)

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

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

                                   ASSIGNMENT
                                   ----------

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

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

     I (we) further direct the Trustee or the Securities Administrator to issue
a new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:
                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
for the account of ___________________________________________________________,
account number ____________________, or, if mailed by check, to ________________
_____________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________, as its
agent.


<PAGE>


                                   EXHIBIT A-2
                                   -----------

         FORM OF CLASS M-[1][2][3][4][5][6][7][8][9][10][11] CERTIFICATE

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

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
     TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
     THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
     CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
     BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
     CO., HAS AN INTEREST HEREIN.

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES [[,/AND] CLASS
     M-1 CERTIFICATES [,/AND] CLASS M-2 CERTIFICATES [,/AND] CLASS M-3
     CERTIFICATES [,/AND] CLASS M-4 CERTIFICATES [,/AND] CLASS M-5 CERTIFICATES
     [,/AND] CLASS M-6 CERTIFICATES [,/AND] CLASS M-7 CERTIFICATES [,/AND] CLASS
     M-8 CERTIFICATES [,/AND] CLASS M-9 CERTIFICATES [,/AND] CLASS M-10
     CERTIFICATES] TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

     ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE
     REPRESENTATIONS SET FORTH IN SECTION 6.02(C) OF THE AGREEMENT REFERRED TO
     HEREIN.

     THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY
     THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS
     DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE
     INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW.
     ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL
     BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.


<PAGE>


Series 2004-HE3, Class                         Aggregate Certificate Principal
M-[1][2][3][4][5][6][7][8][9][10][11]          Balance of the Class M-[1][2][3]
                                               [4][5][6][7][8][9][10][11]
                                               Certificates as of the Issue
                                               Date: $______________

Pass-Through Rate: Variable                    Denomination: $______________

Date of Pooling and Servicing Agreement        Master Servicer: Wells Fargo
and Cut-off Date: October 1, 2004              Bank, N.A.

First Distribution Date: November 25, 2004     Trustee: HSBC Bank USA, National
                                               Association

No.___                                         Issue Date: October 29, 2004
                                               CUSIP:_________________


                                     A-2-2
<PAGE>


          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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

     This certifies that _____________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class
M-[1][2][3][4][5][6][7][8][9][10][11] Certificates as of the Issue Date) in that
certain beneficial ownership interest evidenced by all the Class
M-[1][2][3][4][5][6][7][8][9][10][11] Certificates in REMIC II created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among ACE Securities Corp., as depositor (hereinafter called the
"Depositor", which term includes any successor entity under the Agreement),
Wells Fargo Bank, N.A. as master servicer (the "Master Servicer"), securities
administrator (the "Securities Administrator") and as servicer (the "Servicer")
and HSBC Bank USA, National Association, as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following such 25th day (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class M-[1][2][3][4][5][6][7][8][9][10][11]
Certificates on such Distribution Date pursuant to the Agreement.

     All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by the Securities Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class


                                     A-2-3
<PAGE>


M-[1][2][3][4][5][6][7][8][9][10][11] Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class M-[1][2][3][4][5][6][7][8][9][10][11] Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Securities Administrator of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Securities Administrator for that
purpose as provided in the Agreement.

     The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate per
annum equal to the lesser of (i) One-Month LIBOR plus [____]% , in the case of
each Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired in
respect thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, or
One-Month LIBOR plus [____]%, in the case of any Distribution Date thereafter
and (ii) the applicable Net WAC Pass-Through Rate for such Distribution Date.

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

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

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


                                     A-2-4
<PAGE>


     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities Administrator as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     Any transferee of this Certificate shall be deemed to make the
representations set forth in Section 6.02(c) of the Agreement.

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

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

     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.


                                     A-2-5
<PAGE>


     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.

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


                                     A-2-6
<PAGE>


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

Dated:

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class M-[1][2][3][4][5][6][7][8][9][10][11] Certificates
referred to in the within-mentioned Agreement.

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


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


<PAGE>


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

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT -     Custodian
                                                                --------------
                                                                (Cust) (Minor)
                                                             under Uniform Gifts
                                                                to Minors Act
TEN ENT - as tenants by the entireties                          --------------
                                                                    (State)

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

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

                                   ASSIGNMENT
                                   ----------

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

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

     I (we) further direct the Trustee or the Securities Administrator to issue
a new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:
                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
for the account of ___________________________________________________________,
account number ____________________, or, if mailed by check, to ________________
_____________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________, as its
agent.


<PAGE>


                                   EXHIBIT A-3
                                   -----------

                          FORM OF CLASS B CERTIFICATES

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

     THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
     CERTIFICATES AND THE MEZZANINE CERTIFICATES, AS DESCRIBED IN THE AGREEMENT
     REFERRED TO HEREIN.

     THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY
     THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS
     DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE
     INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF
     THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW.
     ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL
     BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
     SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
     THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
     TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
     LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF AND IN
     COMPLIANCE WITH REGULATION S UNDER THE ACT ("REGULATION S"), OR (2) WITHIN
     THE UNITED STATES TO (A) "QUALIFIED INSTITUTIONAL BUYERS" WITHIN THE
     MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT ("RULE 144A") OR
     (B) TO INSTITUTIONAL INVESTORS THAT ARE "ACCREDITED INVESTORS" WITHIN THE
     MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF "REGULATION D" UNDER THE ACT.

     [THIS CERTIFICATE IS A REGULATION S TEMPORARY GLOBAL CERTIFICATE FOR
     PURPOSES OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
     AMENDED (THE "SECURITIES ACT"). PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE
     LATER OF (I) THE COMMENCEMENT OF THE OFFERING OF THE OFFERED CERTIFICATES
     AND (II) THE CLOSING DATE, THIS


<PAGE>


     CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
     THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM
     THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

     [NO BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL CERTIFICATE
     SHALL BE ENTITLED TO RECEIVE PAYMENTS OF PRINCIPAL OR INTEREST HEREIN
     UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE
     TERMS OF THE AGREEMENT (AS DEFINED HEREIN).]

     [THE HOLDER OF THIS REGULATION S PERMANENT GLOBAL CERTIFICATE BY ITS
     ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
     CERTIFICATE WITHIN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED IN
     REGULATION S UNDER THE SECURITIES ACT) PRIOR TO THE DATE WHICH IS THE LATER
     OF (I) 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND (II) THE DATE ON
     WHICH THE REQUISITE CERTIFICATIONS ARE DUE TO AND PROVIDED TO THE TRUSTEE
     AND SECURITIES ADMINISTRATOR PURSUANT TO THE AGREEMENT (AS DEFINED BELOW),
     EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
     SECURITIES ACT.]

     NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
     TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
     AGREEMENT.


                                     A-3-2
<PAGE>


Series ACE 2004-HE3, Class B                   Aggregate Certificate Principal
                                               Balance of the Class B
                                               Certificates  as of the Issue
                                               Date: $

Pass-Through Rate: Variable                    Denomination: $

Date of Pooling and Servicing Agreement        Master Servicer: Wells Fargo
and Cut-off Date: October 1, 2004              Bank, N.A.

First Distribution Date: November 25, 2004     Trustee: HSBC Bank USA, National
                                               Association

No. ______                                     Issue Date: October 29, 2004

                                               CUSIP:

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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

     This certifies that _______________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class B Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class B Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer"), securities administrator (the "Securities
Administrator"), and as servicer (the "Servicer") and HSBC Bank USA, National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.


                                     A-3-3
<PAGE>


     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following such 25th day (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the Business Day
immediately preceding such Distribution Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to the Holders of Class B Certificates
on such Distribution Date pursuant to the Agreement.

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

     The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate per
annum equal to the lesser of (i) One Month LIBOR plus [_____]%, in the case of
each Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired in
respect thereof) remaining in the Trust Fund is reduced to less than 10% of the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date, or
One-Month LIBOR plus [_____]%, in the case of any Distribution Date thereafter
and (ii) the applicable Net WAC Pass-Through Rate for such Distribution Date.

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

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


                                     A-3-4
<PAGE>


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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities Administrator as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

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

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A or Regulation S under the 1933 Act, written certifications from the Holder
of the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement as
Exhibit B-1, (ii) if such transfer is purportedly being made in reliance upon
Rule 501(a) under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer and from such Holder's prospective
transferee, substantially in the form attached to the Agreement as Exhibit B-2
and (iii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of


                                     A-3-5
<PAGE>


the Trust Fund or of the Depositor, the Trustee, the Master Servicer or the
Securities Administrator in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor, the Trustee or the
Securities Administrator is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

     No transfer of this Certificate shall be made to any person unless the
Transferee provides a certification pursuant to Section 6.02(d) of the
Agreement.

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

     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.

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


                                     A-3-6
<PAGE>

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

Dated:
                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


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


<PAGE>


                                   ASSIGNMENT
                                   ----------

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

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

     I (We) further direct the Securities Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:

                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


                            DISTRIBUTION INSTRUCTIONS

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________ for the account
of ______________________________________________________________, account
number ____________________, or, if mailed by check, to _______________________
_____________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.


<PAGE>


                                   EXHIBIT A-4
                                   -----------

                       FORM OF CLASS CE-[1][2] CERTIFICATE

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

     THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
     MEZZANINE CERTIFICATES TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
     HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
     SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
     THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
     TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
     LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF AND IN
     COMPLIANCE WITH REGULATION S UNDER THE ACT ("REGULATION S"), OR (2) WITHIN
     THE UNITED STATES TO (A) "QUALIFIED INSTITUTIONAL BUYERS" WITHIN THE
     MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT ("RULE 144A") OR
     (B) TO INSTITUTIONAL INVESTORS THAT ARE "ACCREDITED INVESTORS" WITHIN THE
     MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF "REGULATION D" UNDER THE ACT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
     ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
     COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

     NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
     TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
     AGREEMENT.


<PAGE>


Series 2004-HE3, Class CE-[1][2]               Aggregate Certificate Principal
                                               Balance of the Class CE-[1][2]
                                               Certificates as of the Issue
                                               Date: $-------------

Pass-Through Rate: Variable                    Denomination: $_________________

Cut-off Date and date of Pooling and           Master Servicer: Wells Fargo
Servicing Agreement: October 1, 2004           Bank, N.A.

First Distribution Date: November 25, 2004     Trustee: HSBC Bank USA, National
                                               Association

No. __                                         Issue Date: October 29, 2004


 ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
         ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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

     This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE-[1][2]
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE-[1][2] Certificates in REMIC II created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among ACE Securities Corp., as depositor (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
Wells Fargo Bank, N.A., as master servicer (the "Master Servicer"), securities
administrator (the "Securities Administrator"), and as servicer (the "Servicer")
and HSBC Bank USA, National Association, as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and


                                     A-4-2
<PAGE>


conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following such 25th day (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the calendar month
immediately preceding the month in which the related Distribution Date occurs
(the "Record Date"), in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class CE-[1][2] Certificates on such Distribution Date
pursuant to the Agreement.

     All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by the Securities Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class CE-[1][2]
Certificates the aggregate initial Certificate Principal Balance of which is in
excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE-[1][2] Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Securities Administrator of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Securities Administrator for that
purpose as provided in the Agreement.

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

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

     The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any


                                     A-4-3
<PAGE>


Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities Administrator as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
(ii) if such transfer is purportedly being made in reliance upon Rule 501(a)
under the 1933 Act, written certifications from the Holder of the Certificate
desiring to effect the transfer and from such Holder's prospective transferee,
substantially in the form attached to the Agreement as Exhibit B-2 and (iii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any Person using "Plan Assets" to acquire this Certificate shall be made
except in accordance with Section 6.02(c) of the Agreement.


                                     A-4-4
<PAGE>


     The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange of Certificates,
but the Securities Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

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

     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.

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


                                     A-4-5
<PAGE>


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

Dated:
                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

     This is one of the Class CE-[1][2] Certificates referred to in the
within-mentioned Agreement.

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


<PAGE>


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

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT -     Custodian
                                                                --------------
                                                                (Cust) (Minor)
                                                             under Uniform Gifts
                                                                to Minors Act
TEN ENT - as tenants by the entireties                          --------------
                                                                    (State)

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

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

                                   ASSIGNMENT
                                   ----------

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

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

     I (we) further direct the Trustee or the Securities Administrator to issue
a new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:
                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
for the account of ___________________________________________________________,
account number ____________________, or, if mailed by check, to ________________
_____________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_____________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________, as its
agent.


<PAGE>


                                   EXHIBIT A-5
                                   -----------

                               CLASS P CERTIFICATE

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

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
     SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
     THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
     TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
     LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF AND IN
     COMPLIANCE WITH REGULATION S UNDER THE ACT ("REGULATION S"), OR (2) WITHIN
     THE UNITED STATES TO (A) "QUALIFIED INSTITUTIONAL BUYERS" WITHIN THE
     MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT ("RULE 144A") OR
     (B) TO INSTITUTIONAL INVESTORS THAT ARE "ACCREDITED INVESTORS" WITHIN THE
     MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF "REGULATION D" UNDER THE ACT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
     ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
     COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

     NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
     TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
     AGREEMENT.


<PAGE>


Series 2004-HE3, Class P                       Aggregate Certificate Principal
                                               Balance of the Class P
                                               Certificates as of the Issue
                                               Date: $100.00

Cut-off Date and date of Pooling and           Denomination: $100.00
Servicing Agreement:October 1, 2004

First Distribution Date: November 25, 2004     Master Servicer: Wells Fargo
                                               Bank, N.A.

No.__                                          Trustee: HSBC Bank USA, National
                                               Association

                                               Issue Date: October 29, 2004

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


                                     A-5-2
<PAGE>


          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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

     This certifies that____________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer"), securities administrator (the "Securities
Administrator"), and as servicer (the "Servicer") and HSBC Bank USA, National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following such 25th day (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the calendar month
immediately preceding the month in which the related Distribution Date occurs
(the "Record Date"), in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class P Certificates on such Distribution Date pursuant to the
Agreement.

     All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by the Securities Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class P Certificates


                                     A-5-3
<PAGE>


the aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class P Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the Agreement.

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

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

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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities Administrator as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933


                                     A-5-4
<PAGE>


Act"), and an effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of this
Certificate is to be made without registration or qualification, the Securities
Administrator shall require receipt of (i) if such transfer is purportedly being
made in reliance upon Rule 144A under the 1933 Act, written certifications from
the Holder of the Certificate desiring to effect the transfer, and from such
Holder's prospective transferee, substantially in the forms attached to the
Agreement as Exhibit B-1, (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) under the 1933 Act, written certifications from the
Holder of the Certificate desiring to effect the transfer and from such Holder's
prospective transferee, substantially in the form attached to the Agreement as
Exhibit B-2 and (iii) in all other cases, an Opinion of Counsel satisfactory to
it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee, the Master Servicer or the Securities Administrator in
their respective capacities as such), together with copies of the written
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Trustee or the Securities
Administrator is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any Person using "Plan Assets" to acquire this Certificate shall be made
except in accordance with Section 6.02(c) of the Agreement.

     The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange of Certificates,
but the Securities Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

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


                                     A-5-5
<PAGE>


     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.

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


                                     A-5-6
<PAGE>


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

Dated:
                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


<PAGE>


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

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT -     Custodian
                                                                --------------
                                                                  (Cust) (Minor)
                                                             under Uniform Gifts
                                                                   to Minors Act
TEN ENT - as tenants by the entireties                          --------------
                                                                         (State)

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

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

                                   ASSIGNMENT
                                   ----------

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

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

     I (we) further direct the Trustee or the Securities Administrator to issue
a new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:
                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
for the account of ___________________________________________________________,
account number ____________________, or, if mailed by check, to ________________
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________, as its
agent.


<PAGE>


                                   EXHIBIT A-6
                                   -----------

                           FORM OF CLASS R CERTIFICATE

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

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

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
     ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT
     REFERRED TO HEREIN.

     THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
     MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH
     ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM
     REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
     TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF THE
     AGREEMENT.

     NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
     RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
     ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT IN
     COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
     ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE SECURITIES
     ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
     POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
     GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
     INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
     COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE
     TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO
     THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED
     IN


<PAGE>

     SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
     FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED TO AS A
     "DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION
     AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
     COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
     CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
     NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY
     TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
     ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
     SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH
     PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
     HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON
     THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF
     SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
     THE PROVISIONS OF SECTION 6.02(D) OF THE AGREEMENT REFERRED TO HEREIN. ANY
     PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
     BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.


Series 2004-HE3, Class R                       Aggregate Percentage Interest of
                                               the Class R Certificates as of
                                               the Issue Date: 100.00%

Date of Pooling and Servicing Agreement        Master Servicer: Wells Fargo
and Cut-off Date: October 1, 2004              Bank, N.A.

First Distribution Date: November 25, 2004     Trustee: HSBC Bank USA, National
                                               Association

No __                                          Issue Date: October 29, 2004


                                     A-6-2
<PAGE>


          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

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

                              ACE SECURITIES CORP.

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


                                     A-6-3
<PAGE>


     This certifies that _______________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class R Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer"), securities administrator (the "Securities
Administrator"), and as the servicer (the "Servicer") and HSBC Bank USA,
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

     Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the Record Date, in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class R Certificates on such Distribution Date
pursuant to the Agreement.

     All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by the Securities Administrator by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class R Certificates,
or otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Securities Administrator of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Securities Administrator for that
purpose as provided in the Agreement.

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

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


                                     A-6-4
<PAGE>


Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

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

     As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Securities Administrator as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

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

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Master Servicer or the Securities Administrator in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Securities


                                     A-6-5
<PAGE>


Administrator is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any Person using "Plan Assets" to acquire this Certificate shall be made
except in accordance with Section 6.02 of the Agreement.

     Prior to registration of any transfer, sale or other disposition of this
Certificate, the proposed transferee shall provide to the Securities
Administrator (i) an affidavit to the effect that such transferee is any Person
other than a Disqualified Organization or the agent (including a broker, nominee
or middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as
representing the beneficial ownership of the residual interests in each of REMIC
I and REMIC II, (B) it will include in its income a PRO RATA share of the net
income of the Trust Fund and that such income may be an "excess inclusion," as
defined in the Code, that, with certain exceptions, cannot be offset by other
losses or benefits from any tax exemption, and (C) it expects to have the
financial means to satisfy all of its tax obligations including those relating
to holding the Class R Certificates. Notwithstanding the registration in the
Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

     The Holder of this Certificate, by its acceptance hereof, shall be deemed
to have consented to the provisions of Section 6.02 of the Agreement and to any
amendment of the Agreement deemed necessary by counsel of the Depositor to
ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause any portion of the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon any
REMIC.

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

     The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee,


                                     A-6-6
<PAGE>


the Securities Administrator, the Servicer nor any such agent shall be affected
by notice to the contrary.

     The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by
the Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

     The recitals contained herein shall be taken as statements of the Depositor
and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.

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


                                     A-6-7
<PAGE>


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

Dated:
                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


                                         By:
                                             -----------------------------------
                                                    Authorized Officer


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                         WELLS FARGO BANK, N.A.
                                         as Securities Administrator


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


<PAGE>


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

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

TEN COM - as tenants in common            UNIF GIFT MIN ACT -     Custodian
                                                                --------------
                                                                  (Cust) (Minor)
                                                             under Uniform Gifts
                                                                   to Minors Act
TEN ENT - as tenants by the entireties                          --------------
                                                                         (State)

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

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

                                   ASSIGNMENT
                                   ----------

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

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

     I (we) further direct the Trustee or the Securities Administrator to issue
a new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________

Dated:
                                         ---------------------------------------
                                         Signature by or on behalf of assignor


                                         --------------------------------------
                                         Signature Guaranteed


                                     B-1-2
<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------

     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
for the account of ___________________________________________________________,
account number ____________________, or, if mailed by check, to ________________
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or _______________________________________, as its
agent.


                                     B-1-3
<PAGE>


                                   EXHIBIT B-1
                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                     [Date]


Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE3

         Re:      ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                  Asset Backed Pass-Through Certificates
                  Class B, Class CE, Class P and Class R Certificates

Ladies and Gentlemen:

     In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:

     Neither the Transferor nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, (e)
has taken any other action, that (in the case of each of subclauses (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933, as amended (the "1933 Act"), or would render the
disposition of any Certificate a violation of Section 5 of the 1933 Act or any
state securities law or would require registration or qualification pursuant
thereto. The Transferor will not act, nor has it authorized or will it authorize
any person to act, in any manner set forth in the foregoing sentence with
respect to any Certificate. The Transferor will not sell or otherwise transfer
any of the Certificates, except in compliance with the provisions of that
certain Pooling and Servicing Agreement, dated as of October 1, 2004, among ACE
Securities Corp. as Depositor, Wells Fargo Bank, N.A. as Master Servicer,
Securities Administrator and Servicer, and HSBC Bank USA, National Association
as trustee (the "Pooling and Servicing Agreement"), pursuant to which Pooling
and Servicing Agreement the Certificates were issued.


                                     B-1-4
<PAGE>


     Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                         Very truly yours,

                                         [Transferor]

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


                                     B-1-5
<PAGE>


                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                         [Date]


Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE3

         Re:      Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                  Asset Backed Pass-Through Certificates
                  Class B, Class CE, Class P and Class R Certificates

Ladies and Gentlemen:

     In connection with the purchase from ______________________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), (the "Transferee") hereby certifies as follows:

               1.   The Transferee is a "qualified institutional buyer" as that
     term is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933
     (the "1933 Act") and has completed either of the forms of certification to
     that effect attached hereto as Annex 1 or Annex 2. The Transferee is aware
     that the sale to it is being made in reliance on Rule 144A. The Transferee
     is acquiring the Certificates for its own account or for the account of a
     qualified institutional buyer, and understands that such Certificate may be
     resold, pledged or transferred only (i) to a person reasonably believed to
     be a qualified institutional buyer that purchases for its own account or
     for the account of a qualified institutional buyer to whom notice is given
     that the resale, pledge or transfer is being made in reliance on Rule 144A,
     or (ii) pursuant to another exemption from registration under the 1933 Act.

               2.   The Transferee has been furnished with all information
     regarding (a) the Certificates and distributions thereon, (b) the nature,
     performance and servicing of the Mortgage Loans, (c) the Pooling and
     Servicing Agreement referred to below, and (d) any credit enhancement
     mechanism associated with the Certificates, that it has requested.

3.   The Transferee: (a) is not an employee benefit or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (each, a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. ss.12510.3-101 or (b) [[for Class CE, Class P and Class
R] has provided the Securities Administrator with an opinion of counsel on which
the Trustee, the Depositor, the Master Servicer, the Securities Administrator
and the Servicer may rely, acceptable to and in form and


                                     B-1-6
<PAGE>


substance satisfactory to the Trustee to the effect that the purchase of
Certificates is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under ERISA or Section 4975 of the Code
and will not subject the Trust Fund, the Trustee, the Depositor, the Master
Servicer, the Securities Administrator or the Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in the Pooling and Servicing
Agreement.] [[for Class B] represents and warrants that it has acquired and is
holding such certificate in reliance on Prohibited Transaction Exemption ("PTE")
2002-41, and that it understands that there are certain conditions to the
availability of PTE 2002-41, including that such certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch or
Moody's Investors Service, Inc., and such certificate is so rated, and that it
is an "accredited investor" as defined in Rule 501(a)(1) of Regulation D issued
under the Securities Act and will obtain a representation from any transferee
that such transferee is an accredited investor so long as it is required to
obtain a representation regarding compliance with the Securities Act or (c)(i)
it is an insurance company, (ii) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account," as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60,
and (iii) the conditions in Sections I and III of PTCE 95-60 have been
satisfied.

     In addition, the Transferee hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee, the Securities Administrator,
the Master Servicer and the Servicer that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in paragraph 3 above.

     All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of October 1, 2004, among ACE Securities Corp. as Depositor, Wells
Fargo Bank, N.A. as Master Servicer, Securities Administrator and Servicer, and
HSBC Bank USA, National Association as Trustee, pursuant to which the
Certificates were issued.

                                         [TRANSFEREE]


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


                                     B-1-7
<PAGE>


                                                          ANNEX 1 TO EXHIBIT B-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

     The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and Wells Fargo Bank, N.A., as Securities Administrator, with
respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

          1.   As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

          2.   In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $________________1 in securities (except for
the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Transferee satisfies the criteria in the category marked
below.

     ___  Corporation, etc. The Transferee is a corporation (other than a bank,
          savings and loan association or similar institution), Massachusetts or
          similar business trust, partnership, or any organization described in
          Section 501(c)(3) of the Internal Revenue Code of 1986.

     ___  Bank. The Transferee (a) is a national bank or banking institution
          organized under the laws of any State, territory or the District of
          Columbia, the business of which is substantially confined to banking
          and is supervised by the State or territorial banking commission or
          similar official or is a foreign bank or equivalent institution, and
          (b) has an audited net worth of at least $25,000,000 as demonstrated
          in its latest annual financial statements, a copy of which is attached
          hereto.

     ___  Savings and Loan. The Transferee (a) is a savings and loan
          association, building and loan association, cooperative bank,
          homestead association or similar institution, which is supervised and
          examined by a State or Federal authority having supervision over any
          such institutions or is a foreign savings and loan association or
          equivalent institution and (b) has an audited net worth of at least
          $25,000,000 as demonstrated in its latest annual financial statements,
          a copy of which is attached hereto.

----------------------------
1    Transferee must own and/or invest on a discretionary basis at least
     $100,000,000 in securities unless Transferee is a dealer, and, in that
     case, Transferee must own and/or invest on a discretionary basis at least
     $10,000,000 in securities.


                                     B-1-8
<PAGE>


     ___  Broker-dealer. The Transferee is a dealer registered pursuant to
          Section 15 of the Securities Exchange Act of 1934.

     ___  Insurance Company. The Transferee is an insurance company whose
          primary and predominant business activity is the writing of insurance
          or the reinsuring of risks underwritten by insurance companies and
          which is subject to supervision by the insurance commissioner or a
          similar official or agency of a State, territory or the District of
          Columbia.

     ___  State or Local Plan. The Transferee is a plan established and
          maintained by a State, its political subdivisions, or any agency or
          instrumentality of the State or its political subdivisions, for the
          benefit of its employees.

     ___  ERISA Plan. The Transferee is an employee benefit plan within the
          meaning of Title I of the Employee Retirement Income Security Act of
          1974.

     ___  Investment Advisor The Transferee is an investment advisor registered
          under the Investment Advisers Act of 1940.

          3.   The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

          4.   For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the Securities Exchange Act of 1934.

          5.   The Transferee acknowledges that it is familiar with Rule 144A
and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.

         ___      ___     Will the Transferee be purchasing the Certificates
         Yes      No      only for the Transferee's own account?

          6.   If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third


                                     B-1-9
<PAGE>


party (including any separate account) in reliance on Rule 144A, the Transferee
will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
the Transferee agrees that the Transferee will not purchase securities for a
third party unless the Transferee has obtained a current representation letter
from such third party or taken other appropriate steps contemplated by Rule 144A
to conclude that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.

          7.   The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.

Dated:

                                         Print Name of Transferee


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


                                     B-1-10
<PAGE>


                                                          ANNEX 2 TO EXHIBIT B-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

     The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and Wells Fargo Bank, N.A., as Securities Administrator, with
respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

          1.   As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

          2.   In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.

     ___  The Transferee owned $________________________ in securities (other
          than the excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

     ___  The Transferee is part of a Family of Investment Companies which owned
          in the aggregate $_______________ in securities (other than the
          excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

          3.   The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

          4.   The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.


                                     B-1-11
<PAGE>


          5.   The Transferee is familiar with Rule 144A and understands that
the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

         6.   The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:
                                         ---------------------------------------
                                         Print Name of Transferee or Advisor


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


                                         IF AN ADVISER:


                                         ---------------------------------------
                                         Print Name of Transferee


                                     B-1-12
<PAGE>


                    FORM OF TRANSFEREE REPRESENTATION LETTER

     The undersigned hereby certifies on behalf of the purchaser named below
(the "Purchaser") as follows:

          1.   I am an executive officer of the Purchaser.

          2.   The Purchaser is a "qualified institutional buyer", as defined in
     Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.

          3.   As of the date specified below (which is not earlier than the
     last day of the Purchaser's most recent fiscal year), the amount of
     "securities", computed for purposes of Rule 144A, owned and invested on a
     discretionary basis by the Purchaser was in excess of $100,000,000.

Name of Purchaser_______________________________________________________________

By: (Signature)_________________________________________________________________

Name of Signatory_______________________________________________________________

Title___________________________________________________________________________

Date of this certificate________________________________________________________

Date of information provided in paragraph 3_____________________________________


                                     B-1-13
<PAGE>


                                    EXHIBIT C

                    FORM OF REGULATION S TRANSFER CERTIFICATE

[Date]


Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE3

         Re:      ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                  Asset Backed Pass-Through Certificates, Class B Certificates

Ladies and Gentlemen:

     Reference is hereby made to the Pooling and Servicing Agreement (the
"Agreement"), dated as of October 1, 2004, among ACE Securities Corp. (the
"Depositor"), Wells Fargo Bank, N.A., as master servicer, securities
administrator (the "Master Servicer"), and as servicer (the "Servicer") and HSBC
Bank USA, National Association, as trustee (the "Trustee"). Capitalized terms
used herein but not defined herein shall have the meanings assigned thereto in
the Agreement.

     This letter relates to U.S. $[__________] Certificate Principal Balance of
Class B Certificates (the "Certificates") which are held in the name of [name of
transferor] (the "Transferor") to effect the transfer of the Certificates to a
person who wishes to take delivery thereof in the form of an equivalent
beneficial interest [name of transferee] (the "Transferee").

     In connection with such request, the Transferor hereby certifies that such
transfer has been effected in accordance with the transfer restrictions set
forth in the Agreement and the private placement memorandum dated October __,
2004 relating to the Certificates and that the following additional requirements
(if applicable) were satisfied:

     (a)  the offer of the Certificates was not made to a person in the United
States;

     (b)  at the time the buy order was originated, the Transferee was outside
the United States or the Transferor and any person acting on its behalf
reasonably believed that the Transferee was outside the United States;

     (c)  no directed selling efforts were made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

     (d)  the transfer or exchange is not part of a plan or scheme to evade the
registration requirements of the Securities Act;


                                     B-1-14
<PAGE>


     (e)  the Transferee is not a U.S. Person, as defined in Regulation S under
the Securities Act;

     (f)  the transfer was made in accordance with the applicable provisions of
Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be; and

     (g)  the Transferee understands that the Certificates have not been and
will not be registered under the Securities Act, that any offers, sales or
deliveries of the Certificates purchased by the Transferee in the United States
or to U.S. persons prior to the date that is 40 days after the later of (i) the
commencement of the offering of the Certificates and (ii) the Closing Date, may
constitute a violation of United States law, and that (x) distributions of
principal and interest and (y) the exchange of beneficial interests in a
Temporary Regulation S Global Certificate for beneficial interests in the
related Permanent Regulation S Global Certificate, in each case, will be made in
respect of such Certificates only following the delivery by the Holder of a
certification of non-U.S. beneficial ownership, at the times and in the manner
set forth in the Agreement.


                                     B-1-15
<PAGE>


     You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                                         [Name of Transferor]


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


                                     B-1-16
<PAGE>


                                   EXHIBIT B-2
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                        ____________, 20__


Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE3

         Re:      ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                  Asset Backed Pass-Through Certificates,
                  Class B, Class CE, Class P and Class R Certificates

Ladies and Gentlemen:

     In connection with the transfer by ________________ (the "Transferor") to
__________________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:

     Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act'), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.

                                         Very truly yours,


                                         (Transferor)


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


<PAGE>


                            FORM OF TRANSFEREE LETTER


                                                     _______________, 20__


Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE3

         Re:      ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE3
                  Asset Backed Pass-Through Certificates,
                  Class B, Class CE, Class P and Class R Certificates

Ladies and Gentlemen:

     In connection with the transfer by ______________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferee hereby
certifies as follows:

          1.   The Transferee understands that (a) the Certificates have not
     been and will not be registered or qualified under the Securities Act of
     1933, as amended (the "Act") or any state securities law, (b) the Depositor
     is not required to so register or qualify the Certificates, (c) the
     Certificates may be resold only if registered and qualified pursuant to the
     provisions of the Act or any state securities law, or if an exemption from
     such registration and qualification is available, (d) the Pooling and
     Servicing Agreement contains restrictions regarding the transfer of the
     Certificates and (e) the Certificates will bear a legend to the foregoing
     effect.

          2.   The Transferee is acquiring the Certificates for its own account
     for investment only and not with a view to or for sale in connection with
     any distribution thereof in any manner that would violate the Act or any
     applicable state securities laws.

          3.   The Transferee is (a) a substantial, sophisticated institutional
     investor having such knowledge and experience in financial and business
     matters, and, in particular, in such matters related to securities similar
     to the Certificates, such that it is capable of evaluating the merits and
     risks of investment in the Certificates, (b) able to bear the economic
     risks of such an investment and (c) an "accredited investor" within the
     meaning of Rule 501(a) promulgated pursuant to the Act.

          4.   The Transferee has been furnished with, and has had an
     opportunity to review (a) a copy of the Pooling and Servicing Agreement and
     (b) such other information concerning the Certificates, the Mortgage Loans
     and the Depositor as has been requested by the Transferee from the
     Depositor or the Transferor and is relevant to the Transferee's decision to
     purchase the Certificates. The Transferee has had any questions arising
     from such review answered by the Depositor or the Transferor to the
     satisfaction of the Transferee.


                                     B-2-2
<PAGE>


          5.   The Transferee has not and will not nor has it authorized or will
     it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
     transfer any Certificate, any interest in any Certificate or any other
     similar security to any person in any manner, (b) solicit any offer to buy
     or to accept a pledge, disposition of other transfer of any Certificate,
     any interest in any Certificate or any other similar security from any
     person in any manner, (c) otherwise approach or negotiate with respect to
     any Certificate, any interest in any Certificate or any other similar
     security with any person in any manner, (d) make any general solicitation
     by means of general advertising or in any other manner or (e) take any
     other action, that (as to any of (a) through (e) above) would constitute a
     distribution of any Certificate under the Act, that would render the
     disposition of any Certificate a violation of Section 5 of the 1933 Act or
     any state securities law, or that would require registration or
     qualification pursuant thereto. The Transferee will not sell or otherwise
     transfer any of the Certificates, except in compliance with the provisions
     of the Pooling and Servicing Agreement.

          6.   The Transferee: (a) is not an employee benefit or other plan
     subject to the prohibited transaction provisions of the Employee Retirement
     Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
     Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan"), or
     any other person (including an investment manager, a named fiduciary or a
     trustee of any Plan) acting, directly or indirectly, on behalf of or
     purchasing any Certificate with "plan assets" of any Plan within the
     meaning of the Department of Labor ("DOL") regulation at 29 C.F.R.
     ss.12510.3-101 or (b) [[for Class CE, Class P and Class R] has provided the
     Trustee with an opinion of counsel on which the Depositor, the Master
     Servicer, the Securities Administrator, the Trustee and the Servicer may
     rely, acceptable to and in form and substance satisfactory to the Trustee
     to the effect that the purchase of Certificates is permissible under
     applicable law, will not constitute or result in any non-exempt prohibited
     transaction under ERISA or Section 4975 of the Code and will not subject
     the Trust Fund, the Trustee, the Master Servicer, the Securities
     Administrator, the Depositor or the Servicer to any obligation or liability
     (including obligations or liabilities under ERISA or Section 4975 of the
     Code) in addition to those undertaken in the Pooling and Servicing
     Agreement.] [[for Class B] represents and warrants that it has acquired and
     is holding such certificate in reliance on Prohibited Transaction Exemption
     ("PTE") 2002-41, and that it understands that there are certain conditions
     to the availability of PTE 2002-41, including that such certificate must be
     rated, at the time of purchase, not lower than "BBB-" (or its equivalent)
     by S&P, Fitch or Moody's Investors Service, Inc., and such certificate is
     so rated, and that it is an "accredited investor" as defined in Rule
     501(a)(1) of Regulation D issued under the Securities Act and will obtain a
     representation from any transferee that such transferee is an accredited
     investor so long as it is required to obtain a representation regarding
     compliance with the Securities Act or (c)(i) it is an insurance company,
     (ii) the source of funds used to acquire or hold the certificate or
     interest therein is an "insurance company general account," as such term is
     defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and (iii)
     the conditions in Sections I and III of PTCE 95-60 have been satisfied.]


                                     B-2-3
<PAGE>


     In addition, the Transferee hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee, the Securities Administrator,
the Master Servicer and the Servicer that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in paragraph 6 above.

                                         Very truly yours,


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


                                   EXHIBIT B-3
                                   -----------

                        TRANSFER AFFIDAVIT AND AGREEMENT

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

     ___________________________ being duly sworn, deposes, represents and
warrants as follows:

          1.   I am a _____________________ of _______________________________
               (the "Owner") a corporation duly organized and existing under the
               laws of _________________________, the record owner of ACE
               Securities Corp. Home Equity Loan Trust, Series 2004-HE3 Asset
               Backed Pass-Through Certificates, Class R Certificates (the
               "Class R Certificates"), on behalf of whom I make this affidavit
               and agreement. Capitalized terms used but not defined herein have
               the respective meanings assigned thereto in the Pooling and
               Servicing Agreement pursuant to which the Class R Certificates
               were issued.

          2.   The Owner (i) is and will be a "Permitted Transferee" as of
               ____________________. ____ and (ii) is acquiring the Class R
               Certificates for its own account or for the account of another
               Owner from which it has received an affidavit in substantially
               the same form as this affidavit. A "Permitted Transferee" is any
               person other than a "disqualified organization" or a possession
               of the United States. For this purpose, a "disqualified
               organization" means the United States, any state or political
               subdivision thereof, any agency or instrumentality of any of the
               foregoing (other than an instrumentality all of the activities of
               which are subject to tax and, except for the Federal Home Loan
               Mortgage Corporation, a majority of whose board of directors is
               not selected by any such governmental entity) or any foreign
               government, international organization or any agency or
               instrumentality of such foreign government or organization, any
               real electric or telephone cooperative, or any organization
               (other than certain farmers'


                                     B-2-4
<PAGE>


               cooperatives) that is generally exempt from federal income tax
               unless such organization is subject to the tax on unrelated
               business taxable income.

          3.   The Owner is aware (i) of the tax that would be imposed on
               transfers of the Class R Certificates to disqualified
               organizations under the Internal Revenue Code of 1986 that
               applies to all transfers of the Class R Certificates after April
               31, 1988; (ii) that such tax would be on the transferor or, if
               such transfer is through an agent (which person includes a
               broker, nominee or middleman) for a non-Permitted Transferee, on
               the agent; (iii) that the person otherwise liable for the tax
               shall be relieved of liability for the tax if the transferee
               furnishes to such person an affidavit that the transferee is a
               Permitted Transferee and, at the time of transfer, such person
               does not have actual knowledge that the affidavit is false; and
               (iv) that each of the Class R Certificates may be a "noneconomic
               residual interest" within the meaning of proposed Treasury
               regulations promulgated under the Code and that the transferor of
               a "noneconomic residual interest" will remain liable for any
               taxes due with respect to the income on such residual interest,
               unless no significant purpose of the transfer is to impede the
               assessment or collection of tax.

          4.   The Owner is aware of the tax imposed on a "pass-through entity"
               holding the Class R Certificates if, at any time during the
               taxable year of the pass-through entity, a non-Permitted
               Transferee is the record holder of an interest in such entity.
               (For this purpose, a "pass-through entity" includes a regulated
               investment company, a real estate investment trust or common
               trust fund, a partnership, trust or estate, and certain
               cooperatives.)

          5.   The Owner is aware that the Securities Administrator will not
               register the transfer of any Class R Certificate unless the
               transferee, or the transferee's agent, delivers to the Securities
               Administrator, among other things, an affidavit in substantially
               the same form as this affidavit. The Owner expressly agrees that
               it will not consummate any such transfer if it knows or believes
               that any of the representations contained in such affidavit and
               agreement are false.

          6.   The Owner consents to any additional restrictions or arrangements
               that shall be deemed necessary upon advice of counsel to
               constitute a reasonable arrangement to ensure that the Class R
               Certificates will only be owned, directly or indirectly, by an
               Owner that is a Permitted Transferee.

          7.   The Owner's taxpayer identification number is ________________.

          8.   The Owner has reviewed the restrictions set forth on the face of
               the Class R Certificates and the provisions of Section 6.02(d) of
               the Pooling and Servicing Agreement under which the Class R
               Certificates were issued (in particular, clauses (iii)(A) and
               (iii)(B) of Section 6.02(d) which authorize the Securities
               Administrator to deliver payments to a person other than the
               Owner and negotiate a mandatory sale by the Securities
               Administrator in the event that the Owner holds such Certificate
               in violation of Section 6.02(d)); and that the Owner


                                     B-3-2
<PAGE>


               expressly agrees to be bound by and to comply with such
               restrictions and provisions.

          9.   The Owner is not acquiring and will not transfer the Class R
               Certificates in order to impede the assessment or collection of
               any tax.

          10.  The Owner anticipates that it will, so long as it holds the Class
               R Certificates, have sufficient assets to pay any taxes owed by
               the holder of such Class R Certificates, and hereby represents to
               and for the benefit of the person from whom it acquired the Class
               R Certificates that the Owner intends to pay taxes associated
               with holding such Class R Certificates as they become due, fully
               understanding that it may incur tax liabilities in excess of any
               cash flows generated by the Class R Certificates.

          11.  The Owner has no present knowledge that it may become insolvent
               or subject to a bankruptcy proceeding for so long as it holds the
               Class R Certificates.

          12.  The Owner has no present knowledge or expectation that it will be
               unable to pay any United States taxes owed by it so long as any
               of the Certificates remain outstanding.

          13.  The Owner is not acquiring the Class R Certificates with the
               intent to transfer the Class R Certificates to any person or
               entity that will not have sufficient assets to pay any taxes owed
               by the holder of such Class R Certificates, or that may become
               insolvent or subject to a bankruptcy proceeding, for so long as
               the Class R Certificates remain outstanding.

          14.  The Owner will, in connection with any transfer that it makes of
               the Class R Certificates, obtain from its transferee the
               representations required by Section 6.02(d) of the Pooling and
               Servicing Agreement under which the Class R Certificate were
               issued and will not consummate any such transfer if it knows, or
               knows facts that should lead it to believe, that any such
               representations are false.

          15.  The Owner will, in connection with any transfer that it makes of
               the Class R Certificates, deliver to the Securities Administrator
               an affidavit, which represents and warrants that it is not
               transferring the Class R Certificates to impede the assessment or
               collection of any tax and that it has no actual knowledge that
               the proposed transferee: (i) has insufficient assets to pay any
               taxes owed by such transferee as holder of the Class R
               Certificates; (ii) may become insolvent or subject to a
               bankruptcy proceeding for so long as the Class R Certificates
               remains outstanding; and (iii) is not a "Permitted Transferee".

          16.  The Owner is a citizen or resident of the United States, a
               corporation, partnership or other entity created or organized in,
               or under the laws of, the United States or any political
               subdivision thereof, or an estate or trust whose income from
               sources without the United States may be included in gross income
               for United States


                                     B-3-3
<PAGE>

               federal income tax purposes regardless of its connection with the
               conduct of a trade or business within the United States.

          17.  The Owner of the Class R Certificate, hereby agrees that in the
               event that the Trust Fund created by the Pooling and Servicing
               Agreement is terminated pursuant to Section 10.01 thereof, the
               undersigned shall assign and transfer to the Holders of the Class
               CE and the Class P Certificates any amounts in excess of par
               received in connection with such termination. Accordingly, in the
               event of such termination, the Securities Administrator is hereby
               authorized to withhold any such amounts in excess of par and to
               pay such amounts directly to the Holders of the Class CE and the
               Class P Certificates. This agreement shall bind and be
               enforceable against any successor, transferee or assigned of the
               undersigned in the Class R Certificate. In connection with any
               transfer of the Class R Certificate, the Owner shall obtain an
               agreement substantially similar to this clause from any
               subsequent owner.


                                     B-3-4
<PAGE>


     IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.

                                         [OWNER]


                                         By:
                                            ------------------------------------
                                         Name:
                                         Title: [Vice] President


ATTEST:

By:
   ----------------------------------------
Name:
Title:        [Assistant] Secretary

     Personally appeared before me the above-named __________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

     Subscribed and sworn before me this ______________ day of __________, ____.



                                         ---------------------------------------
                                                    Notary Public

                                         County of
                                                   -----------------------------
                                         State of
                                                  ------------------------------

                                         My Commission expires:


                                     B-3-5
<PAGE>


                          FORM OF TRANSFEROR AFFIDAVIT

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

     _________________________, being duly sworn, deposes, represents and
warrants as follows:

     1.   I am a ____________________ of _________________________ (the
"Owner"), a corporation duly organized and existing under the laws of
_____________, on behalf of whom I make this affidavit.

     2.   The Owner is not transferring the Class R Certificates (the "Residual
Certificates") to impede the assessment or collection of any tax.

     3.   The Owner has no actual knowledge that the Person that is the proposed
transferee (the "Purchaser") of the Residual Certificates: (i) has insufficient
assets to pay any taxes owed by such proposed transferee as holder of the
Residual Certificates; (ii) may become insolvent or subject to a bankruptcy
proceeding for so long as the Residual Certificates remain outstanding and (iii)
is not a Permitted Transferee.

     4.   The Owner understands that the Purchaser has delivered to the Trustee
or a transfer affidavit and agreement in the form attached to the Pooling and
Servicing Agreement as Exhibit B-2. The Owner does not know or believe that any
representation contained therein is false.

     5.   At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

     6.   Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.


                                     B-3-6
<PAGE>


     IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.

                                         [OWNER]


                                         By:
                                             -----------------------------------
                                         Name:
                                         Title:           [Vice] President


ATTEST:


By:
   --------------------------------------
Name:
Title.        [Assistant] Secretary

     Personally appeared before me the above-named _________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

     Subscribed and sworn before me this ______ day of _____________, ____.


                                         ---------------------------------------
                                                     Notary Public

                                         County of
                                                   -----------------------------
                                         State of
                                                  ------------------------------

                                         My Commission expires:


<PAGE>


                                    EXHIBIT C

                         FORM OF SERVICER CERTIFICATION

Re:      __________ (the "Trust")

     Mortgage Pass-Through Certificates, Series 2004-HE3
     ---------------------------------------------------

I, [identify the certifying individual], certify to ACE Securities Corp. (the
"Depositor"), HSBC Bank USA, National Association (the "Trustee") and Wells
Fargo Bank, National Association (the "Master Servicer"), and their respective
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:

     1.   Based on my knowledge, the information in the Annual Statement of
          Compliance, the Annual Independent Public Accountant's Servicing
          Report and all servicing reports, officer's certificates and other
          information relating to the servicing of the Mortgage Loans submitted
          to the Master Servicer taken as a whole, does not contain any untrue
          statement of a material fact or omit to state a material fact
          (constituting information required to be provided by Wells Fargo Bank,
          National Association (the "Servicer") under the Agreement) necessary
          to make the statements made, in light of the circumstances under which
          such statements were made, not misleading as of the date of this
          certification.

     2.   Based on my knowledge, the servicing information required to be
          provided to Master Servicer by the Servicer under the Agreement has
          been provided to the Master Servicer.

     3.   I am responsible for reviewing the activities performed by the
          Servicer under the Agreement and based upon my knowledge and the
          review required by the Agreement, and except as disclosed in the
          Annual Statement of Compliance or the Annual Independent Public
          Accountant's Servicing Report submitted to the Master Servicer, the
          Servicer has fulfilled its obligations under the Agreement; and

     4.   I have disclosed to the Master Servicer all significant deficiencies
          relating to the servicer's compliance with the minimum servicing
          standards in accordance with a review conducted in compliance with the
          Uniform Single Attestation Program for Mortgage Bankers or similar
          standard as set forth in the pooling and servicing agreement.

Capitalized terms used and not otherwise defined herein have the meanings
assigned thereto in the Pooling and Servicing Agreement, dated as of October 1,
2004, among ACE Securities Corp., Wells Fargo Bank, N.A. and HSBC Bank USA,
National Association


                                      C-1
<PAGE>


Date:
     ------------------------------------


[Signature]
           ------------------------------


[Title]
         --------------------------------


                                      C-2
<PAGE>


                                    EXHIBIT D

                            FORM OF POWER OF ATTORNEY

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
Wells Fargo Bank, National Association
One Home Campus
Des Moines, Iowa 50328
Attn: _________________________________


                            LIMITED POWER OF ATTORNEY


KNOW ALL MEN BY THESE PRESENTS, that , having its principal place of business at
, as Trustee (the "Trustee") pursuant to that Pooling and Servicing Agreement
among (the "Depositor"), Wells Fargo Bank, National Association (the
"Servicer"), and the Trustee, dated as of October 1, 2004 (the "Pooling and
Servicing Agreement"), hereby constitutes and appoints the Servicer, by and
through the Servicer's officers, the Trustee's true and lawful Attorney-in-Fact,
in the Trustee's name, place and stead and for the Trustee's benefit, in
connection with all mortgage loans serviced by the Servicer pursuant to the
Pooling and Servicing Agreement for the purpose of performing all acts and
executing all documents in the name of the Trustee as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Trustee
for various certificateholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is acting as servicer, all subject to the terms of the Pooling and
Servicing Agreement.

This appointment shall apply to the following enumerated transactions only:

1.   The modification or re-recording of a Mortgage or Deed of Trust, where said
     modification or re-recordings is for the purpose of correcting the Mortgage
     or Deed of Trust to conform same to the original intent of the parties
     thereto or to correct title errors discovered after such title insurance
     was issued and said modification or re-recording, in either instance, does
     not adversely affect the lien of the Mortgage or Deed of Trust as insured.

2.   The subordination of the lien of a Mortgage or Deed of Trust to an easement
     in favor of a public utility company of a government agency or unit with
     powers of eminent domain; this section shall include, without limitation,
     the execution of partial


                                      C-3
<PAGE>

     satisfactions/releases, partial reconveyances or the execution or requests
     to trustees to accomplish same.

3.   The conveyance of the properties to the mortgage insurer, or the closing of
     the title to the property to be acquired as real estate owned, or
     conveyance of title to real estate owned.

4.   The completion of loan assumption agreements.

5.   The full satisfaction/release of a Mortgage or Deed of Trust or full
     conveyance upon payment and discharge of all sums secured thereby,
     including, without limitation, cancellation of the related Mortgage Note.

6.   The assignment of any Mortgage or Deed of Trust and the related Mortgage
     Note, in connection with the repurchase of the mortgage loan secured and
     evidenced thereby.

7.   The full assignment of a Mortgage or Deed of Trust upon payment and
     discharge of all sums secured thereby in conjunction with the refinancing
     thereof, including, without limitation, the assignment of the related
     Mortgage Note.

8.   With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
     a deed in lieu of foreclosure, or the completion of judicial or
     non-judicial foreclosure or termination, cancellation or rescission of any
     such foreclosure, including, without limitation, any and all of the
     following acts:

     a.   the substitution of trustee(s) serving under a Deed of Trust, in
          accordance with state law and the Deed of Trust;

     b.   the preparation and issuance of statements of breach or
          non-performance;

     c.   the preparation and filing of notices of default and/or notices of
          sale;

     d.   the cancellation/rescission of notices of default and/or notices of
          sale;

     e.   the taking of a deed in lieu of foreclosure; and

     f.   the preparation and execution of such other documents and performance
          of such other actions as may be necessary under the terms of the
          Mortgage, Deed of Trust or state law to expeditiously complete said
          transactions in paragraphs 8.a. through 8.e., above.

     The undersigned gives said Attorney-in-Fact full power and authority to
     execute such instruments and to do and perform all and every act and thing
     necessary and proper to carry into effect the power or powers granted by or
     under this Limited Power of Attorney as fully as the undersigned might or
     could do, and hereby does ratify and confirm to all that said
     Attorney-in-Fact shall lawfully do or cause to be done by authority hereof.


                                      C-4
<PAGE>


Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.

IN WITNESS WHEREOF, as Trustee pursuant to that Pooling and Servicing Agreement
among the Depositor, the Servicer, and the Trustee, dated as of 1, 200__ (
Mortgage Loan Asset Backed Certificates, Series 200__-___), has caused its
corporate seal to be hereto affixed and these presents to be signed and
acknowledged in its name and behalf by its duly elected and authorized Vice
President this day of , 200__.


                                         ---------------------------------------
                                         as Trustee for ____ Mortgage Loan Asset
                                         Backed Certificates, Series 200__-___

                                         By
                                             -----------------------------------


STATE OF
         ------------------


COUNTY OF
          -----------------

On , 200__, before me, the undersigned, a Notary Public in and for said state,
personally appeared , Vice President of as Trustee for Mortgage Loan Asset
Backed Certificates, Series 200__-___, personally known to me to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he/she executed that same in his/her authorized capacity, and that by his/her
signature on the instrument the entity upon behalf of which the person acted and
executed the instrument.

WITESS my hand and official seal.
         (SEAL)
                                            ------------------------------------
                                                                   Notary Public
                                         My Commission Expires _________________


                                      C-5
<PAGE>


                                   SCHEDULE 1

                             MORTGAGE LOAN SCHEDULE


                                      C-6
<PAGE>


                                   SCHEDULE 2

                           PREPAYMENT CHARGE SCHEDULE


                                      C-1
<PAGE>


                                   SCHEDULE 3

                                   [RESERVED]


                                      C-1
<PAGE>


                                   SCHEDULE 4

                   STANDARD FILE LAYOUT- DELINQUENCY REPORTING


EXHIBIT 1: STANDARD FILE LAYOUT - DELINQUENCY REPORTING

<TABLE>
<CAPTION>
-----------------------------   --------------------------------------------------------------   ---------    --------------
COLUMN/HEADER NAME                                         DESCRIPTION                            DECIMAL     FORMAT COMMENT
-----------------------------   --------------------------------------------------------------   ---------    --------------
<S>                             <C>                                                                 <C>       <C>
SERVICER_LOAN_NBR               A unique  number  assigned  to a loan by the  Servicer.  This
                                may be different than the LOAN_NBR
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOAN_NBR                        A unique identifier assigned to each  loan by the originator.
-----------------------------   --------------------------------------------------------------   ---------    --------------
CLIENT_NBR                      Servicer Client Number
-----------------------------   --------------------------------------------------------------   ---------    --------------
SERV_INVESTOR_NBR               Contains a unique number as
                                assigned by an external servicer
                                to identify a group of loans in
                                their system.
-----------------------------   --------------------------------------------------------------   ---------    --------------
BORROWER_FIRST_NAME             First Name of the Borrower.
-----------------------------   --------------------------------------------------------------   ---------    --------------
BORROWER_LAST_NAME              Last name of the borrower.
-----------------------------   --------------------------------------------------------------   ---------    --------------
PROP_ADDRESS                    Street Name and Number of Property
-----------------------------   --------------------------------------------------------------   ---------    --------------
PROP_STATE                      The state where the  property located.
-----------------------------   --------------------------------------------------------------   ---------    --------------
PROP_ZIP                        Zip code where the property is located.
-----------------------------   --------------------------------------------------------------   ---------    --------------
BORR_NEXT_PAY_DUE_DATE          The date that the borrower's next
                                payment is due to the MM/DD/YYYY
                                servicer at the end of processing
                                cycle, as reported by Servicer.
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOAN_TYPE                       Loan Type (i.e. FHA, VA, Conv)
-----------------------------   --------------------------------------------------------------   ---------    --------------
BANKRUPTCY_FILED_DATE           The date a particular bankruptcy claim was filed.                               MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
BANKRUPTCY_CHAPTER_CODE         The chapter under which the bankruptcy was filed.
-----------------------------   --------------------------------------------------------------   ---------    --------------
BANKRUPTCY_CASE_NBR             The case  number  assigned  by the  court  to the  bankruptcy
                                filing.
-----------------------------   --------------------------------------------------------------   ---------    --------------
POST_PETITION_DUE_DATE          The payment due date once the  bankruptcy  has been  approved                   MM/DD/YYYY
                                by the courts
-----------------------------   --------------------------------------------------------------   ---------    --------------
BANKRUPTCY_DCHRG_DISM_DATE      The Date The  Loan Is  Removed  From  Bankruptcy.  Either  by                   MM/DD/YYYY
                                Dismissal,   Discharged   and/or  a  Motion  For  Relief  Was
                                Granted.
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOSS_MIT_APPR_DATE              The Date The Loss Mitigation Was Approved By The Servicer                       MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOSS_MIT_TYPE                   The Type Of Loss Mitigation Approved For A Loan Such As;
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOSS_MIT_EST_COMP_DATE          The Date The Loss Mitigation /Plan Is Scheduled To End/Close                    MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
LOSS_MIT_ACT_COMP_DATE          The Date The Loss Mitigation Is Actually Completed                              MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FRCLSR_APPROVED_DATE            The date DA Admin sends a letter
                                to the servicer with MM/DD/YYYY
                                instructions to begin foreclosure
                                proceedings.
-----------------------------   --------------------------------------------------------------   ---------    --------------
ATTORNEY_REFERRAL_DATE          Date File Was Referred To Attorney to Pursue Foreclosure                        MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FIRST_LEGAL_DATE                Notice of 1st legal  filed by an  Attorney  in a  Foreclosure                   MM/DD/YYYY
                                Action
-----------------------------   --------------------------------------------------------------   ---------    --------------
FRCLSR_SALE_EXPECTED_DATE       The date by which a foreclosure sale is expected to occur.                      MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FRCLSR_SALE_DATE                The actual date of the foreclosure sale.                                        MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FRCLSR_SALE_AMT                 The amount a property sold for at the foreclosure sale.             2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
EVICTION_START_DATE             The date the servicer initiates eviction of the borrower.                       MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
EVICTION_COMPLETED_DATE         The date the court revokes legal
                                possession of the property
                                MM/DD/YYYY from the borrower.
-----------------------------   --------------------------------------------------------------   ---------    --------------
LIST_PRICE                      The price at which an REO property is marketed.                     2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
LIST_DATE                       The date an REO property is listed at a particular price.                       MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
</TABLE>


                                      C-1
<PAGE>


<TABLE>
<CAPTION>
-----------------------------   --------------------------------------------------------------   ---------    --------------
<S>                             <C>                                                                 <C>       <C>
OFFER_AMT                       The dollar value of an offer for an REO property.                   2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
OFFER_DATE_TIME                 The date an offer is received by DA Admin or by the Servicer.                   MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
REO_CLOSING_DATE                The date the REO sale of the property is scheduled to close.                    MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
REO_ACTUAL_CLOSING_DATE         Actual Date Of REO Sale                                                         MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
OCCUPANT_CODE                   Classification of how the property is occupied.
-----------------------------   --------------------------------------------------------------   ---------    --------------
PROP_CONDITION_CODE             A code that indicates the  condition of the property.
-----------------------------   --------------------------------------------------------------   ---------    --------------
PROP_INSPECTION_DATE            The date a  property inspection is performed.                                   MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
APPRAISAL_DATE                  The date the appraisal was done.                                                MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
CURR_PROP_VAL                   The current "as is" value of the  property  based on brokers       2
                                price opinion or appraisal.
-----------------------------   --------------------------------------------------------------   ---------    --------------
REPAIRED_PROP_VAL               The amount the property would be
                                worth if repairs are 2 completed
                                pursuant to a broker's price
                                opinion or appraisal.
-----------------------------   --------------------------------------------------------------   ---------    --------------
IF APPLICABLE:
-----------------------------   --------------------------------------------------------------   ---------    --------------
DELINQ_STATUS_CODE              FNMA Code Describing Status of Loan
-----------------------------   --------------------------------------------------------------   ---------    --------------
DELINQ_REASON_CODE              The circumstances which caused a
                                borrower to stop paying on a loan.
                                Code indicates the reason why the
                                loan is in default for this cycle.
-----------------------------   --------------------------------------------------------------   ---------    --------------
MI_CLAIM_FILED_DATE             Date  Mortgage   Insurance  Claim  Was  Filed  With  Mortgage                   MM/DD/YYYY
                                Insurance Company.
-----------------------------   --------------------------------------------------------------   ---------    --------------
MI_CLAIM_AMT                    Amount of Mortgage Insurance Claim Filed                                      No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
MI_CLAIM_PAID_DATE              Date Mortgage Insurance Company Disbursed Claim Payment                         MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
MI_CLAIM_AMT_PAID               Amount Mortgage Insurance Company Paid On Claim                     2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
POOL_CLAIM_FILED_DATE           Date Claim Was Filed With Pool Insurance Company                                MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
POOL_CLAIM_AMT                  Amount of Claim Filed With Pool Insurance Company                   2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
POOL_CLAIM_PAID_DATE            Date Claim Was  Settled  and The Check Was Issued By The Pool                   MM/DD/YYYY
                                Insurer
-----------------------------   --------------------------------------------------------------   ---------    --------------
POOL_CLAIM_AMT_PAID             Amount Paid On Claim By Pool Insurance Company                      2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_A_CLAIM_FILED_DATE     Date FHA Part A Claim Was Filed With HUD                                        MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_A_CLAIM_AMT            Amount of FHA Part A Claim Filed                                    2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_A_CLAIM_PAID_DATE      Date HUD Disbursed Part A Claim Payment                                         MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_A_CLAIM_PAID_AMT       Amount HUD Paid on Part A Claim                                     2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_B_CLAIM_FILED_DATE     Date FHA Part B Claim Was Filed With HUD                                        MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_B_CLAIM_AMT            Amount of FHA Part B Claim Filed                                    2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_B_CLAIM_PAID_DATE      Date HUD Disbursed Part B Claim Payment                                         MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
FHA_PART_B_CLAIM_PAID_AMT       Amount HUD Paid on Part B Claim                                     2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
VA_CLAIM_FILED_DATE             Date VA Claim Was Filed With the Veterans Admin                                 MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
VA_CLAIM_PAID_DATE              Date Veterans Admin. Disbursed VA Claim Payment                                 MM/DD/YYYY
-----------------------------   --------------------------------------------------------------   ---------    --------------
VA_CLAIM_PAID_AMT               Amount Veterans Admin. Paid on VA Claim                             2         No commas(,)
                                                                                                              or dollar
                                                                                                              signs ($)
-----------------------------   --------------------------------------------------------------   ---------    --------------
</TABLE>


                                      C-2
<PAGE>


EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING

The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
follows:

     o    ASUM- Approved Assumption
     o    BAP- Borrower Assistance Program
     o    CO- Charge Off
     o    DIL- Deed-in-Lieu
     o    FFA- Formal Forbearance Agreement
     o    MOD- Loan Modification
     o    PRE- Pre-Sale
     o    SS- Short Sale
     o    MISC- Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

The OCCUPANT CODE field should show the current status of the property code as
follows:

     o    Mortgagor
     o    Tenant
     o    Unknown
     o    Vacant

The PROPERTY CONDITION field should show the last reported condition of the
property as follows:

     o    Damaged
     o    Excellent
     o    Fair
     o    Gone
     o    Good
     o    Poor
     o    Special Hazard
     o    Unknown


                                      C-3
<PAGE>


EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:

       ------------------------    ------------------------------------------
       DELINQUENCY CODE            DELINQUENCY DESCRIPTION
       ------------------------    ------------------------------------------
       001                         FNMA-Death of principal mortgagor
       ------------------------    ------------------------------------------
       002                         FNMA-Illness of principal mortgagor
       ------------------------    ------------------------------------------
       003                         FNMA-Illness of mortgagor's family member
       ------------------------    ------------------------------------------
       004                         FNMA-Death of mortgagor's family member
       ------------------------    ------------------------------------------
       005                         FNMA-Marital difficulties
       ------------------------    ------------------------------------------
       006                         FNMA-Curtailment of income
       ------------------------    ------------------------------------------
       007                         FNMA-Excessive Obligation
       ------------------------    ------------------------------------------
       008                         FNMA-Abandonment of property
       ------------------------    ------------------------------------------
       009                         FNMA-Distant employee transfer
       ------------------------    ------------------------------------------
       011                         FNMA-Property problem
       ------------------------    ------------------------------------------
       012                         FNMA-Inability to sell property
       ------------------------    ------------------------------------------
       013                         FNMA-Inability to rent property
       ------------------------    ------------------------------------------
       014                         FNMA-Military Service
       ------------------------    ------------------------------------------
       015                         FNMA-Other
       ------------------------    ------------------------------------------
       016                         FNMA-Unemployment
       ------------------------    ------------------------------------------
       017                         FNMA-Business failure
       ------------------------    ------------------------------------------
       019                         FNMA-Casualty loss
       ------------------------    ------------------------------------------
       022                         FNMA-Energy environment costs
       ------------------------    ------------------------------------------
       023                         FNMA-Servicing problems
       ------------------------    ------------------------------------------
       026                         FNMA-Payment adjustment
       ------------------------    ------------------------------------------
       027                         FNMA-Payment dispute
       ------------------------    ------------------------------------------
       029                         FNMA-Transfer of ownership pending
       ------------------------    ------------------------------------------
       030                         FNMA-Fraud
       ------------------------    ------------------------------------------
       031                         FNMA-Unable to contact borrower
       ------------------------    ------------------------------------------
       INC                         FNMA-Incarceration
       ------------------------    ------------------------------------------



                                      C-4
<PAGE>


EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
follows:

        ------------------------     -------------------------------------------
              STATUS CODE            STATUS DESCRIPTION
        ------------------------     -------------------------------------------
                  09                 Forbearance
        ------------------------     -------------------------------------------
                  17                 Pre-foreclosure Sale Closing Plan Accepted
        ------------------------     -------------------------------------------
                  24                 Government Seizure
        ------------------------     -------------------------------------------
                  26                 Refinance
        ------------------------     -------------------------------------------
                  27                 Assumption
        ------------------------     -------------------------------------------
                  28                 Modification
        ------------------------     -------------------------------------------
                  29                 Charge-Off
        ------------------------     -------------------------------------------
                  30                 Third Party Sale
        ------------------------     -------------------------------------------
                  31                 Probate
        ------------------------     -------------------------------------------
                  32                 Military Indulgence
        ------------------------     -------------------------------------------
                  43                 Foreclosure Started
        ------------------------     -------------------------------------------
                  44                 Deed-in-Lieu Started
        ------------------------     -------------------------------------------
                  49                 Assignment Completed
        ------------------------     -------------------------------------------
                  61                 Second Lien Considerations
        ------------------------     -------------------------------------------
                  62                 Veteran's Affairs-No Bid
        ------------------------     -------------------------------------------
                  63                 Veteran's Affairs-Refund
        ------------------------     -------------------------------------------
                  64                 Veteran's Affairs-Buydown
        ------------------------     -------------------------------------------
                  65                 Chapter 7 Bankruptcy
        ------------------------     -------------------------------------------
                  66                 Chapter 11 Bankruptcy
        ------------------------     -------------------------------------------
                  67                 Chapter 13 Bankruptcy
        ------------------------     -------------------------------------------


                                      C-5
<PAGE>


EXHIBIT 3: CALCULATION OF REALIZ ED LOSS/GAIN FORM 332- INSTRUCTION SHEET
     1.   The numbers on the form correspond with the numbers listed below.

     Liquidation and Acquisition Expenses:
     1.   The Actual Unpaid Principal Balance of the Mortgage Loan. For
          documentation, an Amortization Schedule from date of default through
          liquidation breaking out the net interest and servicing fees advanced
          is required.

     2.   The Total Interest Due less the aggregate amount of servicing fee that
          would have been earned if all delinquent payments had been made as
          agreed. For documentation, an Amortization Schedule from date of
          default through liquidation breaking out the net interest and
          servicing fees advanced is required.

     3.   Accrued Servicing Fees based upon the Scheduled Principal Balance of
          the Mortgage Loan as calculated on a monthly basis. For documentation,
          an Amortization Schedule from date of default through liquidation
          breaking out the net interest and servicing fees advanced is required.

     4-12. Complete as applicable. All line entries must be supported by copies
          of appropriate statements, vouchers, receipts, bills, canceled checks,
          etc., to document the expense. Entries not properly documented will
          not be reimbursed to the Servicer.

     13.  The total of lines 1 through 12.

     2.   Credits:

     14-21. Complete as applicable. All line entries must be supported by copies
          of the appropriate claims forms, EOBs, HUD-1 and/or other proceeds
          verification, statements, payment checks, etc. to document the credit.
          If the Mortgage Loan is subject to a Bankruptcy Deficiency, the
          difference between the Unpaid Principal Balance of the Note prior to
          the Bankruptcy Deficiency and the Unpaid Principal Balance as reduced
          by the Bankruptcy Deficiency should be input on line 20.

     22.  The total of lines 14 through 21.

     Please note: For HUD/VA loans, use line (15) for Part A/Initial proceeds
     and line (16) for Part B/Supplemental proceeds.

     3.   Total Realized Loss (or Amount of Any Gain)

     23.  The total derived from subtracting line 22 from 13. If the amount
          represents a realized gain, show the amount in parenthesis ( ).


                                      C-6
<PAGE>


EXHIBIT 3A: CALCULATION OF REALIZED LOSS/GAIN FORM 332

                             WELLS FARGO BANK, N.A.
                        CALCULATION OF REALIZED LOSS/GAIN

Prepared by:  __________________                     Date:  _______________
Phone:  ______________________   Email Address:_____________________

--------------------------   ------------------------   ------------------------
Servicer Loan No.            Servicer Name              Servicer Address


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

WELLS FARGO BANK, N.A. Loan No._____________________________
Borrower's Name:________________________________________________________
Property Address:_______________________________________________________________
LIQUIDATION AND ACQUISITION EXPENSES:
(1)  Actual Unpaid Principal Balance of Mortgage Loan       $_______________(1)
(2)  Interest accrued at Net Rate                           ________________(2)
(3)  Accrued Servicing Fees                                 ________________(3)
(4)  Attorney's Fees                                        ________________(4)
(5)  Taxes                                                  ________________(5)
(6)  Property Maintenance                                   ________________(6)
(7)  MI/Hazard Insurance Premiums                           ________________(7)
(8)  Utility Expenses                                       ________________(8)
(9)  Appraisal/BPO                                          ________________(9)
(10) Property Inspections                                   ________________(10)
(11) FC Costs/Other Legal Expenses                          ________________(11)
(12) Other (itemize)                                        $_______________(12)
         Cash for Keys__________________________            ________________
         HOA/Condo Fees_________________________            ________________
         _______________________________________            ________________
         _______________________________________
         TOTAL EXPENSES                                     $_______________(13)
CREDITS:
(14) Escrow Balance                                         $_______________(14)
(15) HIP Refund                                             ________________(15)
(16) Rental Receipts                                        ________________(16)
(17) Hazard Loss Proceeds                                   ________________(17)
(18) Primary Mortgage Insurance Proceeds                    ________________(18)
(19) Pool Insurance Proceeds                                ________________(19)
(20) Proceeds from Sale of Acquired Property                ________________(20)


                                      C-7
<PAGE>


(21) Other (itemize)                                        ________________(21)
     ___________________________________________
     ___________________________________________
     TOTAL CREDITS                                          $_______________(22)

         TOTAL REALIZED LOSS (OR AMOUNT OF GAIN)            $_______________(23)


                                      C-8
<PAGE>


                                   SCHEDULE 5

                    STANDARD FILE LAYOUT- SCHEDULED/SCHEDULED

EXHIBIT 1: STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED

<TABLE>
<CAPTION>
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
COLUMN NAME                                        DESCRIPTION                      DECIMAL    FORMAT COMMENT
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
<S>                             <C>                                                    <C>     <C>
LOAN_NBR                        Loan Number assigned by investor                               Text up to 10 digits
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SERVICER LOAN_NBR               Servicer Loan Number                                           Text up to 10 digits
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
BORROWER_NAME                   Mortgagor name assigned to Note                                Max length of 30
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SCHED_PMT_AMT                   P&I constant                                           2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NOTE_INT_RATE                   Gross Interest Rate                                    4       Max length of 6
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NET_RATE                        Gross Interest Rate less the Service Fee Rate          4       Max length of 6
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SERV_FEE_RATE                   Service Fee Rate                                       4       Max length of 6
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NEW_PAY_AMT                     ARM loan's forecasted P&I constant                     2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NEW_LOAN_RATE                   ARM loan's forecasted Gross Interest Rate              4       Max length of 6
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
ARM_INDEX_RATE                  ARM loan's index Rate used                             4       Max length of 6
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
ACTL_BEG_BAL                    Beginning Actual Balance                               2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
ACTL_END_BAL                    Ending Actual Balance                                  2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NEXT_DUE_DATE                   Borrower's next due date                                       MM/DD/YYYY
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_AMT_1                      Curtailment Amount                                     2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_DATE_1                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_ADJ_ AMT_1                 Curtailment Interest if applicable                     2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_AMT_2                      Curtailment Amount 2                                   2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_DATE_2                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_ADJ_ AMT2                  Curtailment Interest if applicable                     2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_AMT_3                      Curtailment Amount 3                                   2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_DATE_3                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
CURT_ADJ_AMT3                   Curtailment Interest, if applicable                    2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SCHED_BEG_BAL                   Beginning Scheduled Balance                            2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SCHED_END_BAL                   Ending Scheduled Balance                               2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
SCHED_PRIN_AMT                  Scheduled Principal portion of P&I                     2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
                                Scheduled Net Interest (less Service Fee)
SCHED_NET_INT                   portion of P&I                                         2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
                                Liquidation Principal Amt to bring balance to
LIQ_AMT                         zero                                                   2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
PIF_DATE                        Liquidation Date                                               MM/DD/YYYY
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
ACTION_CODE                     Either 60 for liquidation or 65 for Repurchase                 Max length of 2
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
PRIN_ADJ_AMT                    Principal Adjustments made to loan, if
                                applicable                                             2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
INT_ADJ_AMT                     Interest Adjustment made to loan, if applicable        2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
PREPAYMENT PENALTY AMT          Prepayment penalty amount, if applicable               2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
                                Soldier and Sailor Adjustment amount, if
SOILDER_SAILOR ADJ AMT          applicable                                             2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
NON ADV LOAN AMT                Non Recoverable Loan Amount, if applicable             2       No commas(,) or dollar signs ($)
-----------------------------   ------------------------------------------------   ---------   ------------------------------------
</TABLE>